GSAM launches factor-tilted North American energy infrastructure ETF

Jul 18th, 2023 | By | Category: Equities

Goldman Sachs Asset Management has launched a new ETF in the US providing smart beta exposure to the full opportunity set of energy infrastructure securities listed in North America.

GSAM launches North American energy infrastructure ETF

The ETF provides broad exposure to energy infrastructure securities in North America while tilting towards quality and growth factors.

The Goldman Sachs North American Pipelines & Power Equity ETF (GPOW US) has been listed on Cboe BZX Exchange with an expense ratio of 0.55%.

The fund is linked to the newly developed Solactive Energy Infrastructure Enhanced Index which selects its constituents from a universe of US and Canada-listed securities within the midstream energy sector or the following RBICS industries: LPG, Propane & other Distributors; Oil & Gas Transportation and Infrastructure; and Alternative Wholesale Power.

To be eligible for index inclusion, a security must have a market capitalization above $500 million and an average daily trading volume greater than $1.5m.

The methodology first screens out companies deriving more than 20% of their revenue from refining petroleum, more than 50% from oil & gas operations support activities, or more than 20% from petroleum water transportation.

The remaining constituents are weighted using a modified equal-weight approach that tilts towards securities with superior fundamental scores based on growth (estimated using implied total return, EPSE growth, and medium-term trading momentum) and quality (ROIC, leverage, cash flow accruals, and balance sheet accruals) factors.

Diversification restraints limit the cumulative weight of master limited partnerships (MLPs) to 24% and the sum of all securities with weights above 5% to 49%.

Commenting on the new listing, Michael Crinieri, Global Head of ETFs at Goldman Sachs Asset Management, said: “The launch of GPOW furthers our commitment to the energy sector by delivering a transparent and innovative investment solution that meets our client’s needs. GPOW’s underlying index was developed with input from our energy specialists and reflects the global breadth and expertise of our franchise, combined with the fundamental thought process of our Fundamental Equity portfolio managers. We look forward to the potential long-term impact in this industry by delivering our clients diversified exposure to the energy sector focused both on quality and growth.”

Kyri Loupis, co-Chief Investment Officer of the Liquid Real Assets business in Fundamental Equity within Goldman Sachs Asset Management, added: “As one of the largest asset managers in the energy infrastructure sector, the launch of GPOW further demonstrates the expertise of our business. We have designed a product for clients that we feel provides more complete exposure to the energy infrastructure sector relative to other investment options – including conventional energy businesses, master limited partnerships, and renewable companies – while also being packaged in a tax-efficient vehicle that applies the principles of active management in a rules-based framework.”

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