Goldman Sachs Dreams of Moving up the ETF Ranking

Posted on 03/28/2019


Goldmans Sachs is betting on ETFs and model portfolios for clients. The firm’s spot in ETF world is far behind the heavyweights of Vanguard, Fidelity Investments, and BlackRock.

Goldman Sachs announced plans to acquire Standard & Poor’s model portfolio business (Standard & Poor’s Investment Advisory Services), which offers ETF’s and mutual funds to financial advisors for the purpose of selling them to their clients. The move could provide added exposure for Goldman Sachs in a crowded ETF environment. Fund rates are low, and competition is fierce. Goldman was late to the party, opening an ETF business in 2015, but has since scaled up to provide 18 funds. Investment advisors have increasingly been ditching equity analysis in favor of purchasing broad market index funds, such as ETFs. [private_standard]The S&P Global unit that Goldman is purchasing also manages equity portfolios that follow a rules-based investment model, this includes US$ 33 billion in assets. Terms of the deal were not disclosed, and the closing should come in the summer of 2019.

Mike Crinieri, head of ETF Strategy at Goldman Sachs, explained the reason for the acquisition and the abounding options that will come out of it: “It’s really about giving advisors the choice. Many advisors really appreciate that open architecture structure and are willing to pay a fee for that. And then some advisors prefer a zero-cost proprietary approach, where we’ll use our own ETFs, and our own ETFs are differentiated from the traditional market cap-weighted products as well, so some advisors will appreciate that approach.” Goldman Sachs’ proprietary portfolios will depend on the Goldman Portfolio Solutions team, which is known for helping institutional clients with investment strategies. Crinieri sees the new operation as a win-win, “We’re taking that expertise and now packaging that and making that available to all investors.”

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