Goldman Sachs Group Inc (NYSE:GS) has filed with the SEC to set up a number of new alternative exchange-traded funds, including six funds named “ActiveBeta” and five hedge fund-themed funds. The new funds will be passively managed and comprised of international companies, emerging markets, and Europe and Japan equities, in addition to large-cap and small-cap U.S. stocks.
Goldman Sachs to offer 11 specialty and alternative funds
In Friday’s filings with the Securities and Exchange Commission, Goldman Sachs Group Inc (NYSE:GS) detailed its plans for the fast-growing ETF market, filing documents to offer 11 specialty and alternative funds. The firm plans funds with the brand name “ActiveBeta,” which attempt to outperform market-cap-weighted market indexes. These funds will deviate from the methodology of allocating to securities based on their size as traditional indexes do, instead preferring factors like low volatility.
David Einhorn's Greenlight Capital funds were up 11.9% for 2021, compared to the S&P 500's 28.7% return. Since its inception in May 1996, Greenlight has returned 1,882.6% cumulatively and 12.3% net on an annualized basis. Q4 2021 hedge fund letters, conferences and more The fund was up 18.6% for the fourth quarter, with almost all Read More
Despite the funds relying on rules-based indexes in making securities selections, many consider them as “active” management, as they deviate from traditional indexes such as the S&P 500 or the Russell 2000.
Hedge-fund-style strategies have also been gaining steam in retail wealth management since the 2008-2009 financial crisis as advisers looked to tamp down the risks in stock and bond markets.
Goldman Sachs’ foray into actively managed ETFs
As reported by ValueWalk in September, Goldman Sachs Group Inc (NYSE:GS) announced its intention to enter the active ETF market when it sought permission from the SEC to launch an equity dividend ETF. Goldman also sought the SEC’s permission to self-index, which would allow the firm to sell ETFs pegged to its own in-house indexes. With this strategy, Goldman Sachs joined JPMorgan Chase & Co. (NYSE:JPM), which launched its first ETF in June, and Wells Fargo & Company (NYSE:WFC), which applied for regulatory permission in August.
As reported by us earlier, ETFs are growing in sophistication. State Street Global Advisors is developing a risk aware EFT, which might sound like a product that could have appeared in the Terminator movie series about self-aware robots that make decisions in human-like fashion.
In its filing Friday, Goldman Sachs Group Inc (NYSE:GS) disclosed that the hedge fund-themed ETFs will include those focusing on event-driven and equity long-short strategies. It is felt the funds’ underlying indexes will seek to replicate the returns of hedge funds using those strategies. However, Goldman didn’t give details in its filing on the “ActiveBeta” ETFs.
The firm named Goldman Sachs Asset Management LP as the index provider. The ETFs are to be listed on the NYSE Arca exchange, where the bulk of all ETFs are traded.