Hedge funds, family offices among those turning to Goldman Sachs ETF Accelerator

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Goldman Sachs Group’s recently created business designed to help firms quickly launch exchange-traded funds has more than just traditional asset managers as clients.

“It’s really been surprising,” said Lisa Mantil, global head of the Goldman Sachs ETF Accelerator, in a phone interview. She said that insurance companies, private banks, family offices, hedge funds, and registered investment advisers, or RIAs, are among the clients of Goldman’s ETF Accelerator, which was introduced in November.

Goldman announced on Oct. 5 the first funds launched through its digital Accelerator platform, with Brandes Investments Partners using it to list three actively managed ETFs: Brandes U.S. Small-Mid Cap Value ETF BSMC, Brandes U.S. Value ETF BUSA, and Brandes International ETF BINV.

Goldman expects that “the next wave of growth in the ETF space is going to be the active ETF,” Mantil said, adding that the company wants “to help our clients get there.”

The ETF Accelerator was created because clients were calling the bank to ask for help in offering exchange-traded funds, according to Mantil.

“A couple of years ago, all we were doing was really giving free consulting to them” by getting on the phone for an hour to provide “a little bit of what that road map was to launch an ETF,” she said.

Mantil said Goldman’s Accelerator platform aims to help clients launch their first ETF within six months and without having to hire dozens of people, as opposed to the two years it might otherwise take.

“ETFs are the fastest growing part of the investment management industry,” Goldman said in its announcement. Ordinary investors buy shares of ETFs to gain exposure to various investment strategies across assets such as stocks and bonds.

U.S.-listed ETFs now have more than $7 trillion in assets across almost 3,200 funds, according to a Citigroup research note from earlier this month.

“Actively managed ETFs have gone from 20-40% of launches pre-2020 to over 60% since then,” Citi said. “More strategies that require active trading, especially in derivatives, are now accessible via ETFs.”

As for the Goldman Sachs ETF Accelerator’s pipeline, Mantil said she sees hedge funds seeking to diversify their investor base through the ETF market by potentially offering, for instance, a “long-only” ETF. But hedge funds, whose investor base is heavily represented by institutional investors, are “in no way” considering making their “super high alpha” strategies that fall under their traditional fee structures transparent in an ETF, she said of the bank’s pipeline.

The Accelerator, which is a multi-asset and global platform, has also attracted interest from family offices, according to Mantil. That’s partly because ETFs may provide tax efficiency for family offices grappling with the operational complexity of many different accounts, she said.

Meanwhile, GMO, the Boston-based investment firm co-founded by Jeremy Grantham, has turned to Goldman’s ETF Accelerator to launch its first exchange-traded fund. GMO disclosed in a regulatory filing that the bank’s Accelerator business is assisting the firm with consulting services.

“For our clients, it is their strategy,” brand, marketing, and distribution, Mantil said. “It is their ETF. They’re just using our infrastructure.”

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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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