Goldman Sachs plans to launch a bevy of emerging markets exchange-traded funds (ETFs) according to regulatory filings. These new funds could track the Brazilian, Chinese, Indian, and Korean stock markets, in addition to others.
As we understand it, they would be the first ETFs directly from Goldman, though Goldman already has some Exchange Traded Notes (ETNs) and there are also ETFs that currently exist following Goldman-constructed indices as benchmarks.
It’s an interesting move that shows how ETFs are increasingly being marketed to the big boys. We doubt Goldman is simply trying to build up its retail trader client base. These ETFs will likely be for institutions to replace smaller fund managers, we speculate. If a large U.S. fund wants some Brazilian exposure, they’ll be able to invest in a Brazil-tracking Goldman ETF rather than hire some plain vanilla Brazil fund who would simply track the benchmark anyways.
Index Universe: However, the filing only mentions index-based ETFs—not actively managed ones—which is interesting, given that Goldman is better known for its active management strategies.
Both the equity and fixed-income funds will also be allowed to utilise cash and in-kind redemptions, which should help keep spreads narrow. No mention was made of fees or what indexes would be used. A 40-APP is not a definitive signal that a firm will begin launching ETFs in the near future, but it does seem likely that 2010 could see the first ETFs from Goldman hit the market.
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