Investor demand for exchange-traded funds has not slowed down, and companies that don’t issue ETFs may risk losing business, a Goldman Sachs expert said.
Steve Sachs, global chief operating officer of the Goldman Sachs ETF Accelerator, pointed out that although launching an ETF requires time and resources, current and new investment strategies are not available because the cost of ETFs may be higher.
“Any of our clients will tell you that the opportunity cost of not offering an ETF product is greater,” he recently told CNBC’s “ETF Edge.”
Sacks believes that if a company doesn’t have an ETF product, “eventually those assets will leave and go to competitors that do.”
To help clients through the process of launching their own ETF products, Goldman Sachs created it ETF accelerator, a digital platform that helps clients launch, list and manage their own ETF products. The accelerator is launching in 2022 to meet what Sachs said is huge customer demand.
“Our core institutional clients are calling and asking, ‘How do we get into this ETF space? How do we deliver our strategies, whether active or otherwise, in an ETF wrapper?'” he said.
According to Sacks, client inquiries about the launch of ETFs surged following the passage of the Act. SEC Rule 6c-11 in 2019 to help these funds launch more efficiently.
“While we wouldn’t call it a big boom, it was certainly a catalyst. The idea was that it made it easier to launch ETFs, but that’s not the case,” Sacks said. “At one point, we had more than 41 A client called us with the exact same question: ‘What do I do, how do I take action quickly, can you help us?'”
Sachs said it could still take years to build the expertise, people and risk management framework needed to launch an ETF. This is where the Goldman Sachs Accelerator Platform aims to help.
“(It) allows our clients to enter, launch, list and manage their own ETFs but rely on the technology, infrastructure and risk management expertise that Goldman Sachs is known for and essentially get to market faster and cheaper than they can by them. myself,” Sacks said.
Since its inception, the accelerator has facilitated the launch of five ETFs.The most recent is Eagle Capital Management’s Select Stock ETF (EAGL), which went public last week.
Other ETFs launched through the accelerator include GMO’s US Quality ETF (QLTY) and three funds from Brandes Investment Partners: Brandes Small-Mid Cap Value ETF (BSMC), US Value ETF (BUSA) and International ETF (BINV).
“GMO, Brandes (and) Eagle Capital all believe the journey to build it themselves is too expensive and too long,” Sachs said. “They don’t want to miss out on the opportunity cost of not offering an investment strategy in the package. “
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