The demand for exchange-traded funds (ETFs) among investors continues to grow at a rapid pace, and firms that do not have ETF offerings are at risk of losing business, according to a Goldman Sachs expert. Steve Sachs, global chief operating officer of Goldman’s ETF Accelerator, emphasizes that the failure to provide current and innovative investment strategies through ETFs may have significant consequences. He pointed out that the opportunity cost of not offering ETF products can be substantial, leading many clients to seek alternative options.
To assist clients in navigating the complexities of launching their ETF products, Goldman Sachs introduced its ETF Accelerator platform in 2022. This digital platform is designed to streamline the process of launching, listing, and managing ETF products for clients who are interested in entering the ETF space. The catalyst for the creation of the accelerator was the increasing demand from institutional clients who were seeking guidance on transitioning their investment strategies into an ETF format.
The passage of SEC Rule 6c-11 in 2019 played a significant role in driving interest in ETFs among asset managers and investment firms. While the rule aimed to simplify the process of launching ETFs, it did not eliminate the challenges associated with building the necessary expertise, infrastructure, and risk management framework. Despite the regulatory changes, launching an ETF can still be a time-consuming and resource-intensive process. The ETF Accelerator platform offered by Goldman Sachs aims to provide clients with the technology, infrastructure, and expertise needed to expedite the launch process and reduce costs.
Since its inception, the ETF Accelerator has facilitated the launch of several successful ETFs, including Eagle Capital Management’s Select Equity ETF (EAGL), GMO’s U.S. Quality ETF (QLTY), and funds from Brandes Investment Partners. These asset managers recognized the value of leveraging Goldman Sachs’ accelerator platform to save time and resources compared to building the ETFs independently. The ability to access Goldman’s risk management expertise and infrastructure has enabled clients to bring their ETF products to market faster and more efficiently.
The rise of ETFs as a preferred investment vehicle among investors underscores the importance for asset managers and investment firms to offer ETF products. Failure to do so may result in the loss of assets and clients to competitors who have embraced the ETF trend. The launch of platforms such as Goldman Sachs’ ETF Accelerator demonstrates the commitment to helping clients navigate the complexities of the ETF market and capitalize on the growing demand for innovative investment solutions. By leveraging these platforms, asset managers can enhance their market competitiveness and meet the evolving needs of investors in today’s dynamic financial landscape.