Goldman Sachs (GS) is making a big move in the asset management market. The investment bank plans to make a $1 billion investment in T. Rowe Price (TROW), a Baltimore-based asset manager, through open market purchases. The stake, which could amount to 3.5% to 4.1% of T. Rowe’s market cap, will expand Goldman’s access to private market products for a wider range of clients, including retail investors and retirees.
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Following the news, TROW stock jumped about 6%, while GS stock was up 1.4% on Thursday.
The new deal follows President Donald Trump’s executive order that allows investors to include alternative assets, such as cryptocurrencies and private market investments, in their 401(k) retirement plans.
Why Is the Deal Important?
Traditionally, private equity, credit, infrastructure, and real estate funds were reserved for institutional investors and the ultra-wealthy. However, with support from regulatory tailwinds and growing demand for higher-yield, diversified portfolios, these investments are now available to everyday investors.
Thus, the partnership aims to make these investments easier for more people to access. As part of the deal, the companies will launch joint products such as retirement plans, sample portfolios, and mixed investment options that combine public and private assets.
Also, the firms plan to launch their joint offerings by mid-2026, with personalized advice and adviser-managed accounts in the pipeline.
This deal is a win-win for both companies. Goldman Sachs gains access to T. Rowe’s wide retail distribution network, while T. Rowe benefits from Goldman’s expertise and resources in private markets.
Rising Demand for Private Market Investments
The demand for private market assets is surging as investors look beyond traditional stocks and bonds to diversify portfolios, hedge against inflation, and tap into new sources of return.
According to S&P Global, private market assets under management grew to $11.87 trillion in 2023 and are expected to reach over $18 trillion by 2027.
Moreover, asset managers are making efforts to help both big firms and retail investors to take part in the private market by creating new types of funds and user-friendly platforms.
Is GS a Good Stock to Buy?
On TipRanks, GS stock has received a Moderate Buy consensus rating, with seven Buys, six Holds, and one Sell assigned in the last three months. The average Goldman Sachs stock price target is $724.91, suggesting a downside risk of 2.44% from the current level.
Is TROW Stock a Good Buy?
Overall, Wall Street has a Moderate Sell consensus rating on TROW stock, based on five Holds and three Sells assigned in the last three months. The average T. Rowe stock price target of $104.88 implies 6.17% downside risk from current levels.
