She points to a company like Etsy that has benefited from ecommerce penetration and its differentiated online marketplace. “They focus on handmade, personal or vintage items from independent creators. [Also,] we really like the business model," she said. "It’s asset-light because they connect buyers and sellers. They don’t hold inventory themselves, and they have high margins and strong free-cash flow-generation.” The fund also owns cosmetics and skin care retailer Ulta Beauty, she said, because the company turned to popular distribution methods like curbside pickup in response to the Covid-19 pandemic, initiatives that have built customer loyalty, Ansell said.
The fund picks 40 to 50 high-conviction ideas, she said, and the firm is global, looking for opportunities in emerging markets, where it says it has 25% exposure to take advantage of the large numbers of young consumers in emerging countries.
Jenny Chang is a portfolio manager for Goldman Sachs Future Health Care Equity ETF (GDOC). Chang said that the Covid-19 pandemic has accelerated the pace of innovation in the healthcare space. “Many of these innovations are still very early, so we see a very long growth runway,” she said. The GDOC fund focuses on four things: genomics, precision medicine, tech-enabled procedures and digital healthcare, she said. “We have seen genomics sequencing costs drop from being hugely expensive to being done now for a few hundred dollars, and [it] takes only a few days. … The explosion of insight that we’re gaining as a result is leading to a boom of next-generation medicine.” At the same time, procedures are becoming less invasive, she said, because of new tech. She points to robotic surgery, transcatheter aortic valve replacement, liquid biopsies and wearable diabetes devices. These things lead to “better [outcomes], better access, better safety and ultimately lower healthcare costs.”
Anant Padmanabhan, another portfolio manager on the GDOC fund, said the fund avoids legacy benchmark areas such as insurers and drug distributors, and he said the fund is underweight in large-cap pharma. GDOC will look for 60 to 90 stocks globally. One investment, for example, is Beam Therapeutics, a pioneer gene editing company known for “base editing,” which corrects point mutations in DNA to cure diseases. The fund is also invested in robotic surgery company Intuitive Surgical and Novanta, a maker of precision motion systems for robotic surgery, he said.
Kristin Kuney, a portfolio manager for the Goldman Sachs Future Real Estate and Infrastructure Equity ETF, said the increasing need for data and sustainable infrastructure will drive trends in this sector and adds that the disruptors will be the ones housing and building out infrastructure for the disruptors in other fields—think of those providing lab space for biotech firms and cell tower makers as well as those building out for artificial intelligence and autonomous vehicles. American Tower, for one, she said, “has the largest global portfolio that offers exposure to explosive growth both in the developed markets that are rolling out 5G and in emerging markets like Brazil and India, which are also rapidly growing as smartphone penetration continues to increase.”
Medical research will also fuel demand for life science office space. “Unlike traditional office,” she said, “one cannot really do drug research from their home.”
The total expense ratio for the funds is 75 basis points, Goldman Sachs said.
The launch of the funds follows those of two other active thematic funds recently launched by Goldman Sachs: the Goldman Sachs Future Tech Leaders Equity ETF (GTEK) and the Goldman Sachs Future Planet Equity ETF (GSFP).