Investor demand for ETFs is not slowing down, and companies without ETF offerings may risk losing business, according to a Goldman Sachs expert.
Steve Sachs, CEO of global operations for Goldman's ETF Accelerator, points out that despite the time and resources needed to launch an ETF, not offering existing and new investment strategies like ETFs can be more expensive.
“Any number of our clients will tell you, the opportunity cost of not (offering ETF products) is greater,” he recently told CNBC's “ETF Edge.”
If a company doesn't have an ETF offering, Sachs believes “eventually those assets will leave and go to a competitor that does.”
To assist clients through the process of launching their ETF products, Goldman Sachs The company created ETF Accelerator, a digital platform that helps clients launch, list and manage their own ETF products. The accelerator was launched in 2022 in response to what Sachs described as significant client demand.
“Our core institutional clients were calling us and asking: 'How can we get into this ETF space? How can we deliver our strategies, both active and passive, in the ETF wrapper?'” he said.
According to Sachs, client inquiries about launching ETFs spiked following the passage of Rule 6c-11 from the SEC in 2019, which aims to help these funds launch more efficiently.
“While we wouldn't call it a big boom, it was certainly a catalyst,” Sachs said. “The idea was to make it easier to launch an ETF, but he didn't make it easy.” “At one point, we had over 41 customers contacting us with exactly the same problem: 'How do I do this, how do I move quickly, and can you help us?'
It can take years to build the expertise, headcount and risk management framework needed to launch an ETF, Sachs said. This is where Goldman's accelerator platform aims to help.
“(It) allows our clients to come in, launch, list and manage their own ETFs — but they do so outside of the technology, infrastructure and risk management expertise that Goldman is known for and get to market faster and cheaper than they could do on their own,” Sachs said.
Since its inception, the accelerator has facilitated the launch of five ETFs. The latest is Eagle Capital Management's Equity ETF (EAGL), which listed 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 Funds ETF (BINV). ).
“GMO, Brandes (and) Eagle Capital all felt that the journey to build it on their own would be too expensive and too long,” Sachs said. “They did not want to miss the opportunity cost of not delivering their investment strategies in the wrapper.”
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