For this week’s episode of ETF 360, ETF Trends CEO Tom Lydon and CIO Dave Nadig caught up with Steve Sachs, Managing Director and Head of Capital Markets for Goldman Sachs Asset Management, to discuss the Goldman Sachs Innovative Quality ETF (GINN) and 2021 innovation.
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As far as how Goldman Sachs is looking at 2021, Sachs explains how it could once again be unlike any other year, following the unprecedented nature of 2020. With that in mind, looking at how the markets and ETFs reacted, the capital markets still worked really well and are coming out of 2020 looking very good.
Sachs explains, “As we look ahead at Goldman Sachs for 2021 and beyond, shocks like this at the market happen, but while this one was unique as to why it happened, it’s essentially reset the economy. It’s reset the global capital markets, and certainly the environment we’re in right now from a zero rate environment. It’s tough to argue against equity risk in 2021 and beyond, and I think that’s going to be the key theme as we get into the first half of next year.
This all has to do with what they plan to tell clients as far as how to position their portfolios, relative to equity risk captures, and how they are thinking about the fixed income component. That said, in a zero rate environment, it’s a different sort of thing to have to consider.
Sachs adds, “When you think about what fixed income is for your portfolio, it’s the ballast. I think we all need to take a quick step and realize we’ve really been quite spoiled about what’s gone on in the fixed income markets over the last five to six years. We shouldn’t think about fixed income driving return in our diversified portfolios. I think that’s going to be the challenge as we get into 2021 and beyond until we see a more normalized rate environment, both in the U.S. and globally.”
Late ETF Bloomers
In terms of why Goldman Sachs got into the ETF world later than most, launching GSAM as an ETF issuer over time meant having a chance to survey the landscape on a global scale. In thinking about what they wanted to do in this business, with investors having requests related to what they could do with an ETFs solution, GSAM decided to deliver through the ETF wrapper as a way to contend with what was being asked of them.
This also explains why Goldman Sachs still only has a fairly small suite of ETFs. However, they do feel it’s a very powerful suite of funds.
For example, Sachs pointed to the Goldman Sachs Innovative Quality ETF (GINN), which has a unique strategy but was launched for the reasons already explained – a way of applying an ETF wrapper to what’s already going to work.
“These are the best views of our fundamental equity team at GSAM,” he said. “A team of 85+ professionals managing nearly $100 billion in assets, and it’s how they think about the world over the next two decades.”
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