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Goldman Sachs Launches European ETF Business

Jackie Bennion Deputy Editor 27 September 2019

Goldman Sachs Launches European ETF Business

The asset management arm is fast-tracking into European ETFs, listing its first rules-based fund, with more tapped to capture market being dominated by a few players.

Calling the product “simple, smart and accessible”, Goldman Sachs Asset Management has launched its first exchange-traded fund (ETF) into the fast-growing European ETF market, with the promise of a range of funds to follow across European exchanges.

The Goldman Sachs Active Beta US Large Cap Equity UCITS ETF, listed on the London Stock Exchange on Thursday, is the European version of Goldman’s successful flagship US ETF, which has AuM of over $6.5 billion (£5.3 billion).

GSAM began offering ETFs in September 2015 and now has 19 ETFs in the US, with over $14 billion in assets under management.

The bank joins other US heavyweights aiming to wrestle a share away from asset giant BlackRock, which dominates the European ETF market with roughly 50 per cent of its business. Goldman joins JP Morgan, Vanguard, and Invesco, among others scaling up their ETF business to meet strong appetite for a broadening range of ETF investment vehicles.

ETFGI, an independent research firm covering the global ETF market, reported that assets invested in the European ETF/ETP industry reached $882.20 billion in April 2019, the highest on record, and posted its 55th consecutive month of net inflows into ETFs listed in Europe.

Goldman said it will list the fund on several other European exchanges in the near future, with the goal of providng a better risk/return profile over a whole investment cycle relative to traditional market-cap weighted indices.

It also plans to launch a range of ETFs in the next six months covering all major asset classes and geographies, based on in-house investment strategies that are relevant to retail and institutional clients.

“Our global clients are demanding more choice in their portfolios and we are excited to complement our existing fund range with ETFs that we believe can help simplify portfolio construction and contribute to superior risk-adjusted returns,” Nick Phillips, head of the international retail client business at GSAM, said.

This signals another step in the evolution of ETFs, which began by tracking capitalisation-weighted indices, moving to incorporating “smart beta” funds, which mix passive and active management styles, to fund managers creating even more active approaches.

Peter Thompson, head of GSAM’s European ETF business, said: “GSAM ETFs will be smart, simple and accessible. The suite of products we plan to launch in the coming months will enable our clients to build diversified global portfolios using a mix of active and passive investment styles," with a focus on building the business for the long-term.

GSAM is the asset management arm of The Goldman Sachs Group, which supervises approximately $1.44 trillion in assets as of 30 June 2019.

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