Goldman Sachs launches long/short SMA push for RIAs

Goldman Sachs is adding a long/short fund offering for RIAs, with a proprietary separately managed account strategy, according to RIABiz. The move follows similar launches by Charles Schwab and Fidelity.

The Goldman Sachs Asset Management strategy combines tax-aware features, including in-house direct indexing, with long/short hedge fund solutions, per Brent Sullivan, editor of the Tax Alpha Insider newsletter. Jeremy Eisenstein, managing director and head of Goldman Sachs Custody Solutions, said in an email that the firm is using its platform to support independent advisors, as it has for institutional clients.

The strategy adds risk, according to Greg O'Gara, a strategic wealth management advisor. Goldman is assuming short-book and performance risk at the manager level, plus capital and regulatory overhead. "Those are fundamentally different commitments than acting as custodian and lender," he told RIABiz.

The launch intensifies competition for the alternatives shelf space on RIA platforms. Schwab and Fidelity already offer long/short funds; Goldman differentiates with a tax-aware SMA wrapper that could capture more fee revenue than traditional custody.

But the tax engineering faces scrutiny. Nate Koppikar, cofounder of short-biased hedge fund Orso Partners, told Institutional Investor in June that long/short SMAs are a "ticking timebomb" because they can fully offset capital gains tax over time and pass appreciated assets to heirs with a stepped-up basis. RIABiz cites his view that the model is unsustainable.

This is a natural move for Goldman, which has the trading and financing infrastructure to run long/short books. The tax-aware overlay—direct indexing combined with a hedge fund sleeve—is a legitimate product innovation, not just a me-too launch. For RIAs, it means a single provider can handle custody, trading and the strategy.

The risk is that Goldman becomes the manager of record, not just the custodian. Short-book risk and performance risk are now on its balance sheet. Advisors should weigh whether the tax benefits survive IRS scrutiny; Koppikar's critique suggests regulators could target these structures. Competition is good, but diligence matters.

Custodians and asset managers are likely to add more tax-aware alternatives wrappers. Advisors should watch for regulatory commentary on long/short SMA tax loss harvesting.