Goldman Sachs Group's innovative business venture, the ETF Accelerator, is not only attracting traditional asset managers but also a diverse range of clients. Lisa Mantil, global head of the Goldman Sachs ETF Accelerator, expressed her surprise at the overwhelming response from insurance companies, private banks, family offices, hedge funds, and registered investment advisers (RIAs). Launched in November, the ETF Accelerator aims to assist clients in swiftly launching their exchange-traded funds.
In October, Goldman made headlines by introducing its digital Accelerator platform with Brandes Investments Partners setting the stage by listing three actively managed ETFs: Brandes U.S. Small-Mid Cap Value ETF (BSMC), Brandes U.S. Value ETF (BUSA), and Brandes International ETF (BINV).
Anticipating "the next wave of growth in the ETF space," Mantil stated that Goldman Sachs believes active ETFs will play a pivotal role. The company aims to guide and support its clients in achieving success in this arena.
The inception of the ETF Accelerator came about due to a high demand from clients seeking assistance in offering exchange-traded funds. In the past, Goldman Sachs provided informal consulting services, sharing valuable insights on the roadmap to launch an ETF. However, with the creation of the Accelerator platform, clients can now expect their first ETF to be launched within six months without an exhaustive hiring process that would typically take up to two years.
Goldman Sachs underlined the significance of ETFs, describing them as the fastest-growing segment of the investment management industry. Offering ordinary investors access to a wide range of investment strategies across stocks and bonds, U.S.-listed ETFs currently hold over $7 trillion in assets across nearly 3,200 funds, according to a recent Citigroup research note.
The ETF Accelerator marks a significant shift in the industry, empowering a diverse array of clients to enter the world of ETFs swiftly and efficiently. With Goldman Sachs as their ally, these clients are optimally positioned to tap into the opportunities presented by this flourishing market.
The Rise of Actively Managed ETFs
According to Citi, actively managed ETFs have seen a significant surge in popularity, going from 20-40% of launches prior to 2020 to over 60% since then. This increase is largely credited to the growing accessibility of strategies that require active trading, particularly in derivatives.
Hedge Funds Diversifying Through ETFs
Goldman Sachs ETF Accelerator has caught the attention of hedge funds looking to diversify their investor base. One such strategy involves potentially offering a "long-only" ETF. However, hedge funds are not considering making their "super high alpha" strategies, which fall under traditional fee structures, transparent through an ETF. The bank's pipeline reflects this stance.
Interest from Family Offices
The Accelerator has also attracted interest from family offices. One reason for this is that ETFs can provide tax efficiency for family offices struggling with the complexity of managing multiple accounts. This appeal has fueled their interest in investing through the platform.
GMO Turns to Goldman's ETF Accelerator
GMO, the investment firm co-founded by Jeremy Grantham, has chosen Goldman's ETF Accelerator to launch its first exchange-traded fund. The regulatory filing indicates that GMO is receiving consulting services from the Accelerator business.
"For our clients, it is their strategy," explains Mantil, referring to the brand, marketing, and distribution of the ETF. She adds, "It is their ETF. They're just using our infrastructure."
The rise of actively managed ETFs and the growing interest from hedge funds, family offices, and investment firms like GMO demonstrate the evolving landscape of the ETF market. This shift highlights the increased demand and opportunities for investors seeking alternative avenues for their investments.