Alternative investment arm AIMS for success

World Finance takes a look at Goldman Sach’s Alternative Investments and Manager Selection Group’s platform of investment solutions

 

The Alternative Investments and Manager Selection (AIMS) Group is the team at which provides investment solutions across leading hedge fund, private equity, real estate, credit and traditional long-only managers – investment opportunities sourced entirely outside of Goldman Sachs. This article illustrates some of the most important facets of the AIMS platform.

Open architecture
The term ‘open architecture platform’ encompasses a broad range of platforms that vary significantly in the breadth and depth of their offerings. The breadth of AIMS’ investment solutions is unique. AIMS manages one of the few open architecture programmes that delivers investment opportunities from managers across all asset classes. AIMS’ market and economic insights are informed by continual discussions with hundreds of the world’s leading hedge fund, private equity, credit, real estate, and traditional long-only managers.

A fixed, one-size-fits-all approach is generally ill-suited to today’s volatile and challenging investment environment

The AIMS team maintains a constant dialogue with decision makers at these funds, not only evaluating their performance, but also exploring with them AIMS’ own views on the current investment landscape. These insights contribute to the top-down perspectives across AIMS, informing both manager selection and portfolio construction decisions.

Rigorous due diligence
In addition to its breadth, the AIMS platform offers unusual depth within each asset class. AIMS has evaluated thousands of managers within each strategy. In some cases, AIMS monitors managers for years prior to considering an investment, evaluating how their teams evolve and how their strategies unfold. In other cases, the secondary market, co-investment, and seed capital investment opportunities permit a more penetrating look at a manager’s investment process and performance, allowing AIMS to triangulate a more refined view of the manager’s capabilities.

AIMS constantly compares the managers in which it is invested with those in which it is not, ranking and re-ranking, as it dynamically rebalances and optimises the platform. The group is looking for compelling evidence that identifies an enduring investment manager – an organisation that is experienced, thoughtful, and aligned with its investors – that in AIMS’ view is likely to succeed in achieving its risk-return objectives. To find such managers, the AIMS process focuses on identifying the expertise within the group to best analyse a given manager’s strategy, its historical risk-return profile, and its future capabilities. If the team proceed to make a strategy available to clients, the proposal will withstand further layers of scrutiny from senior members of the team through an investment committee.

AIMS continually evolves its approach. The factors employed to evaluate the managers that are ultimately selected have been developed over years and informed by thousands of manager diligences. The factors are refined, via the testing of various hypotheses and conducting of scenario analyses. AIMS’ considerable systems and technology resources, combined with its large global team, allows the storage, synthesis, and analysis of enormous volumes of data on managers’ investing styles, track records, performance attribution, and backgrounds of individual team members. The scope and scale of the operation helps the development of new approaches to manager diligence and portfolio construction.

A customised approach
The team is focused on delivering a customised solution. By capitalising on the proprietary technology, risk management expertise, and global market insights across all of Goldman Sachs, AIMS is able to extend the benefits of its resources and judgment in highly customised ways, whether in the programme design, the array of managers selected for the programme’s implementation, the dynamic portfolio construction, or the ongoing risk management.

AIMS has established a broad platform that provides access to a wide array of solutions within and across a variety of strategies. The platform caters for many different investment objectives and constraints and is also customised to a wide range of broader needs. AIMS can manage assets with full discretion or work alongside clients with varying degrees of input into the investment process. Clients can access off-the-shelf commingled solutions or they may prefer to pursue their own fund structure.  In all circumstances the solution benefits from the breadth of the AIMS platform, and the depth of its expertise.

Highlighting a hedge fund solution designed to meet specific clients’ needs, AIMS launched the Dynamic Alternative Strategies Portfolio (DASP). This product is only available to European clients looking for improved liquidity and greater regulatory oversight. In AIMS’ own words: “We launched DASP in response to client demand for alternative UCITS strategies with more favourable liquidity terms than what traditional hedge funds offer.” DASP has since been recognised as a market-leading UCITS compliant product, winning a number of awards, including World Finance’s Best UCITS Compliant Fund of Hedge Fund in Europe, 2012.

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