| | | Global Fund Flows Summary | | | | --- | --- | --- | --- | --- | | | Millions USD | | % AUM | | | | 4wk sum | 5-Nov | 4wk avg | 5-Nov | | Equity | 98,927 | 39,405 | 0.09 | 0.15 | | Fixed Income | 60,863 | 20,186 | 0.17 | 0.22 | | of which: EM | 1,936 | 759 | 0.08 | 0.12 | | Money Markets | 152,869 | 117,299 | 0.36 | 1.11 | | FX Flows* | 41,624 | 14,125 | 0.07 | 0.10 | +1(212)357-7628 | isabella.rosenberg@gs.com Goldman Sachs & Co. LLC *Cross-border fund flows, excluding hard currency and FX-hedged fund ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on global fund flows, particularly highlighting trends in equity and fixed income markets as of the week ending August 20, 2023 [2][4]. Core Insights - **Equity Fund Flows**: - Global equity funds experienced net inflows of $3 billion, a significant decrease from $26 billion in the previous week [4]. - Demand for global benchmark funds remained strong, while G10 equity funds saw negative flows, particularly in the US and Western Europe [4]. - Emerging Markets (EM) funds, especially those focused on mainland China, reported positive net inflows [4]. - **Fixed Income Fund Flows**: - Fixed income funds continued to attract strong inflows, with aggregate-type funds seeing net inflows of $23 billion, down from $27 billion the previous week [4]. - Investors showed a preference for inflation-protected securities, contributing to the overall strength in fixed income flows [4]. - **Money Market Funds**: - Money market fund assets increased by $1 billion, indicating a shift in investor sentiment towards safer assets [4]. - **Cross-Border FX Flows**: - Cross-border foreign exchange flows were robust, with the US dollar experiencing the strongest net inflows among G10 currencies [4]. - Notably, cumulative foreign inflows to mainland China turned net positive year-to-date, marking a significant recovery since April 2 [4]. Additional Important Insights - **Sector-Level Flows**: - Sector-level flows were subdued, with notable outflows from consumer goods and energy sectors, while industrials and technology sectors saw positive inflows [10]. - **Emerging Markets Performance**: - Emerging Markets overall faced outflows of $3.5 billion, but specific countries like Korea reported positive inflows [10]. - **Cumulative Foreign Flows**: - Cumulative foreign flows into the US and Euro area were nearly equal, despite a historically faster pace of inflows into the US in previous years [4]. - **Investment Trends**: - The report suggests that investors should consider these trends as part of a broader investment strategy, emphasizing the importance of diversification and sector allocation [3][4]. Conclusion - The data indicates a cautious but positive shift in fund flows towards emerging markets, particularly mainland China, while traditional equity markets in developed regions face challenges. The strong performance in fixed income and money market funds reflects a broader trend of risk aversion among investors [4][10].

Financial Data and Key Metrics Changes - The company ended Q2 with record assets under management of $846 billion, an increase driven by gains from equity strategies [3] - Equity assets increased by $8.1 billion or 10% from the prior quarter, with Q2 equity net sales of $1.8 billion representing an organic growth rate of just under 9% [3] - Total revenue for Q2 increased slightly from the prior quarter, primarily due to higher revenue from more days in the quarter and revenue related to the Rivington acquisition [15] - Total Q2 carried interest and performance fees were $1.4 million compared to $5.9 million in the previous quarter [15] - The Q2 effective tax rate was 26.1%, with expectations for the rate to be in the 25% to 28% range for 2025 [16] Business Line Data and Key Metrics Changes - MDT equity strategies had net sales of $3.8 billion in Q2, up from $3.3 billion in Q1 [4] - Fixed income assets decreased by about $800 million or 1% in Q2, mainly due to net redemptions of $2.4 billion [6] - In the alternative private markets category, assets increased by $1.3 billion or 7% in Q2, primarily due to FX rates and net sales of $231 million [7] - Money market fund assets reached a record high of $468 billion, increasing by $3.1 billion in Q2 [12] Market Data and Key Metrics Changes - The company's estimate of money market mutual fund market share was about 7.11% at the end of Q2, up slightly from 7.1% at the end of Q1 [14] - Managed assets as of recent days were approximately $854 billion, including $642 billion in money markets, $91 billion in equities, and $98 billion in fixed income [15] Company Strategy and Development Direction - The company is actively working on product development plans with Rivington Energy Management to enhance its private markets platform [9] - The company is exploring opportunities in the digital asset space, including tokenized money market funds and digital asset infrastructure [12][13] - The company continues to look for acquisitions, particularly in the private markets space, emphasizing that the highest and best use of cash is for acquisitions [50] Management's Comments on Operating Environment and Future Outlook - Management views the tokenization of money market funds as incremental rather than disintermediating traditional money fund business [22] - The company expects ongoing innovation and growth in the digital asset space, with a commitment to exploring opportunities [14] - Management noted that the stablecoin market is currently about $250 billion, with expectations for significant growth, but emphasized that stablecoins cannot pay interest [36][40] Other Important Information - The company completed the acquisition of a majority interest in Rivington Energy Management, enhancing its capabilities in the renewable energy sector [9] - The company purchased approximately 1.5 million shares of its stock for about $64.5 million during the quarter [17] Q&A Session Summary Question: Update on stablecoin tokenization and its impact on traditional money fund business - Management sees it as incremental, with new customers and products, emphasizing the need for daily liquidity at par [22][24] Question: Growth in stablecoins and its impact on money market funds - Management believes the current stablecoin market is concentrated and that the Genius Act will define backing requirements, which could lead to increased supply in the treasury market [36][37] Question: Capacity concerns for MDT mid and small cap products - Management does not expect any capacity issues at this point, as methodologies and buying capabilities are robust [42] Question: Capital return priorities and M&A opportunities - Management emphasizes that the highest use of cash is for acquisitions and is actively exploring opportunities in the private markets [50] Question: Tokenization of money market funds and its potential impact on the industry - Management believes it is too early to estimate the size of growth from tokenization, viewing it as an additional distribution method [56][58]