End of an Era

Closed for Business: Goldman Sachs’ BRIC Fund Falls -88% Since 2010

EM investing has reached a dearth in recent years, hurt by global economic headwinds and renewed fears of a slowdown

Goldman Sachs Group, Inc (NYSE:GS) is moving on from one of its former marquee offerings, its BRIC (Brazil, Russia, India, and China) fund, which has withered -88% since peaking in 2010, according to a recent regulatory filing.

The global banking giant has largely abstained from many of the cost cutting or large-scale moves of its counterparts, which includes the leeching of thousands of jobs at both Standard Chartered and Deutsche Bank. However, Goldman Sachs has opted to cut ties with one of its worst performing funds in a bid to help shore up an area of weakness by merging it with a broader Emerging Markets (EM) fund.

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EM investing has reached a dearth in recent years, hurt by global economic headwinds and renewed fears of a slowdown in China. Earlier this year, global markets were convulsed by a Chinese stock market crash that contributed to a massive outflow of investment and risk aversion.

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Per a recent regulatory filing to the US’ Securities and Exchange Commission (SEC), Goldman Sachs will be discontinuing its failing BRIC Fund given the unlikelihood of significant asset growth in the foreseeable future. Indeed, the fund has rescinded by -88.0% since a 2010 peak, which also underscores a lack of appeal in the area, as well as hope in its rebound.

Rather than simply liquidating the fund, Goldman Sachs has decided to assimilate the fund into a broader EM package with the hopes of giving investors exposure to a more diverse suite of developing countries. Unlike its BRIC counterpart, its EM fund has outperformed in the one-, three- and five-year periods. At the time of its last trading day before the merger, the fund had withered to just $98 million, a stark departure from $842 million back in 2010.

According to Jorge Mariscal, Chief Investment Officer of EM at UBS Wealth Management, in a recent statement on the phenomenon, “The promise of BRIC’s rapid and sustainable growth has been challenged very much for the last five years or so. The BRIC concept was popular. But nothing is eternal.”

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