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    Investing in a Floating NAV World

    Investing in a Floating NAV World

    Effective October 2016, institutional prime and municipal money market funds in the US will have a floating net asset value (NAV). While this does not impact most retail investors, US institutional investors may need to diversify to achieve stability, liquidity of their investment, or total return. This tool may help institutional investors understand how to invest for their immediate and short-term liquidity needs. It allows the investor to assess if risking stability is worth the reward of a potentially higher yield.

    Comparing Floating NAV and Stable NAV Investments

    Liquidity Calculator
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    Floating NAV Investment

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    Government Fund

    Prime Fund

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    Difference in Total Return:

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    Source: GSAM
    IMPORTANT: The projections or other information generated by Calculator: Comparing Stable NAV to Floating NAV Investments regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment returns and are not guarantees of future returns.

    DEFINITIONS

    Prime Money Market Funds invest primarily in short-term commercial paper and can invest in government notes. Starting in October 2016, institutional prime money market funds in the US will no longer be able to guarantee a $1 per share price. The value or NAV will float based on the current market price of their holdings. In addition, should liquidity levels fall below a stated threshold, they will incur fees on redemptions. Prime funds for individual investors in the US will maintain their stable NAV or fixed asset price, but they may incur redemption fees during periods of market volatility.
    Floating Net Asset Value: Due to SEC approved amendments to Rule 2a-7, Prime Funds will now be subject to a fluctuating NAV. This is calculated multiple times throughout the day and is based upon changes in the market value of the Institutional Funds' investments.
    Stable Net Asset Value is the dollar value of a mutual fund share based on the value of its underlying assets of the fund minus the liabilities, divided by the number of shares outstanding. This is calculated and priced once a day and pertains to Government Funds.
    Tax-free/exempt Municipal bonds are exempt from federal taxes and from most state and local taxes, especially if the investor lives in the state in which the bond has been issued.

    PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS WHICH MAY VARY. No assurance can be given that the investment returns may be achieved.
    Investment analysis tools are not intended to provide investment advice. This calculator provides analysis based on your input. All results are for illustrative purposes only and are not intended to represent the performance of any Goldman Sachs product and should not be construed as an offer or solicitation to buy or sell securities.

    Investment analysis tools have limitations; results may vary. An investment in money market funds is not appropriate for all investors. Investors should carefully review and consider their personal investments, risks, charges and expenses before investing.

    United States: 
    Government Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not a deposit of the bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
    Retail Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not a deposit of the bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
    Institutional Funds: You could lose money by investing in the Fund. Because the share price of the Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. The Fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the Fund's liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not a deposit of the bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
    Goldman Sachs & Co. LLC., member FINRA

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    Simulated performance results do not reflect actual trading and have inherent limitations. No representation is made that a client will achieve results similar to those shown. Simulated performance is hypothetical and may not take into account material economic and market factors, such as liquidity constraints, that would impact the client’s actual decision-making The results do not reflect fees, transaction costs, and other expenses a client would have to pay, which would reduce returns.

    All EMEA: In the United Kingdom, this material is a financial promotion and has been approved by Goldman Sachs Asset Management International, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority.
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    Australia: This material is distributed in Australia and New Zealand by Goldman Sachs Asset Management Australia Pty Ltd ABN 41 006 099 681, AFSL 228948 (’GSAMA’) and is intended for viewing only by wholesale clients in Australia for the purposes of section 761G of the Corporations Act 2001 (Cth) and to clients who either fall within any or all of the categories of investors set out in section 3(2) or sub-section 5(2CC) of the Securities Act 1978, fall within the definition of a wholesale client for the purposes of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSPA) and the Financial Advisers Act 2008 (FAA),and fall within the definition of a wholesale investor under one of clause 37, clause 39 or clause 40 of Schedule 1 of the Financial Markets Conduct Act 2013 (FMCA) of New Zealand (collectively, a “NZ Wholesale Investor”). GSAMA is not a registered financial service provider under the FSPA. GSAMA does not have a place of business in New Zealand. In New Zealand, this document, and any access to it, is intended only for a person who has first satisfied GSAMA that the person is a NZ Wholesale Investor. This document is intended for viewing only by the intended recipient. This document may not be reproduced or distributed to any person in whole or in part without the prior written consent of GSAMA. This information discusses general market activity, industry or sector trends, or other broad based economic, market or political conditions and should not be construed as research or investment advice. The material provided herein is for informational purposes only. This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation.

     

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