TIP SHEET: Goldman Rolls Out Income Fund Targeting 10% Dividend Growth
March 07 2012 - 8:05AM
Dow Jones News
Goldman Sachs Asset Management rolled out the newly named
Goldman Sachs Rising Dividend Growth Fund (GSRAX) on Feb. 27 after
completing its acquisition of the mutual fund management business
of Dividend Growth Advisors.
The $195 million fund targets 80% of its investments in stocks
of U.S. and non-U.S. companies with market capitalizations over
$500 million that have increased their dividends 10% a year over 10
years. Stocks of companies that cut their dividends get sold from
the fund.
Goldman took over the fund but Dividend Growth Advisors, based
in Ridgeland, S.C., will sub-advise.
C. Troy Shaver, the co-manager of the fund and a former chief
executive of John Hancock Funds Inc. (JOHNHF.XX), says the
investment philosophy is based on what investors would need to do
in a high interest rate environment. To protect against inflation,
investors would need to invest in dividend stocks that kept pace
with it. Of course, the gains also help in a low-rate
environment.
Currently the fund is overweighted in industrials and consumer
discretionary stocks, including TJX Co.s (TJX), parent of discount
retailing chain T.J. Maxx, and Church & Dwight Co. (CHD), maker
of household products like Arm & Hammer baking soda and Oxi
Clean.
The fund's biggest holding is Denmark-based Novo Nordisk A/S
(NVO, NOVO-B.KO), a pharmaceutical company that is the leader in
diabetic care products, at 4% of the portfolio. Another top-five
holding is McDonald's Corp. (MCD), at 3.7%.
The fund also invests approximately 20% of its assets in 12 oil
and gas pipeline projects, called master limited partnerships.
Morningstar dividend fund analyst Christopher Davis doesn't
track this particular fund but says dividend investing has been a
hot segment. Last year, $3 billion poured into dividend-oriented
stock funds, according to Davis.
Companies in this category tend to be high-quality blue chips
with sustainable competitive advantages and growing profitability,
Davis noted. And they are shareholder-friendly, "all good
attributes."
As of March 1, the fund was up 6.1% year-to-date, 6.91% over one
year and 5.41% over five years, according to investment site
Morningstar.com.
Goldman acquired the business to fill in a gap in its roster of
mutual fund offerings, the firm said in December when the deal was
announced.
-By Liz Moyer, Dow Jones Newswires; 212-416-2512;
liz.moyer@dowjones.com
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