‘Shake things up’: Industry reacts as Goldman Sachs AM enters European ETF market

Tom Eckett

a man with a beard

Industry commentators are welcoming the increased competition Goldman Sachs Asset Management (GSAM’s) entrance brings to the European ETF market, however, are disappointed the product is not the same price as the US version.

Earlier today, the US giant listed a multi-factor US equity ETF on the London Stock Exchange, the Goldman Sachs ActiveBeta US Large Cap Equity UCITS ETF (GSLC).

Peter Thompson (pictured), who joined GSAM last year to head-up the European ETF business, revealed the firm is planning to launch a number of ETFs in the coming months that will be a mix between active and passive strategies.

Both James McManus, head of ETF research at Nutmeg, and Matt Brennan, fund manager at AJ Bell, said the increased competition in the European market would only benefit investors.

McManus commented: “Goldman have established themselves as a serious new entrant to the market in the US. As asset allocators increasing the diversity of investment options is always appealing.”

However, Brennan said he was “disappointed” to see GSAM charge more for the European product. With an ongoing charges figure (OCF) of 0.14%, GSLC is 5 basis points more expansive than its US counterpart.

“It is disappointing to see GS pricing the European product at a higher price to the US sister range,” he continued. “We would like to see equivalent pricing to prove they are truly committed to entering the market.”

Furthermore, Brennan called on GSAM to disrupt the fixed income and commodities space where pricing is far less competitive than equity ETFs.

He added GSAM’s smart beta approach gives them the chance to take market share from active managers as well as collecting assets from investors who prefer the passive option.

Along with its ActiveBeta range, GSAM also runs low-cost ETFs through its Access suite and thematic ETFs through its Motif range in the US.

“We hope Goldman Sachs entering Europe may shake things up. Their heritage in commodities and fixed income could lead to more competition in these asset classes.”

Meanwhile, Ben Seager-Scott, head of multi-asset at Tilney, said the entrance highlighted the continuing development of the ETF landscape in Europe, with more and more US players looking at the continent as a serious opportunity.

However, Nicolas Rabener, managing director of FactorResearch, did question the firm’s strategy to launch a multi-factor product given it helps run one of Europe’s biggest ETFs in this space, the £526m Invesco Goldman Sachs Equity Factor Index World UCITS ETF.

“Somewhat unusually, GSAM is partially cannibalising its own ETF, which is priced more expensively at 0.55%,” he added.


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