Goldman Sachs debuts build-your-own ETF platform

Oct 6th, 2023 | By | Category: ETF and Index News

Goldman Sachs has announced the introduction of the first funds through the Goldman Sachs ETF Accelerator, its digital platform that enables clients to launch, list, and manage their own ETFs.

Goldman Sachs debuts white-label ETF platform

Goldman Sachs has become the first major Wall Street institution to develop a build-your-own ETF platform.

The platform’s debut consists of three ETFs that have come to market from Brandes Investment Partners, a nearly $20 billion investment advisory firm with over 40 years of value-focused investing expertise.

Representing Brandes’ inaugural ETF listings, the three funds are the Brandes US Value ETF (BUSA US), the Brandes US Small-Mid Cap Value ETF (BSMC US), and the Brandes International ETF (BINV US).

Each actively managed ETF seeks to achieve long-term capital appreciation by investing in companies that Brandes’ investment committees have identified as undervalued relative to their financial robustness and their potential for growth.

BUSA targets US large-cap stocks, BSMC focuses on the US’s mid and small-cap segments, and BINV selects its holdings from developed and emerging markets outside of the US.

BUSA comes with an expense ratio of 0.60% while BSMC and BINV are both priced at 0.70%. All three ETFs have been listed on Cboe BZX Exchange.

Build-your-own ETF

ETFs have been steadily growing in popularity for many years owing to the vehicle’s inherent benefits such as liquidity and potential tax advantages. While this trend looks set to continue, actively managed ETFs are expected to capture much greater market share in the future.

Entering the ETF space is a complex process, however, demanding substantial investments in time, manpower, and capital. Many investment managers have shown interest in expanding their businesses into this area but lack the expertise and infrastructure to do so at a significant scale.

So-called ‘white-label’ providers aim to help prospective ETF issuers bridge this gap, assisting them in bringing their strategies to market by offering a full package of services which may include product development, compliance, capital markets, sales, marketing, and distribution.

By delivering a full-service offering, white-label providers help to lower barriers to entry, opening up the opportunity for fund managers of any size to have their own ETFs.

The white-label market in the US is somewhat mature with several existing participants such as ETF Managers Group, Tidal Financial Services, Exchange Traded Concepts, and ETF Architect all having assisted with numerous product launches.

Goldman is the first major Wall Street institution to enter this fast-growing market, however, leveraging cutting-edge ETF technology as well as the firm’s decades of experience within capital markets.

Goldman has positioned the ETF Accelerator as distinct from white-label ETF platforms which tend to act more as a partner to prospective ETF issuers – these white-label providers often serve as either advisor or sub-advisor to the ETF and, notably, share in the fund’s profits. Goldman, instead, acts as a consultant and service provider, assisting with fund launch and integration into the ETF ecosystem, along with portfolio implementation and capital markets solutions, for a fee.

This distinction, combined with Goldman’s expertise, has already supported the ETF Accelerator in attracting a diverse range of clients, extending beyond asset management firms to encompass insurance companies, hedge funds, and family offices. Notably, GMO, led by veteran investor Jeremy Grantham, is also planning to debut its first ETFs through the platform.

Goldman is also set to expand the ETF Accelerator globally with plans to introduce UCITS-compliant ETFs in Europe in the coming quarters.

Commenting on the platform’s debut, Lisa Mantil, Global Head of Goldman Sachs ETF Accelerator, said: “We are thrilled to announce the first funds listed through the platform as we help our clients bring their active ETFs to market. We look forward to continuing to scale the business and support our clients’ ambitions in the industry. Leveraging our firm’s deep-rooted ETF expertise, relationships, and leading technology capabilities, Goldman Sachs ETF Accelerator provides a differentiated service to our clients, further supporting Goldman Sachs’ commitment to excellence, client service, innovation, and partnership.”

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