Market Overview

Goldman Sachs Adds TIPS Fund To Bond ETF Lineup

Goldman Sachs Adds TIPS Fund To Bond ETF Lineup

Goldman Sachs Group Inc. (NYSE: GS) added to its growing lineup of exchange traded funds Thursday with the debut of a new fixed income fund.

The Goldman Sachs Access Inflation Protected USD Bond ETF (CBOE: GTIP) is the newest bond ETF in the Goldman Sachs Asset Management (GSAM) suite.

What Happened

Treasury Inflation Protection Securities (TIPS) are usually favored by fixed income investors when inflation is rising and there has been some affinity for TIPS funds this year. Although there have been recent departures from the fund, the largest U.S.-listed TIPS ETF has added $217.31 million in new assets this year.

TIPS, which have high investment-grade ratings and often low yields, have par values that rise with Consumer Price Index (CPI). Investors looking for the inflation protection offered by TIPS often turn to ETFs because many traditional aggregate bond funds lack TIPS exposure.

Why It's Important

The new GTIP targets the FTSE Goldman Sachs Treasury Inflation Protected USD Bond Index, which focuses on TIPS with a minimum of one year to maturity and a minimum issue size of $5 billion.

“In an inflationary economic environment, GTIP provides investors with a potential hedge through its innovative screening approach to TIPS bonds,” Michael Crinieri, GSAM’s global head of ETF strategy, said in a statement. “The addition of GTIP further highlights the mission of our Access ETF lineup, providing investors with lower-cost bond funds.”

The new ETF has 10 holdings.

“TIPS present an attractive diversification opportunity for many investors with relatively low correlations to other major asset classes,” Jason Singer, portfolio manager for GTIP, said in the statement.

What's Next

GSAM has often launched new ETFs with highly competitive expense ratios and GTIP follows that trend. The new TIPS ETF has an annual fee of just 0.12 percent, or $12 on a $10,000 investment. That's inexpensive among smart beta bond funds, of which GTIP is one. Only a handful of established TIPS ETFs have lower fees than GTIP.

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