The demand for exchange-traded funds (ETFs) among investors shows no signs of slowing down. Steve Sachs, the global chief operating officer of Goldman’s ETF Accelerator, emphasizes that firms that do not offer ETF products may face significant consequences. Despite the challenges associated with launching an ETF, not providing clients with access to current and new investment strategies in this format could prove to be even more costly in the long run.
Sachs believes that firms without ETF offerings risk losing assets and clients to competitors who do provide these products. He stated in a recent interview that the “opportunity cost of not [offering ETF products] is greater” for many clients. This sentiment underscores the importance of staying competitive in the evolving investment landscape by meeting the growing demand for ETFs.
To assist clients in navigating the complexities of launching ETF products, Goldman Sachs introduced its ETF Accelerator in 2022. This digital platform aims to help clients launch, list, and manage their own ETF products efficiently and effectively. Sachs mentioned that the accelerator was established in response to significant client demand, particularly from institutional clients seeking guidance on entering the ETF space and delivering their investment strategies in an ETF format.
Client inquiries about launching ETFs surged following the passage of SEC Rule 6c-11 in 2019, which aimed to streamline the process for these funds. While the rule facilitated ETF launches, Sachs noted that building the necessary expertise, headcount, and risk management framework to launch an ETF can still take years. The Goldman Sachs accelerator platform addresses these challenges by leveraging the firm’s technology, infrastructure, and risk management expertise to help clients expedite their entry into the ETF market.
Since its inception, the ETF Accelerator has facilitated the launch of several ETFs, including Eagle Capital Management’s Select Equity ETF (EAGL), GMO’s U.S. Quality ETF (QLTY), and three funds from Brandes Investment Partners. Sachs highlighted that these firms opted to utilize the accelerator platform because they viewed the traditional route of building ETFs as costly and time-consuming. By leveraging Goldman Sachs’ resources, these firms were able to bring their ETF products to market faster and more affordably.
The increasing demand for ETFs underscores the importance for firms to offer these products to clients in order to remain competitive in the investment landscape. Firms that do not provide ETF offerings risk losing assets and clients to competitors who do. By leveraging platforms like Goldman Sachs’ ETF Accelerator, firms can navigate the complexities of launching ETFs more efficiently and effectively, ultimately helping them stay ahead in the ever-evolving financial industry.