Goldman Sachs Equity Income Fund: Navigating Market Currents in Q2 2025

Q2 2025 proved to be a quarter of intriguing dynamics across global markets, marked by persistent inflation debates, evolving interest rate expectations, and a nuanced corporate earnings landscape. Amidst these shifting currents, the Goldman Sachs Equity Income Fund demonstrated its resilience, delivering compelling performance while steadfastly adhering to its core mandate of generating attractive income and long-term capital appreciation for its investors.

Our diligent approach to identifying high-quality businesses with sustainable dividend growth potential once again paid dividends, quite literally.

The broader market, as represented by the S&P 500, experienced a period of consolidation following strong gains early in the year. Sector rotation was a defining theme, with defensive sectors showing renewed interest as investors pondered the potential for slower economic growth.

Technology and growth stocks, while still commanding significant attention, faced increased scrutiny regarding their valuations against a backdrop of potentially higher-for-longer interest rates. It was within this complex environment that our fund's disciplined strategy truly shone.

For the second quarter of 2025, the Goldman Sachs Equity Income Fund outperformed its primary benchmark, a testament to our rigorous bottom-up stock selection process and judicious sector allocation.

Our overweight positions in certain stable, dividend-growing industries, coupled with a selective approach to undervalued opportunities, significantly contributed to these favorable results. Specifically, our holdings in the consumer staples and healthcare sectors provided a defensive ballast, while strategic investments in select industrial companies capitalized on robust infrastructure spending trends.

A deeper dive into performance attribution reveals that our emphasis on companies with strong free cash flow generation and consistent dividend policies was a key driver.

Several core holdings, particularly within the industrials and utilities sectors, delivered stronger-than-expected earnings and dividend increases, positively impacting the fund’s total return. Conversely, our underweight exposure to certain highly cyclical sectors, which experienced headwinds during the quarter, further mitigated potential downside.

Looking ahead, the investment team maintains a cautiously optimistic outlook.

While macroeconomic uncertainties, including the trajectory of inflation and central bank policies, persist, we believe opportunities for income-focused investors remain abundant. Our strategy continues to center on identifying companies with resilient business models, robust balance sheets, and a demonstrated commitment to returning capital to shareholders through dividends.

We are particularly focused on businesses that can navigate potential economic slowdowns while continuing to grow their earnings and, consequently, their dividend payouts.

We anticipate continued volatility, making active management and a focus on fundamental strength paramount. The Goldman Sachs Equity Income Fund remains committed to its long-term investment philosophy, prioritizing a diversified portfolio of high-quality, income-generating equities designed to provide a compelling blend of current income and long-term capital growth, regardless of market conditions.

We thank our investors for their continued trust and look forward to delivering value in the quarters to come.