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Goldmans prepares for rate rises with flexible income fund launch
by Robert St George on Apr 03, 2014 at 08:53
Goldman Sachs Asset Management has launched a multi-asset income fund that offers flexibility in preparation for interest rate rises.
The Global Income Builder Portfolio will invest in global bonds and equities, seeking to generate income and capital appreciation with less volatility than traditional equity markets, and the strategy will focus on higher yielding securities.
The fund’s reference benchmark is a composite index, with 60% from the Barclays Capital US High Yield index and 40% from the MSCI World index.
Its baseline allocation will therefore be 60% to fixed income and 40% to equities, but it will retain the flexibility to tilt opportunistically above or below that split toward either asset class.
As well as traditional equities and bonds, the fund will employ ‘non-traditional sources of income’, such as preferred stocks, bank loans, energy infrastructure shares, and business development companies (BDCs) – a type of US entity that invests in small and mid caps. The Wells Fargo BDC index, for example, yielded 8.2% at the end of February.
The fund will be managed by an investment committee drawing on Goldman Sachs’ global fixed income and fundamental equity teams, who together are responsible for more than £240 billion.
'The team also has the ability to actively manage its interest rate risk which we believe is a key feature given the outlook for rates,' commented Nick Phillips, head of third-party distribution for Europe, the Middle East and Africa at Goldman Sachs Asset Management.
The fund will have a base management fee of 1.25%, with a minimum investment of $5,000 (£3,000). It will be available in share classes that distribute dividends and interest income monthly.
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