NEW YORK – The European sovereign debt crisis and the tilt of global growth toward Asia and Latin America are blurring the traditional line between emerging and developed economies. Investors are reconsidering traditional global government bond portfolios to include more exposure to emerging market bonds.
To address this trend, Goldman Sachs Asset Management (GSAM) announced the launch of the Goldman Sachs World Bond Fund (Class A Share: [GWRAX]) (the “Fund”)—a core bond strategy that invests in fixed income securities and currencies across the developed and emerging markets. The Fund seeks to capture the importance of debt sustainability dynamics for government bond market returns, while attempting to generate higher yield and lower volatility compared to traditional funds.
“Interest rates in developed countries are being held down by central banks in an attempt to generate economic growth. This has led to negative real yields in developed government bond markets and increased risk of currency depreciation. Recent events have also exposed weaknesses in developed markets. These developments are driving investor appetite for core fixed income products that offer global exposure and combine higher yield and currency appreciation with lower volatility,” said Jonathan Beinner, co-head of GSAM Global Fixed Income and Liquidity Management and Chief Investment Officer.
In addition to providing exposure to a broader set of bonds, the Fund also offers an innovation in benchmarking. The Fund is benchmarked to the recently launched Barclays Global Sovereign Fiscal Strength Index (the “Index”), that incorporates elements of the Barclays GDP and Fiscal Strength indices and combines them with a GSAM-developed methodology that favors countries with strong fundamentals over those under some form of fiscal stress.
“By benchmarking the Goldman Sachs World Bond Fund to a GDP-weighted index that incorporates a debt sustainability adjustment, we are seeking the best fixed income investment opportunities resulting from this global structural shift,” said Michael Goosay, Managing Director, GSAM US Fixed Income Team.
The Fund continues GSAM’s innovation in the alternative benchmarking space. The Fund allocates primarily to global sovereign bonds and sovereign-related debt. Its currency exposure is unhedged. It is offered in Class A and Class C Shares, both with $1,000 minimum initial investments. The Fund also offers Institutional, Class R and Class IR Shares.
Goldman Sachs Asset Management is the asset management arm of The Goldman Sachs Group, Inc. (NYSE: GS), which manages $854 billion as of December 31, 2012. Goldman Sachs Asset Management has been providing discretionary investment advisory services since 1988 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 that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.
