Three heads of Goldman Sachs Asset Management announced their retirement today. The three men, including Ray Iwanowski and Mark Carhart, ran Goldman’s flagship Global Alpha hedge fund. Giorgio De Santis is also leaving Goldman, according to a person familiar with the matter.
The word is that the three are said to be “retiring.” Scuttlebutt inside Goldman however is divided about what might be the underlying reasons for their departure. Some say it is becasue of the poor performance of their quant strategy over the last year or two. Others say that bonus restrictions in the TARP convinced them to pursue opportunities outside the firm. We say: it’s overdetermined! Probably a bit of both.
Carhart is just 43 years old. He was was an academic at the University of Southern California whose doctorate work at the University of Chicago focused on mutual-fund performance. Ray Iwanowski was a former classhmate from Chicago.Both men were hired by Goldman in the mid-1990s to work for Global Alpha, which traded assets based on statistical models first developed by a group led by Clifford Asness, another former Chicago student who left Goldman to form AQR, Applied Quantitative Research. Asness reportedly left Carhart and Iwanowski behind, as the senior remaining members, in part to ease the pain of his defection from Goldman.
This might be a bit of the repeat of the situation that led to Asness leaving. Goldman at the time refused to pay members of Goldman Sachs Asset Management,bonuses linked directly to the performance of their business units. This left the traders feeling that they were unpaid compared to hedge fund colleagues and at the mercy of the discretion the firm’s investment bankers. In order to stem the outflow after Asness left, Goldman began compensating the GSAM team based on performance.
Both Goldman Sachs’s Global Alpha fund and AQR’s Absolute Return fund were reportedly badly pounded in 2008.
Update: Bloomberg reports that Andrea Raphael, a spokeswoman at Goldman Sachs, confirmed the departures and declined to comment further.
Business Insider Emails & Alerts
Site highlights each day to your inbox.