Goldman Sachs rolls out smart beta US aggregate bond ETF

Sep 11th, 2020 | By | Category: Fixed Income

Goldman Sachs Asset Management has rolled out a new ETF offering comprehensive, smart beta exposure to the US investment-grade bond market.

Goldman Sachs rolls out smart beta US aggregate bond ETF

The latest ETF from Goldman Sachs provides comprehensive US investment-grade bond exposure.

Priced with an expense ratio of 14 basis points, the Goldman Sachs Access US Aggregate Bond ETF (GCOR US) is GSAM’s seventh “Access” fixed income ETF.

GSAM’s Access ETFs seek to deliver superior risk-adjusted returns compared to purely passive beta counterparts by minimizing exposure to issuers showing signs of deterioration through the systematic use of certain liquidity and fundamental screening criteria.

Listed on NYSE Arca, GCOR is the first aggregate bond ETF offered by GSAM and will provide exposure across the complete, or aggregate, US bond market, including Treasury, government-sponsored, asset-backed, mortgage-backed, and corporate bonds.

The fund is linked to the FTSE Goldman Sachs US Broad Bond Market Index which has been co-developed by FTSE Russell and GSAM. To be eligible for the index, a bond must have at least one year remaining until maturity and be rated at least BBB- by Standard & Poor’s or Baa3 by Moody’s. Bonds must also meet certain thresholds for minimum amount outstanding.

The current mix is such that Treasury bonds make up 42% of the index, corporate bonds contribute 31% and mortgage-backed securities 26%, plus cash. Whilst the index comprises in excess of 7000 names, the fund presently holds just 219 owing to the representative sampling indexing strategy the fund’s portfolio managers deploy.

The ETF has a weighted average yield to maturity of 1.25%, a weighted average coupon of 3.59%, an effective duration of 6.22 and a weighted average maturity of 14.67 years.

Commenting on the launch, Michael Crinieri, GSAM’s Global Head of ETF Strategy, said, “We pride ourselves on our ability to deliver innovative products that meet client demand and market need, as we have continued to do with our Access fixed income ETF suite. GCOR will provide investors with a simple and transparent aggregate exposure that is enhanced by GSAM’s proprietary smart beta strategies, all backed by the global platform and resources of Goldman Sachs.”

The US aggregate bonds space is a relatively crowded field with a number ETFs already well established. The largest of these is the giant iShares Core U.S. Aggregate Bond ETF (AGG US) which houses just shy of $80 billion in assets, making it the largest bond ETF globally. Its nearest neighbour is the $61bn Vanguard Total Bond Market ETF (BND US).

GCOR comes seeded with $50m.

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