Goldman Sachs Wins $43.4 Billion UPS Deal

The UPS employees will work out of Goldman’s Atlanta office, which is where the investment team, led by CIO Ernie Caballero, is located.


In a massive win for its outsourced chief investment officer unit, Goldman Sachs is lifting out UPS’s $43.4 billion pension portfolio — and the team that manages it.

On Thursday the asset management giant announced that it will now manage UPS’s North American defined benefit plan. Goldman is bringing in UPS Trust’s employees, who will help facilitate the integration of the plan assets.

“That is going to add to the stability and continuity throughout the transition and beyond,” said Tim Braude, co-head of multiasset solutions at Goldman by phone. “In our view it makes that transition much more seamless and that should result in a very smooth process.”

The UPS employees will work out of Goldman’s Atlanta office, which is where the investment team, led by CIO Ernie Caballero, has been located for years. Goldman’s office will have approximately 200 employees in total once the UPS team transition takes place during the third quarter.

Transitioning the portfolio, too, will take time. According to Braude, though, Goldman will focus primarily on refinement, rather than retooling.

“The great news is that when we take a look at this portfolio, it’s structured in a way that’s very similar to how we would ultimately create a solution for a client like this,” he said. “Obviously we have in our view a world class liability-driven investment platform that has been well resourced over the last decade. Our intention would be to utilize that part of our platform to really refine the risk capabilities for the plan and the participants.”


Like many of its defined benefit peers, much of UPS’s portfolio is allocated to fixed income ($25.7 billion) and public equities ($10.2 billion), its December 31, 2023 SEC filings show. The portfolio also has a sizable tilt toward derivatives and other risk management instruments (nearly $6 billion, funded with leverage) and alternative assets, including private equity, private credit, hedge funds, and real estate (about $9.9 billion). The plan has been closed to new participants for several years now, the documents showed.

“Defined benefit plans are not running for total return, they’re running for liability matching,” said Brad Alford, founder of OCIO search firm Alpha Capital Management. “They want more fixed income, less volatility. Outsourcing cuts a layer of fees.”

The deal comes less than a year after Goldman took on a $28.8 billion OCIO mandate, taking on oversight of aerospace company BAE Systems’ assets. And in the U.S., it comes shortly after another storied defined benefit plan — Eastman Kodak — was outsourced to NEPC.

“This is an amazing win for Goldman, hats off to them,” Alford said. “The big money managers — Goldman, BlackRock, and JPMorgan — have become a force in DB pension funds.”

According to Goldman, the mandate win follows a competitive search process led by a third-party consultant. Goldman is now the largest OCIO manager in the U.S., overseeing $325 billion in OCIO assets globally.

UPS’s portfolio, for its part, has been a high-profile part of the defined benefit plan universe in the U.S. Under longtime CIO Brian Pellegrino, who is now the CIO at the Georgia Tech Foundation, the plan inked high returns as he added complexity to the portfolio’s management style. Caballero, who had been with UPS for years, took over as CIO when Pellegrino departed in 2018.