The demand for exchange-traded funds (ETFs) among investors is showing no signs of slowing down. According to Steve Sachs, the global chief operating officer of Goldman’s ETF Accelerator, firms that do not offer ETF products may be at risk of losing business in the long run. Sachs emphasizes that the opportunity cost of not providing ETF offerings can be greater than the resources required to launch and manage these investment vehicles. He suggests that assets may eventually flow to competitors that do offer ETFs if a firm fails to adapt to this growing trend.
In response to the increasing interest in launching ETF products, Goldman Sachs introduced its ETF Accelerator platform in 2022. The digital platform is designed to assist clients in the process of launching, listing, and managing their own ETFs. The decision to create the accelerator was driven by the significant demand from institutional clients seeking to enter the ETF space and deliver their investment strategies in an ETF format. This move by Goldman Sachs reflects a commitment to helping clients adapt to the evolving landscape of investment products.
The passage of SEC Rule 6c-11 in 2019 acted as a catalyst for the growth of ETFs by streamlining the process of launching these funds. While the rule aimed to make it easier for firms to introduce ETF products, Sachs acknowledges that it still requires expertise, resources, and risk management capabilities to successfully launch an ETF. The accelerator platform by Goldman Sachs aims to bridge this gap by leveraging the firm’s technology, infrastructure, and expertise to help clients bring their ETFs to market efficiently and cost-effectively.
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 three funds from Brandes Investment Partners. These firms opted to work with Goldman Sachs’ accelerator platform due to the perceived challenges and costs associated with launching ETFs independently. Sachs highlights that by utilizing the accelerator, firms can expedite the process of launching, listing, and managing their ETFs while benefiting from Goldman’s industry expertise and resources.
Overall, the importance of offering ETF products in today’s investment landscape cannot be understated. Firms that fail to adapt to the increasing demand for ETFs may risk losing out on business opportunities and asset flows to competitors. By leveraging platforms like Goldman Sachs’ ETF Accelerator, clients can streamline the process of bringing their investment strategies to market in an ETF format, ultimately staying relevant and competitive in the ever-evolving world of investments.
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