Goldman Sachs Economist O'Neill Named Asset Management Chairman
O’Neill, 53, will remain in London and report to Ed Forst and Tim O’Neill, global co-heads of Goldman Sachs’s investment- management division, which includes the fund business known as GSAM, the New York-based firm said today in an e-mailed statement.
The promotion gives a public face to the largest part of the company’s investment-management division nine years after O’Neill first outlined the view that Brazil, Russia, India and China would wield growing power in the global economy. Those markets have been responsible for about half of global growth since the financial crisis began in 2007.
“For the firm’s future and success, GSAM’s growth and development is pretty important,” O’Neill said in a telephone interview. “The goal is that I will link thematic ideas, help grow certain funds and bring along new ones.”
The move comes as Goldman Sachs reviews its business practices and structure after paying $550 million to settle a U.S. regulator’s fraud charges related to the firm’s 2007 sale of a mortgage-linked security. The company is also adapting its business in the wake of U.S. legislation that limits Wall Street’s ability to trade for itself on proprietary desks or by investing in hedge funds or private-equity funds.
Asset management generated $1.92 billion in revenue in the first six months of this year, up 3 percent from a year earlier, and accounted for 9 percent of the company’s revenue, according to the firm’s second-quarter earnings report.
Assets within GSAM fell 4.5 percent in the quarter to $802 billion as clients pulled cash from money market and equity funds. Stock market declines also reduced the level of assets under management.
In February, the division’s co-head, Marc Spilker, left the firm after two decades and was replaced by Forst, who had returned to Goldman Sachs from a job at Harvard University five months earlier.
Spilker and Tim O’Neill had been promoted to run the unit in June 2008 when Forst exited to work at Harvard. Three months before Forst left, division co-head Peter Kraus had departed. Eric Schwartz, another previous co-head, left in 2007.
O’Neill joined Goldman Sachs as a partner, co-head of global economics research and chief currency economist in 1995 from Swiss Bank Corp., now part of Zurich-based UBS AG, where he was head of research. An Englishman who is the son of a postman and graduated from Sheffield University, he has also worked for Bank of America Corp.
He developed the BRICs theory in the wake of the Sept. 11 attacks, after becoming Goldman Sachs’s sole chief economist, to reflect the waning influence of the U.S. on the world’s economy. Since then, it’s been central to Goldman Sachs’s economic outlook. Leaders of the BRICs countries held their first summit in Russia last year and met again in Brazil this April.
In a report released Sept. 1, O’Neill predicted the BRIC economies would expand 8.9 percent this year and 8.7 percent in 2011, helping to lead global growth of 4.8 percent and 4.6 percent, faster than consensus estimates.
“If we are right about the likely persistence of the BRIC consumer and that markets do not appreciate their importance, then at some stage a renewed, probably powerful, rally in global equity and risky asset markets will commence,” O’Neill wrote. “This remains our underlying strategic stance.”
A season ticket holder and former board member of the Manchester United soccer team, O’Neill is a member of the Red Knights, a group of the team’s supporters keen to buy the 18- time English champion from the Florida-based Glazer family.
O’Neill’s appointment is subject to U.K. regulatory approval, the firm said. He declined to comment on who may replace him as chief economist.
“Mr. O’Neill will help lead all aspects of the GSAM business and serve as an important voice for GSAM in expressing his views on global investment themes,” the statement said. “He will also continue to write about his views in this newly created role designed to leverage Mr. O’Neill’s global perspective on world markets.”