The Goldman Sachs Group Inc. (NYSE: GS) is one of the world’s largest investment banks. One of its divisions, Goldman Sachs Asset Management, manages funds for both individuals and institutions with over $1 trillion of assets under management (AUM). Among Goldman Sachs Asset Management’s product offerings are 79 mutual funds that offer Class A shares. Five of these funds fit perfectly with a conservative plan to diversify retirement savings investable assets. All returns are based on net asset value (NAV).
The first three funds provide strong diversification to a retirement savings portfolio. There will be taxable income due to the yields being paid out and the portfolio turnover to take advantage of shifting market conditions. Tax consequences can be delayed or avoided by using an IRA or Roth IRA to shield income. Investors looking for less-taxable income or greater portfolio growth should consider adding the Large Cap Growth Insights Fund and the Flexible Cap Growth Fund to their portfolios.
GS Income Builder Fund (GSBFX)
The Income Builder Fund seeks to provide investors with monthly income through a diversified portfolio of stocks, bonds and other income-producing securities. The income objective is balanced with a secondary focus on capital appreciation designed to increase the total return and to maintain investors' purchasing power. The fund has a current yield of 3.75%.
The Income Builder Fund’s assets are mainly invested in securities of large-cap U.S. companies. However, it may invest globally across multiple asset classes as opportunities present themselves. The portfolio is actively managed to reduce interest rate risk exposure and to be positioned to take advantage of rising interest rates. The fund’s overall strategies serve to reduce volatility of NAV, and the fund has been meeting its objective with annualized total returns of 7.82% over five years, 5.85% over 10 years and 6.8% since inception in 1994.
GS Growth and Income Fund (GSIIX)
The Growth and Income Fund shifts the diversification focus away from fixed income to a portfolio of large-cap and mid-cap dividend-paying stocks. The fund's researchers look for value-priced companies with balance sheets that show an ability to sustain and increase dividends.
The shift away from fixed-income securities means a dip in yield to 1.78% accompanied by an increase in annualized total return to 14.33% over five years and 11.7% over 10 years.
GS Real Estate Securities Fund (GIRIX)
Real estate has been a traditional means of steadily increasing asset values and income. The problem with real estate is that active management requires an expenditure of time and effort that is not attractive to many investors. The Real Estate Securities Fund enables investors to receive the benefit of real estate ownership passively through a diversified portfolio of publicly traded securities.
The fund invests in 25 to 45 different securities across multiple sectors of the real estate market, including office buildings, multi-family housing, hotels and retail, creating a diversified portfolio with a current yield of 1.13%. Long-term appreciation has been good, with a five-year annualized total return of 12.34%. The 10-year return is thrown off by the boom and bust associated with the financial crisis, which caused the first four years to have a zero return. The annualized total return since inception is a better number at 9.88%.
GS Large Cap Growth Insights Fund (GLCGX)
The Large Cap Growth Insights Fund uses an investment approach that looks at momentum, valuation and profitability to evaluate stocks in the Russell 1000 Index that fund managers feel have the best chance for long-term steady growth. An additional objective is to minimize the drag transaction costs and expenses have on returns. The fund's annualized total return over the last five years is 16.24%.
GS Flexible Cap Growth Fund (GCLLX)
The Flexible Cap Growth Fund adds diversification from small, middle and large capitalization companies. The fund looks to find companies in the early stages of growth and to hold onto the investment as those companies grow. This approach has resulted in a five-year annualized total return of 12.7%.