Investor demand for exchange-traded funds (ETFs) continues to rise, and firms without ETF offerings may risk losing business, according to Steve Sachs, global chief operating officer of Goldman Sachs’ ETF Accelerator. Sachs believes that not offering current and new investment strategies as ETFs may be even more costly in the long run, as assets could potentially move to competitors with ETF products. To assist clients in launching their own ETFs, Goldman Sachs created the ETF Accelerator, a digital platform that helps clients launch, list, and manage their ETF products. Sachs noted that client inquiries about launching ETFs increased following the passage of SEC Rule 6c-11 in 2019, which aimed to streamline the ETF launch process.
Despite the potential benefits of launching an ETF, Sachs acknowledged that it can still be a time-consuming and resource-intensive process. The ETF Accelerator platform aims to help clients overcome these challenges by leveraging Goldman’s technology, infrastructure, and risk management expertise to help them bring their ETFs to market more quickly and cost-effectively. Since its inception, the accelerator has facilitated the launch of five ETFs, including Eagle Capital Management’s Select Equity ETF (EAGL) and GMO’s U.S. Quality ETF (QLTY). Sachs emphasized that the platform has enabled clients to avoid the high costs and lengthy timelines associated with launching ETFs independently.
Firms such as GMO, Brandes Investment Partners, and Eagle Capital Management chose to work with Goldman’s ETF Accelerator because they believed that building their own ETFs would be both expensive and time-consuming. By using the accelerator platform, these firms were able to deliver their investment strategies in an ETF wrapper more efficiently and effectively than if they had done so on their own. Sachs highlighted the importance of not missing out on the opportunity cost of not offering investment strategies in ETF form, especially as investor demand for these products continues to grow.
The launch of the ETF Accelerator in 2022 was a response to significant client demand for assistance in entering the ETF space. The platform provides clients with the technology, infrastructure, and risk management expertise needed to launch, list, and manage their own ETF products. Sachs noted that while SEC Rule 6c-11 made it easier to launch an ETF, it still requires expertise, headcount, and risk management frameworks. By leveraging the accelerator platform, clients can access these resources and capabilities to bring their ETFs to market faster and more cost-effectively than if they had done so independently.
Overall, the increasing investor demand for ETFs presents both opportunities and challenges for asset management firms. Firms without ETF offerings risk losing assets to competitors who do offer ETF products, making it crucial for them to consider launching their own ETFs. The ETF Accelerator created by Goldman Sachs aims to help clients overcome the hurdles associated with launching ETFs by providing them with the technology, infrastructure, and expertise necessary to bring their products to market efficiently. By working with the accelerator platform, firms can capitalize on the growing demand for ETFs and avoid missing out on the potential benefits of offering their investment strategies in ETF form.
