Goldman Sachs Asset Management LP plans to launch a new municipal closed-end fund as part of its existing lineup of tax-exempt mutual funds, according to an Oct. 24 registration with the Securities and Exchange Commission. The addition, which is to be called the Goldman Sachs Municipal Opportunity Fund, will bring the firm's number of tax-free mutual funds to six.
A spokeswoman at Goldman said the firm was not able to comment on the filing, and could provide no other details.
According to the SEC filing, the fund is a closed-end investment company designed primarily for long-term investors and not as a trading vehicle. The minimum investment in the fund is $5,000, with no minimum amount required for subsequent investments.
The filing did not indicate a date on which the initial offering of the fund will commence.
The fund seeks a high level of current income that is exempt from regular federal income tax and may also consider the potential for capital appreciation, according to the SEC documents. Under normal market conditions, the fund will invest at least 80% of its net assets, plus any borrowings, in tax-exempt and municipal securities issued by or on behalf of states, territories, and possessions of the United States.
"Although it has no current intention to do so, the fund reserves the flexibility to issue preferred shares, debt securities, or to engage in borrowings, including through reverse repurchase agreements or dollar rolls, to add leverage to its portfolio. Any leverage used by the fund would be limited to 38% of the fund's total assets, including the proceeds of the leverage, at the time utilized," the filing stated.
The fund may also invest up to 75% of its total assets measured at time of purchase in investment-grade fixed-income securities and up to 75% of its total assets in high-yield municipal securities that are medium quality or non-investment grade.