Goldman Sachs To Offer Private Credit For U.S. Retirement Plans

Investment bank Goldman Sachs (GS) is planning to offer a private credit product for U.S. retirement plans.

The Wall Street firm joins a number of other financial institutions that are rushing to provide alternative investments to 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 plans such as 401(k) plans, the equivalent of an RRSP in Canada.

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 fees.

The firm’s push to launch the “GS Private Credit CIT” comes as it looks to grow its private-asset operations as public markets continue to shrink.

Other asset managers such as BlackRock (BLK) and Invesco (IVZ) are also growing their private assets, where the products 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 shift includes an expected opening of private assets in 401(k) plans, which were previously banned as they were viewed as 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 is launching a private credit target-date fund series in partnership with Great Gray Trust Co., a private equity-backed CIT specialist.

And Goldman says it plans to bring more private credit solutions to the retirement market after launching its CIT in the fourth quarter.

GS stock has risen 23% this year to trade at $708.26 U.S. per share.