Sept. 26 (Bloomberg) -- Goldman Sachs Group Inc. named Edward Forst co-head of the investment-management unit that oversees more than $796 billion in assets, including the Global Alpha hedge fund, filling a position vacated three months ago.

Forst, 46, will run the division with Peter Kraus, according to a memo dated Sept. 25. Andrea Raphael, a spokeswoman in New York, confirmed the memo's contents and declined to comment further. Forst, who has been Goldman's chief administrative officer, will remain based in London.

Goldman, the world's largest securities firm, said in June that 23-year veteran Eric Schwartz was stepping down as co-head of investment management. His departure came after Global Alpha, run by Mark Carhart and Ray Iwanowski, dropped in 2006 for the first time in seven years.

``There's been an awful lot of publicity around the troubles Alpha has had, but it's hard to be so upset with assets under management growing at a 20 percent-plus clip year in and year out,'' said Jeffery Harte, an analyst at Sandler O'Neill & Partners in Chicago who recommends that investors buy Goldman shares. ``The fact that one of the two heads is going to be in Europe shows how important international is to Goldman and to asset management.''

Goldman said last week that about 53 percent of the firm's third-quarter revenue came from outside the U.S., the highest percentage ever.

The firm's shares rose $3.71, or 1.8 percent, to $214.61 at 4:27 p.m. in New York Stock Exchange composite trading.

Rising Assets

Assets under management rose 27 percent from a year earlier to a record $796 billion in the third quarter, Goldman reported last week. That figure includes about $40 billion in hedge funds. Global Alpha accounts for about $6 billion, down from about $10 billion in January.

The investment management division also runs an undisclosed amount for private clients. Goldman reported that the unit's revenue fell 1 percent in the first nine months of this year as performance fees, paid out of fund profits, dropped 83 percent. Fees charged on assets under management, independent of performance, rose 31 percent during the period.

Last month, Goldman injected $2 billion into its Global Equity Opportunities hedge fund, a quantitative fund run by Robert Jones, and raised $1 billion from outside investors as losses mounted amid turmoil in financial markets worldwide. Global Alpha fell 2.8 percent in the first two weeks of this month and now is down almost 35 percent for the year. The fund declined 6 percent in 2006.

Joined in 1994

Kraus, 55, has been co-head of investment management since 2001. Forst joined Goldman in 1994 as part of the capital markets division. He has been a managing director since 1996 and a partner since 1998, according to the memo.

Since 2004, Forst has been co-head of the firm's operations, technology, finance and services effort with David Viniar, Goldman's chief financial officer. Previously, he held positions including chief of staff in both the equities and fixed-income, currency and commodities divisions, and co-head of global credit markets.

Forst, who was based in New York before moving to London earlier this year, is giving up the title of chief administrative officer. Spokeswoman Raphael declined to say who'll take over his duties.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.

Last Updated: September 26, 2007 16:44 EDT