GSAM On The Unique Nature Of Their Corporate Bond ETF, 'GSIG'

With Goldman Sachs Asset Management’s recent launch of their new ETF, the Goldman Sachs Access Investment Grade Corporate 1-5 Year Bond ETF (NYSEArca: GSIG), there are many reasons to look into the smart beta exposure it is offering to the corporate bond market.

ETF Trends spoke with GSAM’s Steve Sachs, Managing Director and Head of Capital Markets, and Michael Crinieri, GSAM’s Global Head of ETF Strategy, about what GSIG is bringing to its Access ETF suite. 

“It’s that overarching strategy,” Sachs said. With GSAM continuing to expand their fixed-income ETF lineup of the $2 trillion GSAM manages, with half being in global-fixed income, it’s the expertise they are well known for around the globe. So, having funds that have supported the ETF business since the beginning, GSAM is focused on the strategies that are core to the company’s value proposition.

“Being a global fixed-income manager, this is us expanding that lineup, and we’ll continue to do that,” Sachs added. “We have a number of other funds in registration, and it’s a very large, strategic focus of the firm for our ETF platform to continue to deliver that world-class fixed-income management to investors who want to access it through the ETF wrapper.” 

Related: GSAM Debuts Smart Beta Investment Grade Corporate Bond ETF 

Speaking specifically to GSIG, it is a natural extension of the access suite. It is the same methodology that underlies the Goldman Sachs Access Investment Grade Corporate Bond ETF (GIGB). Looking at a universe of fixed-income securities, GSIG follows the pattern of the others in the suite – screening for liquidity but also taking the extra step of screening for fundamentals.

Much like the thought of managing credit exposure in actively managed strategies, with all things being equal, it’s appropriate to want to examine the health and wealth of a bond issuer, as opposed to just its liquidity.

“In the case of GSIG, just like GIGB, we’re looking at leverage and margins,” Sachs explained. “We want to see leverage decreasing. We want to see margins increasing. And much like GIGB, when you look at that in the rankings, the first 9, risk/reward, is very similar. It’s the 10th spot, and short term credit is no different from the long term. It’s about what you don’t own versus what you do own.”

“Obviously then, given the market environment, short duration is something that the client base is asking for, and we think beyond as well.”

ETF Portfolio Building Blocks

Crinieri also had some things to add regarding GSIG, noting how the goal is to continue to add to the building blocks for advisors to construct comprehensive portfolios better.

He adds, “One of the things we do is we spend a lot of time with investors, both our clients, but also internal GSAM investors. We spend a lot of time with the global portfolios solutions team as well. These are the portfolio managers who power both our ETF models and our massive OCIO business, where we put together asset allocation portfolios for institutional clients.”

This is about plotting out the areas of the market to provide exposure to. That’s one of the inputs when GSAM considers building out the access suite. These are products that will be used in the model portfolios, and there’s also broader demand for other asset allocators as well.

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