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November 10, 2022  |  18 Minute Read

James Ashley

International Head of Strategic Advisory Solutions

James Ashley

Simona Gambarini

Senior Market Strategist, Strategic Advisory Solutions

Simona Gambarini

Key Takeaways

  • Monetary policy frameworks have evolved over time as central banks have long looked for effective ways to stabilize the economy. While inflation is the dominant economic variable that central banks have chosen to target, there is nothing sacrosanct about the current 2% inflation goal.
  • There are reasons to believe that higher inflation is neither transitory nor persistent but rather structural, driven by forces such as ageing demographics, deglobalization and decarbonization. As a result, policymakers may need to revisit the appropriateness of 2% inflation targets.
  • An increase in the inflation target to 3% may lengthen the runway of economic expansions and therefore may be supportive of risk assets. If such a shift were to occur, we would see value in building portfolios with potentially less traditional fixed income in favor of equity and equity-like investments such as real estate and infrastructure.



Inflation is back, and in a big way. While the years following the global financial crisis were characterized by central banks persistently undershooting their inflation targets despite a range of measures designed to engineer a return to 2%, the immediate aftermath of the latest crisis (COVID-19) brought resurgent inflationary pressures that central banks are now strenuously rushing to tame. Much has been written about the current dynamics of inflation—supply vs demand, transitory vs persistent, cyclical vs structural—and we don’t need to revisit those arguments here. There is, however, nothing sacred about 2% inflation targeting and we can consider whether it’s still the appropriate lodestar for monetary policy.



There’s Nothing Sacred about a 2% Inflation Target

Inflation targeting frameworks were widely adopted beginning in the late-1990s. Prior to that, central banks had pursued an array of variables in their quest to stabilize the economy, including FX targets and money supply targets. Furthermore, inflation is not the sole economic variable worthy of central bank attention: the US Federal Reserve (Fed), for example, operates a dual mandate whereby inflation and maximum employment co-exist as twin objectives. Ultimately, inflation has not been—and still is not—the single, universally agreed upon ‘right’ thing for central banks to target. What’s more, inflation targeting frameworks around the world vary, and while they tend to have coalesced around some form of a 2% objective for most developed markets, it is not set in stone. Central banks aim for a low positive inflation number on the basis that a strict interpretation of price stability would create at least two fundamental challenges. First, any deviation to the downside of such a target would tip the economy into deflation, with a 0% inflation target providing no room for undershooting error without potentially large negative consequences. Second, there are numerous problems in measuring inflation accurately. For example, the Boskin Commission of 1996 famously concluded that the US Consumer Price Index (CPI) overstated inflation by over 1%.1 If so, a ”true” 1% inflation target would require a targeted rate of roughly 2%.


Time for a Change?

These considerations help explain why a central bank choosing to adopt an inflation target might set it at 2%. But it wouldn’t have to. If the bias in inflation measurement has changed in size (or even sign) over the past 25 years, then a different target variable level may optimize economic outcomes. Similarly, given the profound economic and financial changes over the past 25 years since 2% inflation targets were popularized, the structural inflationary impulses may lead to different conclusions as to what is the appropriate nominal anchor for the economy. Productivity shifts, globalized supply chains, a different institutional landscape, and—perhaps most important of all—the substantially different demographic outlook for many developed markets over the next 25 years all suggest that revisiting the appropriateness of 2% may be warranted in the years ahead. 


That said, there are numerous and significant challenges in doing so. First, to float the possibility of a higher inflation target just when inflation is egregiously above target might be seen as “shifting the goalposts”—an admission by policymakers that bringing inflation down to 2% is just too hard. In that case, there could be significant damage to policymakers’ credibility. Second, both the Fed and the European Central Bank (ECB) recently adjusted their inflation regimes, and to make changes on a regular basis could be seen as detrimental to stability and predictability—the very things that inflation targeting is supposed to engender. Third, for many central banks, the decision on their remit is inherently political; the specified target is not freely determined by monetary policymakers themselves, but by democratically elected politicians. Any change in mandate is therefore not a purely technocratic one, and it may be that these questions will lie dormant for some time before being considered in earnest.


What if 3% Became the New 2%?

Regardless of whether or not there should be a change in the inflation target, it would be interesting to explore how financial markets might react if there were a change to, say, a 3% target. Specifically, our intention is not to consider the immediate reaction to any such announcement (which would depend on whether or not it had been anticipated) nor the behavior of financial assets during any transition phase, but what it might mean for long-term risk and returns assumptions in a steady-state equilibrium, and for allocations within a well-diversified multi-asset portfolio.


Rates: Steeper curves, higher yields, and tighter euro-zone spreads

Perhaps the most obvious impact would be on interest rates: yield curves would likely steepen, but in the long run it would probably lead to a higher nominal rate structure across the entire curve (Exhibit 1). Higher yields would be mostly breakeven-led, in our view. This would reflect both higher average expected inflation over the long run and a higher inflation risk premium. 


Of course, the forcefulness of these rate market dynamics would depend on the credibility of such a change. This would in turn be contingent on several factors: the initial conditions on announcement, the economy’s own inflation history, the level of real neutral interest rates, and the fiscal imperative for higher inflation. The political credibility of raising the target would also matter. Inflation is more politically palatable where the population is younger and indebted than where it is older and asset-rich given the distributional impact of inflation. It’s hard to know which way these various factors would cut for different economies as the politics of inflation is very complex. Our assessment is that such a change would be much more credible for the US and the UK than for the euro area or Japan. That said, if the ECB were ever successful in implementing such a change, we suspect that higher inflation targets would be a tightener for euro area sovereign spreads and for swap spreads because it would likely improve public debt dynamics and inflate away part of the debt stock.


Equities: Higher inflation and stronger economic growth—a boon for risk assets?

An increase in central bank inflation targets would generally be favorable for risk assets, as such a move would likely be pro-cyclical in nature. A study by the Peterson Institute for International Economics in 20192 demonstrated that raising the inflation target not only increases the scope to cut the policy interest rate in any future economic downturn, but also raises the scope to lower long-term yields with forward guidance and quantitative easing. In other words, it would give central banks more ammunition to deal with any recessionary situation and, thus, would reduce the frequency of hitting the effective lower bound. Given the traditionally inverse relationship between inflation and unemployment (the so-called short-run Phillips curve), a higher inflation target might also lead to a lower unemployment rate and therefore boost nominal economic growth. Exhibit 1 illustrates the potential effect of a higher inflation target on the yield curve for the US: raising the US inflation target by 1% would give the Fed significantly more ammunition to fight a recession.



Exhibit 1: US Government Bond Yields



Source: Peterson Institute for International Economics. December 2019.



Equity Sectors: REITS and financials may likely be beneficiaries, but innovation would be the differentiating factor

While equities have historically tended to beat inflation over the long term (Exhibit 2 shows that since the 1950s, equities have always outperformed inflation over an investment horizon of at least 19 years), in the shorter term inflation can have mixed implications for equity performance. On the one hand, inflation is typically positive for earnings3 as the boost to nominal sales growth through rising prices usually more than offsets inflation-driven margin compression. Of course, this only holds true for a certain absolute level of inflation, above which demand destruction might take hold in earnest. On the other hand, inflation can become a headwind to equity valuations if it leads to expectations of monetary tightening and higher real interest rates.



Exhibit 2: Percent of Time an Asset Class Outperforms Inflation over a Given Time Horizon (since 1953)


Source: Bloomberg, Morningstar, Shiller, and Goldman Sachs Asset Management. The analysis period is from January 1953 to December 2021. Monthly real total returns. “Commodities” refers to Bloomberg Commodities Total Return Index since February 1960 and St Louis Fed's Commodity Spot Market Price Index from January 1953 to February 1960. “Cash” refers to Ibbotson Associates SBBI US 30 Day Tbill Index, “Residential RE” refers to Shiller’s Residential House Prices, “Intermediate Govt” refers to Ibbotson Associates SBBI US IT Govt Index, “LT Govt” refers to Ibbotson Associates SBBI US LT Govt Index, “LT Corp” refers to Ibbotson Associates SBBI US LT Corp Index, and “Equities” refers to S&P 500 Composite. Past performance does not guarantee future results, which may vary.



However, we suspect that a 3% inflation target would still be sufficiently moderate to avoid major concerns about demand destruction. Meanwhile, monetary policy would likely be more supportive, all else being equal. Indeed, central banks would be able to cut rates more aggressively in an economic downturn, thereby accelerating the recovery and providing a policy tailwind to equities. Of course, not all segments of the market would be equally impacted by such a change. Companies with long-term fixed rate liabilities, including REITS, and with revenues tied to interest rates and the steepness of the yield curve, such as financials, would probably be the largest beneficiaries. Companies with strong pricing power should also perform well in this environment as they would be able to pass on higher input costs and wages to the end consumer without it weighing significantly on their margins. 


Similarly, companies that offer innovative solutions that help other businesses improve productivity and reduce costs may be prized assets. First, demand is often less discretionary for innovation than it is for traditional goods and services and, therefore, relatively more inelastic. For example, if a patient needs a medical procedure or if a company needs to upgrade its cybersecurity systems, demand is unlikely to be dampened by a slightly higher-than-usual increase in prices. Furthermore, having innovative, best-in-class products can help companies justify higher prices and establish pricing power. Finally, inflation often drives businesses to invest in innovative solutions as they look for ways to reduce costs and improve efficiency. Over the long term, innovation is a deflationary force so if inflation settled at an elevated level going forward, companies would have more incentive to increase, rather than decrease, their spending on technology.


Credit: Tighter spreads overall, but a somewhat mixed picture across sectors and countries

A higher inflation target of 3% in major developed economies would be largely positive for credit, in our view, with spreads likely to tighten across the board as a result of stronger economic growth. However, not all sectors will benefit to the same extent. Steeper curves combined with higher interest rates would be especially advantageous for financials. Insurance companies may also benefit from this dynamic if it allows them to invest premiums at higher yields. In general, higher growth should be supportive of cyclical industries, but allowing inflation to run “hotter” may lead to weaker margins in inflation-sensitive parts of the economy, such as the consumer, retail and industrial sectors. Therefore, the overall impact on profitability would depend on the extent to which growth improves, in addition to pricing power. 


It is unclear, however, how emerging market credit would fare relative to developed market credit. On the one hand, better expectations for risk-adjusted returns across advanced economies could increase the opportunity cost of searching for yield in emerging markets. On the other, a higher inflation target in the developed world has the potential to enhance the relative attractiveness of some bonds in emerging economies, particularly those of commodity exporters or of countries with a relatively higher debt burden.


Real Assets: Key beneficiaries of higher inflation targets due to inflation hedging attributes

Real assets, such as real estate, —with their value tied to underlying physical assets—may also perform well in an environment where inflation is higher, especially when accompanied by strong economic growth, as this could boost demand for real estate and infrastructure. This is because leases and revenue streams are often linked to inflation, and at the same time there is often some form of expense pass through. That said, not all real assets have inflation escalators, regulated recovery mechanisms (in the case of utilities) or pricing power (strong demand for hard assets as a hedge allows for cost pass throughs). Inflation sensitivity will vary across real estate and infrastructure sectors and for equity and debt investors. Assets with shorter-term leases or take-or-pay contracts tend to capture the upside in inflation well, and long-term leases and contracts (i.e., power purchase agreements) linked to inflation can provide some form of risk mitigation. 


One type of real asset that we believe would be a key beneficiary of a move up in central bank inflation targets is commodities, particularly given that greenflation (a sharp rise in the price of metals and minerals that are used in the creation of renewable technologies) is one of the reasons central banks would even consider changing their inflation target in the first place. In fact, Goldman Sachs Global Investment Research economists4 believe that the ascension of climate on policymakers’ list of concerns cements the policy support at the center of the structural bull thesis for commodities.


Portfolio Ramifications

Pulling those strands together leads to the question of how much inflation sensitivity does (and should) a well-balanced and diversified portfolio contain, and if any strategic asset allocation changes should be made if we saw an increase in the inflation target of 3%. 


Taking this typical UK multi-asset portfolio as an example, we do not find much outright inflation sensitivity when we run a factor regression. Rather, equity risk is the most important driver of portfolio movement, followed by credit and rates. In keeping, the asset classes we deploy in our Real Return Mix include exposure to equity risk, credit risk, and others.



Exhibit 3: Factor Analysis (UK)



Source: Goldman Sachs Asset Management. September 2022. All numbers reflect Multi-Asset Solutions’ strategic assumptions as of June 30, 2022. Past performance does not guarantee future results, which may vary.



To assess the potential impact of a higher inflation target on portfolios, it’s helpful to recall that the last 40 years have been characterized by falling inflation and interest rates, resulting in a multi-decade bull market for bonds. This long period of moderation benefitted portfolios heavily skewed toward fixed-income assets that offered strong risk-adjusted performance. A conservative portfolio with 40% equities and 60% fixed income delivered about the same return as a more aggressive 60/40 equity-fixed income portfolio, while offering lower volatility (Exhibit 4). However, the new cycle is likely to be very different, with higher inflation and interest rates. Our forward-looking assumptions suggest that a 60/40 portfolio may outperform a 40/60 by 1 percentage point on an annual basis over the next decade, with an expected return of 6.2% vs 5.2%. That 1 percentage point difference becomes even more substantial when converted into real terms (i.e., once inflation is subtracted), where the real expected return would stand at 3.2% vs 2.2% if we assume a 3% inflation rate.



Exhibit 4: The Multi-Year Bull Bond Market for a 60/40 Portfolio 



Source: Goldman Sachs Asset Management, Multi-Asset Solutions of June 30, 2022. For illustrative purposes only. 60/40 portfolio is composed of 60% Equity and 40% Fixed Income while the 40/60 portfolio is the reverse. Equity is represented by the MSCI World Index in USD unhedged. Fixed Income by the Bloomberg Global Aggregate Bond Index, in USD hedged. Cumulative time series from January 31, 1990 to August 31, 2020 are based on earliest common period across all underlying indices. Backtested performance shown is not actual performance and in no way should be construed as indicative of future results. Backtested performance results are created based on an analysis of past market data with the benefit of hindsight, do not reflect the performance of any Goldman Sachs Asset Management product and are being shown for informational purposes only. Expected returns are estimates of hypothetical average returns of economic asset classes derived from statistical models. There can be no assurance that these returns can be achieved. Actual returns are likely to vary. Please see additional disclosures.



What would a higher inflation target of 3% mean for strategic asset allocation? First, equities would remain core to the portfolio to keep up with rising inflation (Exhibit 3). In addition, investors often think of inflation-linked bonds first, followed closely by real assets, but these are relatively smaller parts of the portfolio. Most investors cannot afford to own a large portion of inflation-linked bonds because their return is limited and impacted negatively by rising interest rates. Rather, we prefer to spread out the burden of keeping up with inflation across equities, inflation-linked bonds, real assets, and alternatives investments, including hedge funds strategies. 


Using a well-diversified 60/40 portfolio as a starting point, we would consider reallocating capital from traditional developed market equities and fixed income to assets whose characteristics could help perform better in a higher-inflation environment. Those include small cap equities, high yield bonds, emerging market debt, energy stocks, real assets (both public and private), private equity, and private credit. Private assets have the potential to offer compounding higher returns over time while tapping into differentiated return drivers. In Exhibit 5, we build an illustrative real return focused portfolio by reallocating around 20% from core assets to the real return asset classes. This allows for a portfolio with higher expected return, slightly higher risk, and a better Sharpe ratio. The tracking error of this portfolio relative to the 60/40 is at a contained 1.3%. In addition, some of the asset classes may also have ESG considerations, including commodities, energy stocks, REITs, infrastructure and private assets (e.g., impact investing). We encourage our clients to take a view and be active as they navigate ESG questions. For example, an exclusionary policy against owning energy stocks makes a statement, but owning Big Oil as it transitions to Big Energy may allow the investor to be part of the solution.



Exhibit 5: Building a Real Return Focused Portfolio


Source: Goldman Sachs Asset Management. Assumptions as of June 30, 2022. For illustrative purposes only. These examples are for illustrative purposes only and are not actual results. If any assumptions used do not prove to be true, results may vary substantially. All numbers reflect Multi-Asset Solutions’ strategic assumptions as of June 30, 2022. Strategic long-term assumptions are subject to high levels of uncertainty regarding future economic and market factors that may affect future performance. They are hypothetical indications of a broad range of possible returns. Risk Free Rate is calculated as the forward looking expected return on cash. Expected returns are estimates of hypothetical average returns of economic asset classes derived from statistical models. There can be no assurance that these returns can be achieved. Actual returns are likely to vary. Please see additional disclosures.



As discussed, some equity sectors would likely benefit, but the ability of firms to protect margins in the face of higher inflation could vary even within the same sector. Some investors may have gotten out of the habit of asking fund managers about how they consider inflation dynamics when they pick stocks, and we would suggest adding this line of questioning back into due diligence practices. When comparing active equity funds, differentiation in top 10 holdings will be heavily influenced by the largest names in the benchmark, as not owning a top name drives active risk as much as owning more of a small name does. Rather, look at the top names by contribution to tracking error, as these are the trades that tend to drive the fund to differentiate from the benchmark.5 It’s also important that investors ask about the inflation sensitivity of their top equity holdings. Selecting companies with high purchasing power may mean higher importance on security selection, to look beyond sectors and equity style factors.


A Higher Inflation Regime

Inflation has returned, and in a structurally different global landscape some of the disinflationary forces observed throughout the last cycle may well reverse and turn into inflationary pressures. Whether 2% inflation mandates are still the appropriate framework for monetary policy can be debated, but overall, we believe a 3% inflation environment would likely be positive for risk assets, as the tailwind from stronger economic growth would more than offset the headwind from higher nominal bond yields across the curve. Even so, selectivity would be essential as wide dispersion of inflation sensitivity exists within a given asset class. The scenario of higher central bank inflation mandates is, of course, a hypothetical one with many unknowns and potentially profound implications.




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1 Gordon, Robert J. “The Boskin Commission Report: A Retrospective One Decade Later”, NBER working paper 12311, June 2006.

2 Peterson Institute for International Economics. The Case for Raising the Inflation Target Is Stronger than You Think. As of December 17, 2019. 

Goldman Sachs Global Investment Research. Equities and inflation: Stocks perform better in a high and falling inflation regime than high and rising. As of June 4, 2021.

Goldman Sachs Global Investment Research. Commodity Watch-Starting the next leg higher. As of April 28, 2021.

Goldman Sachs Asset Management, SAS portfolio Strategy. As of September 2022.



Bloomberg Commodities Total Return Index is composed of futures contracts and reflects the returns on a fully collateralized investment in the BCOM.

St Louis Fed's Commodity Spot Market Price Index consists of spot market prices of 22 Commodities for United States calculated by the National Bureau of Economic Research and retrieved from Federal Reserve Bank of St. Louis.

Ibbotson Associates SBBI US 30 Day Tbill Index represents 30-day U.S. Treasury bill total return based on Stocks, Bonds, Bills, and Inflation (SBBI) Yearbook, by Roger G. Ibbotson and Rex Sinquefield, updated annually.

Shiller’s Residential House Prices benchmark of average single-family home prices in the U.S., calculated monthly based on changes in home prices over the prior three months.

Ibbotson Associates SBBI US IT Govt Index represents intermediate-term (i.e., 5-year) government bond total return based on Stocks, Bonds, Bills, and Inflation (SBBI) Yearbook, by Roger G. Ibbotson and Rex Sinquefield, updated annually.

Ibbotson Associates SBBI US LT Govt Index represents long-term (i.e., 20-year) government bond total return based on Stocks, Bonds, Bills, and Inflation (SBBI) Yearbook, by Roger G. Ibbotson and Rex Sinquefield, updated annually.

Ibbotson Associates SBBI US LT Corp Index represents long-term (i.e., 20-year) corporate bond total return based on Stocks, Bonds, Bills, and Inflation (SBBI) Yearbook, by Roger G. Ibbotson and Rex Sinquefield, updated annually.

S&P 500 Composite Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S.

MSCI World Index in USD unhedged captures large and mid-cap representation across 23 Developed Markets (DM) countries.

Bloomberg Global Aggregate Bond Index, in USD hedged, tracks the performance of global markets for investment grade (high quality) fixed-rate debt securities. The index is 100% hedged to the USD by selling the forwards of all the currencies in the parent index at the one-month Forward rate.

AA Rating denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

BBB Rating signifies debts are fairly sound. But when economic conditions or any other circumstances change, the debt issuer may have trouble fulfilling its financial obligations.


Risks Considerations

Capital is at risk.

All investing is subject to risk, including the possible loss of the money you invest.

Equity securities are more volatile than bonds and subject to greater risks. Dividends are not guaranteed and a company’s future ability to pay dividends may be limited.

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.

High-yield, lower-rated securities involve greater price volatility and present greater credit risks than higher-rated fixed income securities.

An investment in real estate securities is subject to greater price volatility and the special risks associated with direct ownership of real estate.

Investments in fixed income securities are subject to the risks associated with debt securities including credit and interest rate risk.

Investments in foreign securities entail special risks such as currency, political, economic, and market risks. These risks are heightened in emerging markets.

Investments in commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity.

High-yield, lower-rated securities involve greater price volatility and present greater credit risks than higher-rated fixed income securities.

The currency market affords investors a substantial degree of leverage. This leverage presents the potential for substantial profits but also entails a high degree of risk including the risk that losses may be similarly substantial. Such transactions are considered suitable only for investors who are experienced in transactions of that kind. Currency fluctuations will also affect the value of an investment.

Real estate investments are speculative and illiquid, involve a high degree of risk and have high fees and expenses that could reduce returns. These risks include, but are not limited to, fluctuations in the real estate markets, the financial conditions of tenants, changes in building, environmental, zoning and other laws, changes in real property tax rates or the assessed values of Partnership Investments, changes in interest rates and the availability or terms of debt financing, changes in operating costs, risks due to dependence on cash flow, environmental liabilities, uninsured casualties, unavailability of or increased cost of certain types of insurance coverage, fluctuations in energy prices, and other factors, such as an outbreak or escalation of major hostilities, declarations of war, terrorist actions or other substantial national or international calamities or emergencies. The possibility of partial or total loss of an investment vehicle’s capital exists, and prospective investors should not invest unless they can readily bear the consequences of such loss.

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Australia: This material is distributed 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 for the purposes of section 761G of the Corporations Act 2001 (Cth). This document may not be distributed to retail clients in Australia (as that term is defined in the Corporations Act 2001 (Cth)) or to the general public. This document may not be reproduced or distributed to any person without the prior consent of GSAMA. To the extent that this document contains any statement which may be considered to be financial product advice in Australia under the Corporations Act 2001 (Cth), that advice is intended to be given to the intended recipient of this document only, being a wholesale client for the purposes of the Corporations Act 2001 (Cth). Any advice provided in this document is provided by either Goldman Sachs Asset Management International (GSAMI), Goldman Sachs International (GSI), Goldman Sachs Asset Management, LP (GSAMLP) or Goldman Sachs & Co. LLC (GSCo). Both GSCo and GSAMLP are regulated by the US Securities and Exchange Commission under US laws, which differ from Australian laws. Both GSI and GSAMI are regulated by the Financial Conduct Authority and GSI is authorized by the Prudential Regulation Authority under UK laws, which differ from Australian laws. GSI, GSAMI, GSCo, and GSAMLP are all exempt from the requirement to hold an Australian financial services licence under the Corporations Act of Australia and therefore do not hold any Australian Financial Services Licences. Any financial services given to any person by GSI, GSAMI, GSCo or GSAMLP by distributing this document in Australia are provided to such persons pursuant to ASIC Class Orders 03/1099 and 03/1100. No offer to acquire any interest in a fund or a financial product is being made to you in this document. If the interests or financial products do become available in the future, the offer may be arranged by GSAMA in accordance with section 911A(2)(b) of the Corporations Act. GSAMA holds Australian Financial Services Licence No. 228948. Any offer will only be made in circumstances where disclosure is not required under Part 6D.2 of the Corporations Act or a product disclosure statement is not required to be given under Part 7.9 of the Corporations Act (as relevant).

Canada: This document has been communicated in Canada by GSAM LP, which is registered as a portfolio manager under securities legislation in all provinces of Canada and as a commodity trading manager under the commodity futures legislation of Ontario and as a derivatives adviser under the derivatives legislation of Quebec. GSAM LP is not registered to provide investment advisory or portfolio management services in respect of exchange-traded futures or options contracts in Manitoba and is not offering to provide such investment advisory or portfolio management services in Manitoba by delivery of this material.

Japan: This material has been issued or approved in Japan for the use of professional investors defined in Article 2 paragraph (31) of the Financial Instruments and Exchange Law by Goldman Sachs Asset Management Co., Ltd.

Bahrain: This material has not been reviewed by the Central Bank of Bahrain (CBB) and the CBB takes no responsibility for the accuracy of the statements or the information contained herein, or for the performance of the securities or related investment, nor shall the CBB have any liability to any person for damage or loss resulting from reliance on any statement or information contained herein. This material will not be issued, passed to, or made available to the public generally.

Egypt: The securities discussed in the enclosed materials are not being offered or sold publicly in Egypt and they have not been and will not be registered with the Egyptian National Financial Supervisory Authority and may not be offered or sold to the public in Egypt. No offer, sale or delivery of such securities, or distribution of any prospectus relating thereto, may be made in or from Egypt except in compliance with any applicable Egypt laws and regulations.

Kuwait: This material has not been approved for distribution in the State of Kuwait by the Ministry of Commerce and Industry or the Central Bank of Kuwait or any other relevant Kuwaiti government agency. The distribution of this material is, therefore, restricted in accordance with law no. 31 of 1990 and law no. 7 of 2010, as amended. No private or public offering of securities is being made in the State of Kuwait, and no agreement relating to the sale of any securities will be concluded in the State of Kuwait. No marketing, solicitation or inducement activities are being used to offer or market securities in the State of Kuwait.

Oman: The Capital Market Authority of the Sultanate of Oman (the "CMA") is not liable for the correctness or adequacy of information provided in this document or for identifying whether or not the services contemplated within this document are appropriate investment for a potential investor. The CMA shall also not be liable for any damage or loss resulting from reliance placed on the document.

Qatar: This document has not been, and will not be, registered with or reviewed or approved by the Qatar Financial Markets Authority, the Qatar Financial Centre Regulatory Authority or Qatar Central Bank and may not be publicly distributed. It is not for general circulation in the State of Qatar and may not be reproduced or used for any other purpose.

Saudi Arabia: The Capital Market Authority does not make any representation as to the accuracy or completeness of this document, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this document. If you do not understand the contents of this document you should consult an authorised financial adviser.

These materials are presented to you by Goldman Sachs Saudi Arabia Company ("GSSA"). GSSA is authorised and regulated by the Capital Market Authority (“CMA”) in the Kingdom of Saudi Arabia. GSSA is subject to relevant CMA rules and guidance, details of which can be found on the CMA’s website at

The CMA does not make any representation as to the accuracy or completeness of these materials, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of these materials. If you do not understand the contents of these materials, you should consult an authorised financial adviser.

UAE: This document has not been approved by, or filed with the Central Bank of the United Arab Emirates or the Securities and Commodities Authority. If you do not understand the contents of this document, you should consult with a financial advisor.

Israel: This document has not been, and will not be, registered with or reviewed or approved by the Israel Securities Authority (ISA”). It is not for general circulation in Israel and may not be reproduced or used for any other purpose. Goldman Sachs Asset Management International is not licensed to provide investment advisory or management services in Israel.

Jordan: The document has not been presented to, or approved by, the Jordanian Securities Commission or the Board for Regulating Transactions in Foreign Exchanges.


Date of first use October 26, 2022. 295045-OTU-1689243.

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