By clicking the "I Accept" button, you agree to abide by the terms and conditions listed below.

Select your country:

Menu Our services in the selected location:
  • No services available for your region.
Select Location:
Remember my selection
Your browser is out of date.

We have been made aware that there are external parties falsely claiming to carry out financial services on behalf of Goldman Sachs (including Goldman Sachs Asset Management International and Goldman Sachs International) in order to market fake investment products and to solicit monetary payments. These external parties may pose as Goldman Sachs through the use of fraudulent communications via email, instant messaging or phone, as well as through the use of fake brochures and other documents containing Goldman Sachs branding and logos.
The Financial Conduct Authority of UK has issued warnings about these fraudulent activities which can be found here and here.
It is important to know that any communication you receive from Goldman Sachs would only come from an @gs.com e-mail address and/or be found on the goldmansachs.com website. Further information regarding how you can protect yourself from fraudulent activity online and how you can contact us about this can be found on the Goldman Sachs Security page, available here.


Fundamental Equity


The equity market has pulled back in recent months, driven by fears around inflation, rising rates, and geopolitical uncertainty. In our view, this has created an attractive entry point for long-term investors in innovation equities. Moreover, the current environment may actually provide additional tailwinds to companies that have strong pricing power, offer innovative solutions and are on the right side of long-term secular growth trends, such as technological innovation, environmental sustainability, future health care, and the new-age consumer. One thing is for sure: uncertainty and volatility drive increased differentiation between stocks, making active management even more important.



Over the last few months, central banks’ hawkish shifts in policy in response to rising inflation have unsettled investors and triggered a broad-based repricing of equities. Innovation-oriented equities, which outperformed the broad equity market by 132% over the prior five years, have experienced the most severe sell-off, pulling back by 21%. One of the reasons innovation equities have corrected so severely is that they have the highest anticipated growth rates and derive the majority of their value from cash flows extending far into the future. As a result, they have the highest implied duration risk: they are the most sensitive to rising rate expectations. When the market anticipates higher rates, it applies a higher discount rate to those future cash flows, lowering their present value. Valuations of innovation equities have now fallen to below their long-term average, giving investors the opportunity to gain exposure to innovation at a much more reasonable price.


Exhibit 1: Innovation Equities Have Experienced the Sharpest Sell-Off Relative to the Broad Equity Market

Innovation Equities Chart

Source: Bloomberg as of 23-Dec-2021. All returns are net.   



Although the premium that investors are willing to pay for long-duration growth has moved lower, we have not seen a broad-based deterioration in fundamentals. In fact, we see examples of fundamentals remaining strong and, in many cases, improving. One concern of investors is that we may have seen 2022 spending pulled forward into 2021, and that we may now be heading into a period of deceleration. We believe this is a valid concern for some companies, where the acceleration in demand resulting from the pandemic may be unsustainable, but we remain confident in the sustainability of the demand outlook for the companies we own in our portfolios. In addition, we believe the current environment, characterized by high inflation and geopolitical uncertainty, is likely to provide an additional tailwind to innovation equities for the following reasons: 1) innovation helps to offset inflation 2) geopolitical uncertainty drives the push for energy and technology independence.


When inflation is high, businesses will seek to increase revenues and reduce expenses in order to offset rising input costs. As a result, companies that 1) have pricing power, enabling them to pass on higher input costs to consumers via higher prices, and 2) offer innovative solutions that help other businesses improve productivity and reduce costs, will be prized assets. With higher inflation, we expect to see rising demand for many of the innovative solutions in which we invest, including automation software solutions resulting in increased labor productivity and lower overall costs; and tech enabled healthcare that lowers costs and improves outcomes for patients.


In a world of increasing geopolitical tension, we expect the trend toward resource nationalism to accelerate as countries look to reduce their reliance on others and establish self-sufficiency, primarily in the form of technology and energy independence. Companies and governments now realize that relying on offshore technological production – such as semiconductor manufacturing – poses significant risks, as they navigate increasingly complex geopolitics, national security concerns, and the supply chain bottlenecks that have paralyzed multiple industries. Meanwhile, recent geopolitical events have drawn global attention to the risk of relying primarily on finite energy resources – namely, oil and gas – from a small subset of countries. To avoid the impact of potential supply disruptions and resulting price shocks, countries are moving to diversify and avoid depending on any single energy source. This push is fueled by regulatory tailwinds that favor the adoption of renewables, particularly in Europe but also increasingly around the world.



We believe the current environment heightens the need for active managers to: 1) be selective, using a disciplined, fundamental approach; and 2) build well-balanced portfolios aligned with durable, secular growth themes.  In our view, taking a disciplined, fundamental approach to stock selection is critical as not all companies – even those aligned with secular growth – are created equal. For example, businesses with robust balance sheets, high profit margins, strong free cash flow, and low leverage tend to be best positioned to withstand higher interest rates and rising cost pressures. One of the metrics we pay close attention to is a company’s gross margin. A higher gross margin provides a greater cushion to absorb inflation, and usually indicates strong pricing power and core unit profitability. It is also important to differentiate between companies that may be unprofitable now but are likely to become profitable in the future, and those that may never become profitable. 



Going forward, we believe innovation equities continue to be well-positioned to outperform, even in an inflationary, rising rate environment. Ultimately, we believe the long-term growth we are likely to see in these businesses will outweigh the current tension from higher rates and other short-term structural pressures. We foresee demand for the companies in which we are invested, which benefit from strong secular tailwinds – cybersecurity, sustainability, digital transformation, decarbonization, health care innovation, and tech-enabled consumption, to name a few – accelerating rather than slowing. That said, we believe active management is even more important in the current environment, as being selective at the company level and building well-balanced portfolios will likely be key to long-term success. Overall, we retain conviction in the multi-decade secular growth themes on which our portfolios are focused, continue to believe that companies on the right side of these themes may be well-positioned to outperform, and view the market pull-back as offering an attractive entry point for long-term investors.

Have a more detailed look at our Thematic Strategies

Related Resources

EU: This financial promotion is provided by Goldman Sachs Bank Europe SE


This material is a financial promotion disseminated by Goldman Sachs Bank Europe SE, including through its authorised branches ("GSBE"). GSBE is a credit institution incorporated in Germany and, within the Single Supervisory Mechanism established between those Member States of the European Union whose official currency is the Euro, subject to direct prudential supervision by the European Central Bank and in other respects supervised by German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufischt, BaFin) and Deutsche Bundesbank.


Outside EU: In the United Kingdom, this material is a financial promotion and has been approved by Goldman Sachs Asset Management International, which is authorized and regulated in the United Kingdom by the Financial Conduct Authority.


Switzerland: For Qualified Investor use only - Not for distribution to general public. This is marketing material. This document is provided to you by Goldman Sachs Bank AG, Zürich. Any future contractual relationships will be entered into with affiliates of Goldman Sachs Bank AG, which are domiciled outside of Switzerland. We would like to remind you that foreign (Non-Swiss) legal and regulatory systems may not provide the same level of protection in relation to client confidentiality and data protection as offered to you by Swiss law.




Prospective investors should inform themselves as to any applicable legal requirements and taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant.


This material is provided at your request for informational purposes only. It is not an offer or solicitation to buy or sell any securities.


The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk. Opinions expressed are current opinions as of the date appearing in this material only.


Please note that for the purposes of the European Sustainable Finance Disclosure Regulation (“SFDR”), the product is an Article 8 product that promotes environmental and social characteristics. Please note that this material includes certain information on Goldman Sachs’s sustainability practices and track record, at an organizational and investment team level, which may not necessarily be reflected in the portfolio. Please refer to the offering documents of any product(s) prior to investment, for details on how and the extent to which the product(s) takes ESG considerations into account on a binding or non-binding basis.


Views and opinions expressed are for informational purposes only and do not constitute a recommendation by GSAM to buy, sell, or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change, they should not be construed as investment advice.


References to indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only and do not imply that the portfolio will achieve similar results. The index composition may not reflect the manner in which a portfolio is constructed.  While an adviser seeks to design a portfolio which reflects appropriate risk and return features, portfolio characteristics may deviate from those of the benchmark.


This material contains information that discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions. It also pertains to past performance or is the basis for previously-made discretionary investment decisions.  This information should not be construed as a current recommendation, research or investment advice.  It should not be assumed that any investment decisions shown will prove to be profitable, or that any investment decisions made in the future will be profitable or will equal the performance of investments discussed herein.  Any mention of an investment decision is intended only to illustrate our investment approach and/or strategy, and is not indicative of the performance of our strategy as a whole.  Any such illustration is not necessarily representative of other investment decisions. 


This material has been prepared by GSAM and is not financial research nor a product of Goldman Sachs Global Investment Research. It was not prepared in compliance with applicable provisions of law designed to promote the independence of financial analysis and is not subject to a prohibition on trading following the distribution of financial research. The views and opinions expressed may differ from the views and opinions expressed by Goldman Sachs Global Investment Research or other departments or divisions of Goldman Sachs and its affiliates.  Investors are urged to consult with their financial advisors before buying or selling any securities. This information should not be relied upon in making an investment decision. GSAM has no obligation to provide any updates or changes.


Portfolio holdings and/or allocations shown above are as of the date indicated and may not be representative of future investments.  The holdings and/or allocations shown may not represent all of the portfolio's investments. Future investments may or may not be profitable.


Environmental, Social, and Governance (“ESG”) strategies may take risks or eliminate exposures found in other strategies or broad market benchmarks that may cause performance to diverge from the performance of these other strategies or market benchmarks. ESG strategies will be subject to the risks associated with their underlying investments’ asset classes. Further, the demand within certain markets or sectors that an ESG strategy targets may not develop as forecasted or may develop more slowly than anticipated.


Economic and market forecasts presented herein reflect a series of assumptions and judgments as of the date of this presentation and are subject to change without notice.  These forecasts do not take into account the specific investment objectives, restrictions, tax and financial situation or other needs of any specific client.  Actual data will vary and may not be reflected here.  These forecasts are subject to high levels of uncertainty that may affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes.  These forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Goldman Sachs has no obligation to provide updates or changes to these forecasts. Case studies and examples are for illustrative purposes only.


Foreign securities may be more volatile than investments in U.S. securities and will be subject to a number of additional risks, including but not limited to currency fluctuations and political developments.


Index Benchmarks

Indices are unmanaged. The figures for the index reflect the reinvestment of all income or dividends, as applicable, but do not reflect the deduction of any fees or expenses which would reduce returns. Investors cannot invest directly in indices.

The indices referenced herein have been selected because they are well known, easily recognized by investors, and reflect those indices that the Investment Manager believes, in part based on industry practice, provide a suitable benchmark against which to evaluate the investment or broader market described herein.  The exclusion of “failed” or closed hedge funds may mean that each index overstates the performance of hedge funds generally.


Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.


Emerging markets securities may be less liquid and more volatile and are subject to a number of additional risks, including but not limited to currency fluctuations and political instability.


Documents providing further detailed information about the fund/s, including the articles of association, prospectus, supplement and key investor information document (KIID), annual/semi-annual report (as applicable), and a summary of your investor rights, are available free of charge in English language and as required, in your local language by navigating to your local language landing page via https://www.gsam.com/content/gsam/ain/en/advisors/literature-and-forms/literature.html and also from the fund’s paying and information agents. If GSAMFSL, the management company, decides to terminate its arrangement for marketing the fund/s in any EEA country where it is registered for sale, it will do so in accordance with the relevant UCITS rules.


Offering Documents

This material is provided at your request for informational purposes only and does not constitute a solicitation in any jurisdiction in which such a solicitation is unlawful or to any person to whom it is unlawful. It only contains selected information with regards to the fund and does not constitute an offer to buy shares in the fund. Prior to an investment, prospective investors should carefully read the latest Key Investor Information Document (KIID) as well as the offering documentation, including but not limited to the fund’s prospectus which contains inter alia a comprehensive disclosure of applicable risks. The relevant articles of association, prospectus, supplement, KIID and latest annual/semi-annual report are available free of charge from the fund’s paying and information agent and/or from your financial adviser.


Distribution of Shares

Shares of the fund may not be registered for public distribution in a number of jurisdictions (including but not limited to any Latin American, African or Asian countries). Therefore, the shares of the fund must not be marketed or offered in or to residents of any such jurisdictions unless such marketing or offering is made in compliance with applicable exemptions for the private placement of collective investment schemes and other applicable jurisdictional rules and regulations.


Investment Advice and Potential Loss

Financial advisers generally suggest a diversified portfolio of investments. The fund described herein does not represent a diversified investment by itself. This material must not be construed as investment or tax advice. Prospective investors should consult their financial and tax adviser before investing in order to determine whether an investment would be suitable for them.

An investor should only invest if he/she has the necessary financial resources to bear a complete loss of this investment.


Swing Pricing

Please note that the fund operates a swing pricing policy. Investors should be aware that from time to time this may result in the fund performing differently compared to the reference benchmark based solely on the effect of swing pricing rather than price developments of underlying instruments.



No part of this material may, without GSAM’s prior written consent, be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorized agent of the recipient.

Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources. 



Please enter your email address to continue reading.

Confirm Your Access

An email has been sent to you to verify ownership of your email address.

Please verify the link in the email by clicking the confirmation button. Once completed, you will gain instant access to our insights.

If you did not receive the email from us please check your spam folder or try again.