Goldman Makes a Grab for 401(k) Business

May 19, 2010 ( – Goldman Sachs, now fighting a U.S. government fraud lawsuit over whether it misled investors, is apparently making a serious play for more 401(k) business.

A Bloomberg news report quoted Bill McDermott, a Goldman Sachs Asset Management managing director and head of its defined contribution business line, as saying that Goldman is promoting its alternative asset funds and custom target-date offerings. McDemott joined Goldman earlier in the year to beef up its product development and marketing efforts to plans.  

Figures cited by Bloomberg show the distance Goldman has yet to travel: $17.5 billion in 401(k) assets as of March 31, 2010, compared to $347 billion as of December 31, 2009 at Fidelity Investments. 

The most popular Goldman funds for 401(k) plans are Goldman Sachs Mid Cap Value Fund and Goldman Sachs Small Cap Value Fund, according to BrightScope. The mid-cap fund returned 42.9% for the last 12 months, and the small-cap fund returned 45.2% in the same period, according to data compiled by Bloomberg.

The U.S. Securities and Exchange Commission filed a lawsuit against Goldman on April 16 accusing the company of misleading investors in a mortgage-linked investment. Goldman denies those allegations and said it will fight the charges (see CDO Complaints Stack Up for Goldman Sachs).