MOODY'S ASSIGNS Aa/MR4 RATING TO GOLDMAN SACHS' VARIETY OPEN
Moody's Investors Service assigned a Aa/MR4 rating to Variety Open (the fund), a fund managed by Goldman Sachs Investment Trust Management Co., Ltd. (GSITM). The fund is a Japanese open-ended investment trust, denominated in Yen.
The fund was created in February 1998 to provide investors with a selection of securities issued mainly outside of Japan and to achieve a high level of income gain. The fund's benchmark is the JP Morgan Government Bond Index (Global ex Japan) with a 50% Yen hedge.
GSITM is the fund manager, and Goldman Sachs Asset Management International is the sub-adviser. Moody's said the ratings reflect the fund manager's focus on high-quality investment, including the fund's ability to provide a high level of liquidity to meet redemption needs. The fund's distributors in Japan are Kokusai Securities Co., Ltd. and Goldman Sachs (Japan) Limited.
The fund can invest in investment vehicles, such as bonds, commercial paper, mutual fund shares, asset-backed securities, CD's of non-Japanese issuers and mortgage-backed securities. As of now, the fund, while respecting the principles of risk diversification, is mainly invested in long-term fixed income instruments denominated in multi-currencies. The fund's duration should at all times range from less than one year to 11 years. Currently the fund's duration is 6.5 years and all assets are rated by Moody's. The fund is not only holding foreign currency bonds, out of which 50% are currency hedged, but actively managing the multi-currency exposure. The fund can use swaps and derivative products such as futures, options, and options on futures for foreign exchange and interest rate exposure. Besides citing GSITM's well-developed trading, audit, and compliance systems, Moody's notes that GSITM is an experienced fund manager.
The Toyo Trust & Banking Co., Ltd. acts as the fund's trustee. All securities of the funds are held in segregated local custodian accounts.
Moody's bond fund ratings are opinions of the investment quality of mutual funds which principally invest in long-term fixed income obligations. The ratings are not intended to consider the prospective performance of a fund with respect to appreciation, volatility of net asset value, or yield. Bond funds rated Aa are judged to be of an investment quality similar to Aa-rated fixed income obligations; that is, they are judged to be of high quality by all standards.
The MR4 market risk rating assigned to the fund is based on its high sensitivity to changing interest rates and other market conditions, especially a high sensitivity to changing currency exchange rates. Moody's market risk ratings complement the credit rating by providing investors with an indicator of a fund's potential for loss and the relative volatility of the net asset value. The rating is based on Moody's in-depth analysis of qualitative and quantitative factors including a fund's long-term investment goals, interest rate and foreign exchange risk, prepayment and extension risk, concentration, liquidity and derivative risk as well as credit risk.
Moody's market risk ratings use a five-tiered numerical scale. Funds with the least sensitivity to market changes will receive an MR1, whilst the most sensitive funds will be rated MR5.
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