Feb 7, 2008 - The Massachusetts state pension fund has fired Goldman, terminating a $1.2 billion contract, dissatisfied with Goldman's performance and changes in senior management.
The pension fund was especially unhappy with way the new group would be run, after it learnt that Robert C. Jones, a senior money manager, would give up daily investment duties, replaced by Mark Carhart, who came from the hedge fund side.
Mr. Carhart runs Goldman's Global Alpha Fund, which lost about 40% last year. In spite of the dismal performance of his hedge fund, Goldman Sachs’ Mark Carhart is getting a promotion. But that promotion is getting a rude welcome from an important client.
Mr. Carhart runs Goldman's Global Alpha Fund, which lost about 40% last year. In spite of the dismal performance of his hedge fund, Goldman Sachs’ Mark Carhart is getting a promotion. But that promotion is getting a rude welcome from an important client.
The personnel changes involve the merging of Goldman's quantitative equities group, whose head Robert Jones managed the pension fund's money, with its quantitative strategies group, which was led by Mark Carhart and Ray Iwanowski and invested more in alternative assets.
“It all comes down to confidence in the managers,” Stan Mavromates, chief investment officer of the pension fund, said at a meeting yesterday. “They are having significant management changes. We feel very uncomfortable with those changes.”
At the same time, performance was lackluster, with Goldman returning only 2.86% for the pension fund's accounts while the benchmark Standard & Poor's 500 index (excluding tobacco) gained 5.29% last year.
Massachusetts temporarily transferred money to State Street Corp's State Street Global Advisors unit, which will invest temporarily in a passive fund that tracks the index until it completes a review of its domestic equity allocation.
Late last year the pension fund took back $1.5 billion from money managers Boston Co and Wellington Management Co amid poor returns.
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