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Tardy To The Party, But Goldman Is Already An ETF Force

October 8, 2015 10:06 am
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Tardy To The Party, But Goldman Is Already An ETF Force

For over the two decades, the U.S. exchange traded funds industry existed and thrived with nary a peep from Goldman Sachs Group Inc. (NYSE: GS). That changed last month when Goldman's Goldman Sachs Asset Management (GSAM) unit introduced its first ETF, the Goldman Sachs ActiveBeta US Large Cap Equity ETF (NYSE: GSLC).


New York-based Goldman may have been tardy to the ETF party, but it has announced its presence with authority. GSLC came to market with $50 million in assets under management, commitments from institutional investors. That alone made GSLC one of the most successful new ETFs to come to market this year, but Goldman's first ETF has since seen its assets swell to $64.4 million as of Oct. 6, according to GSAM's website


More impressive has been the debut by GSLC's emerging markets cousin, the Goldman Sachs ActiveBeta Emerging Markets Equity ETF (NYSE: GEM). Like its U.S.-focused counterpart, GEM came to market with a solid commitment from institutional investors, debuting with $20 million in assets under management. 


Someone likes GEM because the new emerging markets ETF has seen its assets under management total surge to $178.2 million as of Oct. 6, according to GSAM


Said another way, GEM has needed just six trading days to sees its assets rise almost nine-fold at a time when investors are tripping over themselves to depart established, well-known emerging markets ETFs. For example, investors have pulled $2.86 billion from the Vanguard FTSE Emerging Markets ETF (NYSE: VWO), the largest emerging markets ETF by assets, this year.


GEM takes the stocks found in the widely followed MSCI Emerging Markets Index and weights them based on based on low volatility, momentum, high quality and good value. That is the same strategy employed by the ActiveBeta® U.S. Large Cap Equity ETF.


Goldman appears to have learned an important lesson: If a company is going to be late to the ETF game, its products better separate themselves from established, do so quickly and costs are a good place to start. GEM charges 0.45 percent per year, which is reasonable among strategic beta emerging markets ETFs. By comparison, the $134.6 million First Trust Emerging Markets AlphaDEX Fund (NYSE: FEM) charges 0.8 percent per year.


On a related note, GSLC, Goldman's U.S.-focused offering, charges a paltry, Vanguard-esque 0.09 percent per year. In fact, GSLC sports the same expense ratio as the Vanguard Value ETF (NYSE: VTV). The average expense ratio for ETFs in the Morningstar US ETF Large Blend Strategic Beta category is 0.38 percent per year and the average annual fee for funds in the Morningstar US ETF Large Blend Index group is 0.36 percent, according to Goldman


News of GEM's stellar asset growth was originally reported by Business Insider



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