The Goldman Sachs ActiveBeta Emerging Markets Equity ETF (NYSEarca: GEM), a relatively new player in the emerging markets exchange traded fund space, has quickly caught the eyes of institutional investors.
GEM, which first began trading in September, has grown to $552.3 million in assets under management after attracting $375.6 million in net inflows this month, according to ETF.com.
According to Goldman Sachs, GEM experienced a major growth spurt over the past few days, growing to $400 million in AUM from $180 in just one day, due to large institutional investor interest.
Institutional investors have been early adopters of Goldman Sachs’ smart-beta ETFs. For instance, the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (NYSEArca: GSLC), which implements multi-factor strategies through its patented ActiveBeta Portfolio Construction Methodology, first hit the market with a cool $50 million in institutional seed money. [Goldman Sachs Fuels ETF Fee War with New Smart-Beta Strategies]
The sudden interest in the Goldman Sachs ActiveBeta Emerging Markets Equity ETF may have to do with the end of the year. While we can only speculate, the timing of the increased inflows suggests that some institutional investors may be implementing a tax-loss harvesting strategy with an emerging market ETF to maximize their portfolios.
ETFs are a great way for investors to capitalize on the tax-loss harvesting strategy if they do not want to be out of the market. To maintain exposure to the international equities, an investor could buy an ETF that tracks similar international exposure after selling the original international position to register a loss for tax purposes. [Tax Loss Harvesting: What You Need To Know]