Key Takeaways
- • Goldman Sachs Asset Management's outsourced CIO unit won the largest-ever OCIO mandate in the United Kingdom, managing $28.8 billion in pension assets for aerospace company BAE Systems.
- • The mandate covers the BAE Systems Pension Scheme and BAE Systems Executive Pension, and includes the lift-out of BAE's in-house investment team, which is joining GSAM.
- • GSAM, which oversees $2.7 trillion in client assets, has a track record of absorbing institutional investment teams, including Pacific Global Advisors, an OCIO business from Verus, and Aptitude Investment Management.
- • Tim Braude, global co-head of multi-asset solutions and global head of the OCIO, said the transition of in-house teams to asset managers was expected to accelerate as markets mature.
Summary
Goldman Sachs Asset Management's outsourced chief investment office (OCIO) announced on Wednesday that it won the largest OCIO mandate ever awarded in the United Kingdom, according to Institutional Investor. The mandate covers $28.8 billion in pension assets belonging to aerospace company BAE Systems, spanning the BAE Systems Pension Scheme and BAE Systems Executive Pension. In addition to the management fees, GSAM also picked up BAE Systems' in-house investment team, which is joining the asset manager.
Tim Braude, global co-head of multi-asset solutions and global head of the OCIO at Goldman Sachs, said the firm had long expected a gradual shift of in-house teams toward asset managers as markets mature. "While it's not necessarily a line item in our strategy, it's something that we have expected would accelerate and we've prepared ourselves appropriately," he said.
GSAM, which oversees $2.7 trillion in client assets, has a history of bringing in investment teams with pension, insurance, and institutional experience, sometimes alongside establishing or expanding an OCIO relationship with the employer. The firm acquired Pacific Global Advisors from Pacific Life Insurance Company in 2015, an $18 billion group that worked mainly with large pension plans. In 2017 it bought a $21 billion OCIO business from Verus, and in 2018 it acquired Aptitude Investment Management, a hedge fund solutions group formerly the in-house team for Weyerhaeuser Company's defined benefit pension trusts. Last year, GSAM won a $5.4 billion pension and insurance mandate from Canadian jet manufacturer Bombardier and folded in members of its in-house team.
Braude said outsourcing decisions are often driven by a desire for enhanced governance, risk management, and additional resources rather than dissatisfaction with internal teams, citing the scale of a leading global asset manager as an advantage. He also said BAE Systems had been conducting "novel" cashflow and liability-driven investing, which GSAM can now apply to other institutions, a capability he described as beneficial to the business.
Tim Braude, global co-head of multi-asset solutions and global head of the OCIO at Goldman Sachs, said the firm had long expected a gradual shift of in-house teams toward asset managers as markets mature. "While it's not necessarily a line item in our strategy, it's something that we have expected would accelerate and we've prepared ourselves appropriately," he said.
GSAM, which oversees $2.7 trillion in client assets, has a history of bringing in investment teams with pension, insurance, and institutional experience, sometimes alongside establishing or expanding an OCIO relationship with the employer. The firm acquired Pacific Global Advisors from Pacific Life Insurance Company in 2015, an $18 billion group that worked mainly with large pension plans. In 2017 it bought a $21 billion OCIO business from Verus, and in 2018 it acquired Aptitude Investment Management, a hedge fund solutions group formerly the in-house team for Weyerhaeuser Company's defined benefit pension trusts. Last year, GSAM won a $5.4 billion pension and insurance mandate from Canadian jet manufacturer Bombardier and folded in members of its in-house team.
Braude said outsourcing decisions are often driven by a desire for enhanced governance, risk management, and additional resources rather than dissatisfaction with internal teams, citing the scale of a leading global asset manager as an advantage. He also said BAE Systems had been conducting "novel" cashflow and liability-driven investing, which GSAM can now apply to other institutions, a capability he described as beneficial to the business.
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