Bloomberg Audio Studios, Podcasts, radio News. I'm Shanalie Bassek, and I'm standing here at the Goldman Sachs Financial Services conference over here now with Mark Knackman, who's a global head of asset and wealth management at Golden Sachs. This is the big growth THEORYA. This is the focus that Goldman has been kind of honing in on. And you have set out a plan to be less balance sheet intensive and focus more on that third party fundraising a third
party business. How far along in that journey are you, especially when you have some ambitious plan to even double assets. That's some part of the.
Business, that's right. We set out an ambitious plan at the beginning of last year when we formed Asset in Valves Management. We had to invest a day in February set out some targets, and I think we're well on albay on meeting and exceeding a number of them. You know, the key was growing durable revenue is high single digits. We've done this were the last seven quarters, getting our pretax margin into the mid twenties. We're now at twenty
four percent, so we're well on our way. And as you mentioned, we had a couple of targets in terms of reducing our balance sheet intensity and fundraising. On the balance sheet we at the time, but last year we're at thirty billion dollars of our historical principle balance sheet. We had a target to get to fifteen billion by the end of this year. We're going to exceed this. You know, at the end of the third quarter we were around twelve billion, so we'll continue to make progress
by the end of the year. So if you feel really good about reducing the balance sheet. At the same time, we've had a very good time raising funds in the alternative area. We had a target of two hundred and fifty billion dollars of fundraising, which we've met. We expect now this year to raise more than sixty billion dollars of alternative assets. So we feel very good about the transition from the balance sheet intensive business balance sheet lighter business.
And at the same time, you know, continue to grow our management fees and we feel good about exceeding our target of the ten billion dollar number for this year.
I'm really curious about the private credit card in particular because you look over across the across the island over in Manhattan, and you see black Rock making an acquisition for HPS to get much bigger in the private credit space. How does that make you think about the future of
M and A in this business. Do you think that you need that MNA to get much bigger in private credit, especially when you yourself have a plan to more than double assets in that business to three hundred billion dollars.
We feel really good about our position. We're a scale player in private credit. We've been in the business for thirty years. We launched our first mezzanine FUNT in nineteen ninety six, so we've been experienced players throughout the second We're in a very unique place where we're scale player, but we're also closely attached to the world's leading investment bank. And so when you think about that, you know the origination capability we have, which is one of the key
things when you think about private credit, it's unmatched. And so I think we think we have what it takes to continue to grow, and we have the scale right now and we think we're going to be able to more than double the business over the next few years.
Does that mean M and A is off the table, whether it is in private credit or another area.
I'd say generally speaking, we have very strong growth opportunities that are organic, and so we're very focused on those. We're obviously paying attention to what's going on in the market, and so if we see something that could accelerate our gross we will take a look at it, but the by bar will be high.
What do you make of the not just private business, but the public business here, because in addition to doubling down on private assets, you've been doubling down on the ETF business as well, making notable hires, including from JP Morgan. Does that mean you're setting out to compete and be much much bigger in this business and take on the likes of JP Morgan and black Rock.
Yes, I think we are. I think on the on the traditional business, I would say we're very focused on the solutions orientation there and so I think we are a leader in SMAs and you know we already have a very strong position. We want to become a leader in active ETFs. I think it really our heritage is be active asset managers across both the traditional on the alternative side, so we're very focused on that. We've launched
ten new ETFs this year. We're going to launch a number of ETFs next year, so we're going to grow there. I think we see a greater adoption of ats just
in general, but also within models. I think one of the things that our clients are really interested in is having model portfolios and getting Goldman Sachs model portfolios, and ETFs tend to be parts of these of these model performers as well as SMAs, and so I think we've think this whole solutions space, the whole model space is a big growth area for us.
When you think about the path forward here, what are clients one at the end of the day, are they looking more to be in those public markets or the private ones? How do you differentiate where there's going to be the most growth in the next five ten years.
I think clients want a combination. I think it's interesting. We obviously have a very big boss manager that is focused on the Altrahi network segment, and so we see asset allocation there, and I'd say people want a combination of public and private assets, and I think it's important to have that combination and have the ability to move between those two sides.
Do you believe that there can be this great convergence where public markets look more like private markets and vice versa, or do you think they have to be separate.
I think I think it will get more and more blurred. I think the difference between between the two markets. I think it's interesting. You see some private credit deals that trade secondary and so you see some liquidity in sound of these deals, and so I think there's you know, there's you know, there's a lot of discussion. We've participated a lot in private company that have equity that is
broadly distributed to employees. For example, employees want liquidity. There's mays to create liquidity for private companies, and so that always blurring the line between what are private liquid assets and what are public liquid assets.
Now, the other big business you have, and we were just talking about this in the commercial break, big money market business. You think about that wall of money still sitting in money markets. There's a big investor expectation that that moves. Have you seen it? Are you seeing it as rates start to fall?
I think when I look at our money market business this year, we've not seen material outflows into equity from their money mask. So a lot of people still keep their money market money markets yields are still pretty attractive. I would also say that our business is probably more tilted towards institutional and corporate clients versus retail clients, but we still see people holding on to their money market assets for the time being.
Now you don't just run the asset management business, you also run the well business. This has also been targeted as a growth area for Goldman's Acts. When you think across the world, where are you going to grow? Are you going to hire significantly to get that job done?
Yes. So we have a long history of growing our weals business, you know, high single digits for many years, really based on great investment performance and a great client experience, and I think those are kind of the key two pillars driving our weals business, and we're very committed to continue to growing it both in the US as well as internationally. So we have kind of a long term plan to add advisors both in the US as well
as in Europe and Asia. We've done this this year, we'll continue doing it next year and the day often, so we're going to consistently growing that business. We're also expanding our private bank capability, which is something we had historically done less and so we're going to We're getting better in lending in that business, which is a very
good attractive business to be in. Both of the advisor grows as well as the expansion of the private bank on top of good investment performance and client experience will allow us to continue to grow this business.
If I know anything about you is that you're a man who focuses on the numbers. Where are you wanting to be number one tomorrow that you are not today?
Look, I'd say, have we talked about private credit. We have a great private credit franchise. We have a kind of top five alts franchise. Overall, we want to move up there in the ranking we have. We're a top five active asset maague. On the public side, we want to move up in the ranking. This goes to ETFs and model portfolios and other solutions parts of the business.
I'd say, the interesting thing about the Belt's business, our wealth business is entirely focused on the ultra high networks segment. We think we're a leader in that industry. There's not a lot of good data around where exactly we rank, but we think we're a top player in globally in that business. But we definitely want to be the number one ultra high networst player globally.
We're looking forward to following that story that is Mark Knockman. He is the global head of Asset and Wealth Management over here at Goldman Sachs