Goldman's build-your-own ETF hub debuts first funds

A Goldman Sachs Group Inc. platform for Wall Street clients riding the ETF boom has given birth to its first investment funds.

Three exchange-traded strategies from Brandes Investments Partners began trading Thursday through the Goldman Sachs ETF Accelerator, according to a press release. Those are the first to launch through Goldman’s hub, which is designed to help institutional clients launch their own ETFs while providing services such as portfolio implementation and capital markets solutions.

The platform, which was announced in November 2022, is a culmination of client demand as actively managed ETFs boom in popularity, according to Goldman’s Lisa Mantil. Assets in such funds have ballooned in recent years, stoking an arms race among ETF issuers seeking to capture market share — as well as new entrants. In addition to traditional asset managers, Goldman has also seen interest from hedge funds, insurance companies and pension funds. The consulting service is the first of its kind among the large Wall Street banks.

“There were dozens and dozens of our core Goldman Sachs institutional clients calling, wanting to get into the active ETF space but had no idea how to do it,” Mantil, global head of the Goldman Sachs ETF Accelerator, said in a phone interview. “We’re doing everything within the walls and halls in Goldman Sachs to help a client launch, list and manage ETFs.”

The hub is similar to a white-label ETF business, where a third party helps issuers launch a product and assists on the distribution and ETF servicing front. However, unlike the white-label setup, Goldman won’t be listed as the funds’ investment adviser or necessarily be included in the branding of the product.

While getting a new ETF off the ground can be “really expensive” for many smaller investment managers, turning to Goldman helps mitigate some of those startup costs, Mantil said.

Active funds have attracted roughly 25% of the $330 billion that’s flowed into U.S. ETFs this year, according to Bloomberg data. That’s a record share, even though active ETFs only make up about 6% of the $7 trillion industry. As assets in actively managed strategies continue to grow, that should benefit Goldman’s platform, Mantil said.

“We do not have ambitions to have five to 10 clients or 50 funds. We’re building this in the most industrial way — hundreds of clients, thousands of funds,” Mantil said. “We have really big ambitions because we believe the next wave of AUM growth in the ETF space will be active.”

[More: Boom in new ETFs defies saturation warnings]