When it comes to its hedge funds, Goldman is on the CAIS

March 15, 2012

By Katya Wachtel

Goldman Sachs’s own hedge fund product  — like the now defunct Global Alpha — is generally reserved for the checkbooks of the investment bank’s wealth management clients. But not always.

For investors looking to get a piece of a Goldman hedge fund for a discount (and without having to actually be a Goldman private wealth customer) the investment bank is offering one of its commodity-focused hedge funds on a third party platform: CAIS.

CAIS Group, which opened its doors in 2009, already offers its customers an entree to brand name managers including John Paulson’s eponymous hedge fund, and Daniel Loeb’s Third Point.  The platform also includes John Thaler’s JAT Capital — one of 2011’s standout performers — on its shelf.

Now, according to a regulatory filing from March 12, CAIS Group clients also have access to the Goldman Commodity Opportunities Fund (the underlying fund of which was launched in 2007). The minimum investment in the CAIS fund is $100,000, according to the filing. As of March 12, $7,265,000 had been raised.

While Goldman’s asset management division, better known as GSAM, has offered some proprietary product on third party platforms over the past 10 years, it is not something the bank does often, said several people familiar with Goldman’s structured product, including former employees.

“I don’t remember placing our funds on external platforms,” said one former GSAM hedge fund employee who asked not to be named due to ongoing relationships on the Street.  “The closest we came was third-party distribution, but that was mostly mutual funds.”

Indeed, Goldman’s mutual funds and some private equity products are available to non-Goldman clients through platforms at Bank of America’s Merrill Lynch, Morgan Stanley and others.

But another former GSAM employee said Goldman has been keen to tap the investment adviser market for some of internal hedge fund offerings.

And Goldman’s placement of the commodity portfolio on a third party platform could be seen as an effort to secure more and different sources of capital to its investment management business, which has seen its total AUM steadily decrease for the past two years.

“This is a turn-key solution and Goldman got themselves some shelf space,” the ex-GSAM employee said.

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