Investment bank Goldman Sachs (GS) is planning to offer a new private credit product for U.S. retirement plans.
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The Wall Street firm joins a number of other financial institutions that are rushing to provide alternative investments for retirement portfolios and capitalize on loosening U.S. regulations. Goldman Sachs says its asset management unit is launching a product structured as a collective investment trust, or CIT, that is built for defined-contribution retirement accounts such as 401(k) plans.
The bank’s new private credit product is set to launch in the fourth quarter of this year and offer exposure to private credit funds, including North American and European direct-lending investments and private placements. Goldman said it will charge clients a fee of about 1% of assets, including administrative costs.
Risk vs. Reward
The firm’s push to launch the “GS Private Credit CIT” comes as it looks to grow its private-asset operations as public markets shrink. Other asset managers, such as BlackRock (BLK) and Invesco (IVZ), are also growing their private assets, which are more lucrative than those trading on public exchanges.
Private credit, which involves loans made by nonbanks to riskier companies, is growing at a rapid pace, and Wall Street is looking for ways to package it for individual retail investors. The administration of U.S. President Donald Trump is helping that growth with the biggest rollback of financial regulations in a generation, say analysts.
That current shift includes an expected opening of private assets in 401(k) plans, which were previously banned as they were deemed too risky for retirement savings. Critics and industry watchdogs are wary of the push into expensive, hard-to-value private assets in retirement funds, saying it could spell disaster for retirees.
Still, Goldman Sachs says it plans to bring more private credit solutions to market after launching its CIT in the fourth quarter. GS stock has risen 26% this year.
Is GS Stock a Buy?
The stock of Goldman Sachs has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on eight Buy, six Hold, and one Sell recommendations issued in the last three months. The average GS price target of $702.83 implies 0.77% downside from current levels.
