Another Goldman unit hit by decline

Goldman Sachs’ plans to expand its wealth management operations have suffered a potential setback after the sharp decline in value of another Goldman fund. Goldman Sachs Liquidity Partners 2007, which received $1.8bn in initial funding in summer 2007 – $100m of it from Goldman itself – to invest in the credit markets, is down 55.3% this year to end-October, say investors. Fund management has become a key focus for Goldman since its recent move to become a bank holding company. As part of this shift, it has been seeking to reduce its dependence on high-risk proprietary trading and increase revenues from fee-earning businesses such as wealth management. However, the strategy has arguably been endangered by continuing difficulties at funds under Goldman Sachs Asset Management. Last year, for example, its flagship Global Alpha Fund lost 40% of its value. In mid-November, Goldman offered to let investors withdraw money from the Liquidity Parterns’ fund at year-end.

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