Investing Insights From Blackstone's Jon Gray and KKR's George Roberts...Goldman Sachs' Summer Intern Survey...Why Edtech is 'Mission Critical'

[Goldman Sachs]( [BRIEFINGS] September 16, 2020 Talks at GS: Insights from Great Investors Above (L to R): Jon Gray of Blackstone, Alison Mass of Goldman Sachs and George Roberts of KKR With the investing landscape fundamentally altered by the pandemic and its impact across markets, how are the world’s leading investors thinking about where to find value? Jon Gray, President and COO of Blackstone, sees opportunities in sectors that have been interrupted by the pandemic but will return over time (think global travel, location-based entertainment and urbanization) and industries that are accelerating because of the pandemic, such as e-commerce, content creation and the digital infrastructure that supports it. “All of this content we're watching on our devices needs to get made. And so there are businesses that service content creation,” Gray says in an episode of our new series, Talks at GS: Insights from Great Investors. George Roberts, co-chairman and co-CEO of KKR, says, “I think that we’ve had a theme of where all this fits when we come out of it. Obviously healthcare, tech is going to be a part of it. Telecom is going to be huge when we get through this. Also the industrial sector." In the new series, moderated by Alison Mass, chairman of Goldman Sachs’ Investment Banking Division, and Katie Koch, co-head of the Fundamental Equity business within Goldman Sachs Asset Management, investors will also share lessons from their careers and the principles that have guided their success. “I would say being high-conviction in my approach to investing is probably the most important thing,” Gray explains. “Identifying a theme, a business, or something I really believe in—going all in, that has paid off. And that when I just sort of dabble things around, it tends not to work out as well.” To young professionals, Roberts offers the following advice: “I’m wrong more times than I’m right—but I at least express the views that I [do]…So making sure that you show up at every meeting, you come with an idea—and don’t be afraid to be wrong.” [Watch video with Jon Gray]( [Watch video with George Roberts]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Talks%20at%20GS%3A%20Insights%20from%20Great%20Investors&body=https%3A%2F%2Fyoutu.be%2F6cknihZpWnk) How Goldman Sachs Interns See the World This summer, nearly 3,000 interns participated in Goldman Sachs’ first-ever virtual summer internship program. Their views on the intern experience, and some of the issues that defined the public conversation this summer, are highlighted in a recent survey: New Working Environment. Sixty-three percent of Goldman Sachs summer interns said they expect that COVID-19 will lead to the normalization of flexible working. But 75% expect the virtual environment at work and school will hurt their abilities to foster relationships. Lasting Pandemic Changes. Twenty-five percent said that they will never look the same way at traveling or going to live events, and 20% said the same for eating out. Race relations. Seventy-one percent said they have spoken to friends and family members about racial discrimination, and 65% have educated themselves by reading a book or article on race relations. In a conversation with Bentley de Beyer, global head of Human Capital Management, three interns—Jessica Keck, Samuel Agyeman Prempeh and Nayan Goyal—share more about their experiences in a recent Exchanges at Goldman Sachs episode (listen [here](. [View infographic]( [Listen to podcast]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Goldman%20Sachs%202020%20Internship%20Survey&body=https%3A%2F%2Fwww.goldmansachs.com%2Fcareers%2Fblog%2Fposts%2F2020-intern-survey%2Findex.html) The Daily Check-In With Goldman Sachs As the school year begins with an array of remote and hybrid learning plans, the role of education technology has become “mission critical,” says [Adam Nordin]( head of the Global Education Technology & Services team within Goldman Sachs’ Investment Banking Division, in a recent episode of The Daily Check-In. The sudden move to remote instruction is forcing companies in the space to think strategically about how they can effectively meet the surge in demand for online learning, Nordin explains. “Valuations are robust because performance is very strong. But there is an advantage to scale in the industry because distribution has historically been where the most friction is present. And so if you have an established brand, a trusted relationship with the school…the more that you have to offer and the better that it can be integrated to make a more seamless experience for the customer…the more value that you can add.” In other episodes of The Daily Check-In, [Sandra Lawson]( head of Sustain Strategy at Goldman Sachs Research, describes her team’s sector-level view of different ESG risks and opportunities, starting with the Food & Beverage and Alcohol & Tobacco sectors, and [Daniela Costa]( head of Goldman Sachs Research's European Capital Goods team, outlines long-term growth opportunities for European industrials. [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Daily%20Check-In%20With%20Goldman%20Sachs&body=https%3A%2F%2Fyoutu.be%2FtX7_QgFj4lM) Briefly...on Measuring 'Alternative' Sources of Returns In recent years, investors have broadened their search for potential returns by taking on non-traditional or “alternative” risks. Many of these alternative risk premia (ARP) have historically been implemented by hedge funds and other institutional investors that develop long-short strategies aimed at mitigating market volatility. We sat down with Goldman Sachs Asset Management’s Federico Gilly and Matthew Schwab to discuss the latest developments in this space. First of all, can you explain ARP strategies and why they’re gaining traction among investors? Federico Gilly: To understand ARP, it’s helpful to compare them to the now more-familiar “smart beta” strategies. With smart beta strategies, the basic aim is to outperform a traditional market-cap weighted stock index by selectively choosing and re-weighting stocks in the index according to one or more common investment themes. The academic research behind smart beta—a classification of investment strategy which has gained popularity over the last 20 years—suggests that certain traits or “factors” such as low volatility, value or momentum can outperform traditional market-cap weighted indexes. ARP strategies are developed from a similar vein of research by isolating common investment themes among alternative managers. However, these strategies go a step further by identifying potential returns across asset classes —such as equities, fixed income, currencies and commodities—and systematically applying the concept of factor investing to long-short portfolios, thus creating a new asset class of alternative investment capabilities. As a result, ARP strategies have attracted some $200 billion in assets over the last decade. What are the benefits of ARP to investors? Matthew Schwab: For many investors, the biggest risk in their portfolios is equity risk. Therefore, they are constantly looking to diversify this risk, as well as find additional potential sources of return, in order to reduce portfolio volatility. ARP strategies aim to deliver returns which are independent of the equity or bond markets to provide investors with another source of portfolio diversification. For example, an ARP strategy designed to capture the well-known low volatility premium (that less risky stocks tend to outperform riskier ones) would invest in low volatility stocks and hedge the overall market risk by taking short positions in either the overall market or in high volatility stocks. This removes the “beta” of the market itself so that investors are only exposed to the “pure” returns of low volatility stocks outperforming high volatility stocks. In addition, ARP strategies are designed to be more transparent, lower cost and more liquid than many traditional alternative investments, further enhancing their attractiveness in a diversified portfolio. Goldman Sachs Asset Management and Bloomberg [just announced]( the Bloomberg GSAM Risk Premia Indices, the first transparent, investable index family for ARP strategies.* What was the rationale for the move? Federico Gilly: The idea for the benchmark actually came from investors who have expressed frustration at the lack of a comprehensive benchmark to evaluate the performance of ARP products. Alternative risk premia indices in the marketplace today typically aggregate the returns of individual ARP managers or indices and, as a result, are more of a peer group than a true benchmark. These indices lack the level of transparency typically desirable in a benchmark to help investors more precisely understand the risk and return of the asset class. Unlike traditional equities, which went from indexing to smart beta, ARP jumped from idea to execution without the development of an index or benchmark. As a result, investors have struggled to properly benchmark ARP managers on their performance and analyze their strategies. Compounding matters is the fact that there is a great deal of variation in how ARP managers implement their strategies, resulting in wide dispersion of returns. We partnered with Bloomberg in an effort to design a suite of indices that could help address these challenges by providing a benchmark based on consensus definitions against which manager performance can be measured. By being transparent and replicable, these indices can be used both to understand performance as well as to provide low-cost beta to the asset class. *The indices are administered by Bloomberg's authorized index administrator, Bloomberg Index Services Limited (BISL). BISL is responsible for calculation, governance and licensing of these indices. [Read other Briefly Q&As]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Briefly...on%20Measuring%20'Alternative'%20Sources%20of%20Returns&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fbriefly%2Findex.html) Goldman Sachs Media Highlights Business Insider - September 15 [A majority of Goldman Sachs' summer interns prefer Instagram to TikTok, believe remote work hurts relationships, and think Biden will be elected president in November]( Bloomberg - September 15 [Goldman Names Kim Posnett Co-Head of Investment Banking Services]( CNBC - September 15 [Our economic forecast is ‘pretty optimistic’: Goldman Sachs chief US equity strategist]( (2:28) CNBC - September 14 [Goldman’s Heath Terry: Tech valuations aren’t particularly extreme]( (3:59) The Wall Street Journal - September 11 [Here are the top women in U.S. banking]( Euromoney - September 10 [World’s Best Investment Bank 2020: How the client got to the heart of Goldman Sachs]( [Subscribe]( [Unsubscribe]( The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. 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