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Monday, September 10, 2007|
Goldman Sachs Saves the Date with New Mutual Funds
Continuing the trend towards target-date retirement funds, Goldman Sachs Asset Management has thrown six new target-date mutual funds in the ring. The biggest challenge that GSAM will face is getting the funds onto the platforms of 401(k) recordkeepers.
Goldman Sachs Asset Management (GSAM) announces the introduction of the Goldman Sachs Retirement Strategies Portfolios, a group of six target date mutual funds that will invest in varying combinations of up to 15 underlying Goldman Sachs equity, fixed income and money market funds to provide a convenient way to diversify, simplify and manage the retirement needs of individual investors. Separately, under a different name, GSAM is also launching other pooled investments targeted at institutional investors which contain a combination of alpha, exotic beta and beta return sources.
“The Goldman Sachs Retirement Strategies Portfolios bring GSAM’s best thinking in portfolio construction for retirement portfolios to individual investors or Defined Contribution Plan participants, who now have access to the same investment strategies that GSAM provides to institutional pension clients,” said Doug Manchester, Managing Director and Head of Retirement Services. These Portfolios, which will primarily be sold through retirement plans, enable investors to take advantage of GSAM’s quantitative asset allocation models. The Retirement Strategies Portfolios offer comprehensive exposure to both core and satellite asset classes, with more satellite investment choices than other target date offerings. By offering greater exposure to satellite asset classes such as international real estate, emerging markets and commodities, the Portfolios seek to provide greater diversification and higher risk-adjusted returns. “By adding more exotic, less-correlated asset classes, the Goldman Sachs Retirement Strategies Portfolios add diversified alpha sources and improved portfolio efficiency,” says Katinka Domotorffy, Managing Director and Senior Portfolio Manager for GSAM’s Quantitative Strategies Group, a 60-member team that manages GSAM’s lifecycle and lifestyle funds. Goldman Sachs’ lifestyle funds, the Asset Allocation Portfolios, were launched in January 1998.
GSAM’s Quantitative Strategies’ investment process features a unique approach to global tactical asset allocation, which goes beyond the strategic allocation and/or security selection processes followed by many other lifecycle funds. GSAM’s process seeks to add value over time by overweighting and underweighting broad asset classes based on the firm’s current global market outlook on stock, bond and currency markets. Assets are shifted on a quarterly basis in order to benefit from changing conditions in global capital markets. “Long-term strategic asset allocations are the primary source of risk and typically the primary determinant of total returns, and they represent an anchor or neutral starting point from which GSAM’s asset allocation decisions are made,” commented Ms. Domotorffy. “Our Quantitative Strategies Team provides the deep portfolio management skills that are necessary to execute these strategies effectively.”
The Goldman Sachs Retirement Strategies Portfolios are tied to target dates 2010, 2015, 2020, 2030, 2040 and 2050. Initial portfolio asset allocations range from 58% equity/42% fixed income for the 2010 Portfolio, to 90% equity/10% fixed income for the 2050 Portfolio. Strategic allocations to the underlying asset classes will be set annually and tactical rebalances will be made quarterly. The objective of each Portfolio is long-term capital appreciation and income consistent with its current asset allocation. Over time, exposure to underlying equity funds will decrease in favor of increasing allocation to what are expected to be less volatile fixed-income funds. An investor may choose to invest in one or more of the Portfolios based upon individual investment goals, risk tolerance, financial circumstance and planned retirement year. The benchmarks for the Retirement Strategies Portfolios are combinations of the S&P 500, MSCI EAFE (net of withholding), and Lehman Aggregate Bond Indices.
The Goldman Sachs Retirement Strategies Portfolios are available in A and C share classes. Each requires a minimum investment of $1,000.
Goldman Sachs Funds, the mutual fund family of Goldman Sachs Asset Management (GSAM), offers individual and institutional investors a wide range of long-term investment choices among 63 equity, fixed income and hybrid funds. The Family's line of global products, created by 10 independent and distinct GSAM portfolio teams and supported by over 280 GSAM research professionals around the world, provides both core and satellite investments across asset classes, investment styles, investment approaches and geographical regions.
Goldman Sachs Asset Management is the asset management arm of The Goldman Sachs Group, Inc. (NYSE: GS), which manages more than $700 billion as of June 30, 2007. Goldman Sachs Asset Management has been providing discretionary investment advisory services since 1989 and has investment professionals in all major financial centers around the world. The company offers investment strategies across a broad range of asset classes to institutional and individual clients globally. Founded in 1869, Goldman Sachs is a leading global investment banking, securities and investment management firm.
To learn more about Goldman Sachs Funds, visit www.goldmansachs.com
The Retirement Strategy 2010 Portfolio, Retirement Strategy 2015 Portfolio, Retirement Strategy 2020 Portfolio, Retirement Strategy 2030 Portfolio, Retirement Strategy 2040 Portfolio and Retirement Strategy 2050 Portfolio are expected to invest all of its assets in a combination of affiliated underlying equity and fixed income funds. Because the Portfolio is subject to the underlying fund expenses as well as its own expenses, the cost of this type of investment may be higher than a mutual fund that only invests in stocks and bonds.
The risk factors to which the Portfolios are subject are proportionate to the amount of assets it allocates to each underlying fund. As each Portfolio is further away from its target date, the Portfolio will have a higher allocation to equity investments and will therefore have greater risk exposure to those risks associated with equity investments. As each Portfolio approaches its target date, its asset allocation will shift so that it invests a greater percentage of its assets in underlying fixed income funds. The Portfolio will then be more susceptible to the risks associated with fixed income investments.
Some of the risk factors associated with many of the underlying equity funds include the volatility of US and non-US equity investments (including REITs); the illiquidity associated with investments in small-capitalization companies; and the political, economic and currency risks of non-US securities, which are particularly significant with respect to equities of issuers located in emerging markets. Some of the risk factors associated with many of the underlying fixed income funds include prepayment, credit and interest rate risk; the price fluctuations of U.S. government securities in response to changes in interest rates and inflation; the credit risk and volatility of high-yield bonds; the volatility of investments in commodities; the political, economic and currency risks of non-US securities, which are particularly significant with respect to issuers located in emerging markets; and financial risks associated with derivative investments.
The S&P 500 Index is the Standard & Poor's 500 Composite Index of 500 stocks, an unmanaged index of common stock prices. The unmanaged MSCI EAFE Index (unhedged) is a market capitalization-weighted composite of securities in 21 developed markets. The Lehman Brothers Aggregate Bond Index represents an unmanaged diversified portfolio of fixed-income securities, including U.S. Treasuries, investment-grade corporate bonds, and mortgage-backed and asset-backed securities. The Index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an unmanaged index.
Goldman, Sachs & Co., distributor of the Funds, is not a bank, and Fund shares distributed by Goldman, Sachs & Co. are neither deposits nor obligations of, nor endorsed, nor guaranteed by any bank or other insured depository institution, nor are they insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in the Funds involves risks, including possible loss of the principal amount invested.
Copyright 2007 Goldman, Sachs & Co. All Rights Reserved. Date of First Use: 9/10/07 07-1859
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