The Markets April 4, 2008

Goldman Sachs Pulls Account from 401(k) Offering

Citing months of poor performance, Goldman Sachs announced it has stopped offering an investment account that AQR Capital Management created for the bank's 401(k) lineup.
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Fortune magazine reports that a letter written by Goldman Sachs said the fund “has already begun unwinding positions in order to ensure an orderly liquidation and close of the fund on April 30.” Goldman Sachs still has more than $500 million in other accounts with AQR for its clients.

The Global Relative Value fund was designed to be a relatively high volatility investment based on the strategies used by AQR Capital Management’s Global Asset Allocation hedge fund. According to a Bloomberg report, Global Asset Allocation was down 16% in the first six weeks of this year, Fortune said.

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The fund in the Goldman 401(k) lost 21% of its value from the beginning of this year to the date of termination – from $36 million to $28 million. Global Relative is among several AQR funds and accounts that have suffered since the credit crisis of last summer.

AQR’s hedge fund assets under management have shrunk to $8.6 billion from about $11 billion at the beginning of 2007, according to the magazine.

Deals & People April 4, 2008

State Street Names New SSgA Leader

State Street Corporation has named Scott Powers president and chief executive officer of State Street Global Advisors (SSgA), the company’s investment management arm.
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Powers will report to Ronald E. Logue, chairman and chief executive officer of State Street, and will join the company’s Operating Group, State Street’s senior-most strategy and policy-making team, the announcement said. He succeeds James S. Phalen, who has served as interim president and CEO of SSgA since January.

Phalen will return to his position as head of international operations for State Street’s investment servicing and investment research and trading businesses.

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Powers will join SSgA from Old Mutual US where he has served as chief executive officer of Old Mutual plc’s US operations. Prior to joining Old Mutual, he held senior management positions at Mellon Institutional Asset Management and The Boston Company Asset Management. Powers began his career as a financial services adviser with Dean Witter Reynolds.

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