As disclosed in the Prospectus, GSAM offers three distinct types of currency hedged share classes which are further detailed below:
1. The main type of currency hedged share classes are those that seek to hedge the currency exposures of the Portfolio to the relevant share class currency and such classes are designed for investors who want to gain exposure to assets denominated in foreign currencies, without the associated currency risk.
Such share classes, using a EUR denominated class as an example, would be denoted: “(EUR-Hedged)”.
Investors should however be aware that for certain Portfolios, including for instance our regional or global equity portfolios, rather than seeking to fully hedge all portfolio currency exposures, the Investment Manager will seek to minimise transaction costs by hedging only the predominant currency exposures of the Portfolio to the relevant share class currency, and therefore there may be residual currency exposures that remain unhedged. For example, a (EUR-hedged) share class offered on our GS Global Equity Partners Portfolio would seek to hedge only USD, GBP and CHF exposures, which when combined with EUR exposures typically represents 90% of the Portfolio.
2. For certain Portfolios, GSAM offers share classes which seek to partially hedge the currency exposures of the Portfolio to the relevant share class currency. Such classes are offered where the Investment Manager wishes to retain the currency exposures associated with certain asset classes (e.g. global equity portion of a Flexible Portfolio) or certain countries (e.g. emerging market countries) and as such these classes are designed only to hedge a certain proportion of the currency exposures of the Portfolio.
It is important to note that these share classes will still retain a level of currency exposure, which could be significant, and therefore such share classes should not be considered fully hedged to the relevant share class currency.
To ensure that this is clear to investors, such share classes, using a EUR denominated share class as an example, would be denoted as “(EUR-Partially Hedged)”
3. In addition to the above, GSAM may also offer share classes which seek to minimise the currency exposure between the Base currency of the Portfolio and the currency of the share class. Any underlying currency exposure in the Portfolio will remain unhedged. However it is important to note that that in this case, investors will still be exposed to the FX movements between the currency exposures of the Portfolio currencies and its base currency, and therefore investors may not regard this as currency hedged. The return of these share classes would be consistent with the return of share classes in the Base currency of the Portfolio.
To ensure this is clear to investors we include a description of the resulting currency exposures in the share class name.
Example:
• Portfolio: Goldman Sachs Emerging Markets Equity Portfolio
• Portfolio Base currency: USD
• Underlying currency exposure: Emerging Markets currencies.
• Share Class currency: EUR
• Share class name: (EUR) (Long Emerging Markets Ccy vs. USD).
Investor outcome: Investors will be exposed to the movement of the underlying Portfolio currencies (Emerging Market currencies) relative to Portfolio base currency (USD) rather than being exposed to the underlying portfolio currencies (Emerging Market currencies) relative to the share class currency (EUR).