Goldman Sachs Asset Management on Thursday unveiled a fistful of exchange-traded funds focused on what it calls transformational themes in the global economy.
The following suite of five products is based on indexes developed by Motif Capital Management Inc., a wholly owned subsidiary of Motif Investing Inc. They invest across a range of sectors, market caps and geographies, and all have expense ratios of 0.50 percent:
• Goldman Sachs Motif Data-Driven World ETF (GDAT)
• Goldman Sachs Motif Finance Reimagined ETF (GFIN)
• Goldman Sachs Motif Human Evolution ETF (GDNA)
• Goldman Sachs Motif Manufacturing Revolution ETF (GMAN)
• Goldman Sachs Motif New Age Consumer ETF (GBUY)
The underlying indexes employ data analytics and automation to find companies that fit particular themes and sub-themes.
For example, with GBUY the “new age consumer” theme is separated into seven sub-themes: e-commerce; social media; online gaming; online music and video; experiences over goods; evolution of education; and health and wellness.
Motif uses semantic search algorithms to scour public documents such as regulatory filings, academic journals and patent filings to delineate which companies within an eligible investible universe fit the bill for a sub-theme. Those that pass muster are weighted by their “thematic beta” score that’s based on their relevance to the theme in question.
In the case of GBUY, that produced a portfolio of 119 companies led by top five holdings Amazon.com Inc., Alibaba Group Holding Ltd., Facebook Inc., Tencent Holding Ltd. and Nike Inc., which have weightings ranging from 3.3 percent to 2.0 percent.
GSAM is the asset management arm of Goldman Sachs Group and has built a solid ETF lineup since it entered the space in 2015. Its existing roster of 13 ETFs (not including the five newest products) has total assets under management of $11.4 billion, and four of them are billion-dollar or more products.
The concept of targeting so-called transformational sectors and industries is appealing, intuitive and potentially lucrative. ARK Invest’s line of (mainly) actively managed ETFs that invest in disruptive and transformational companies and themes have by and large done well both from asset gathering and performance perspectives.
Thematic funds with portfolios largely chosen by machines from iShares (Evolved U.S. Sector ETFs) and State Street (SPDR Kensho ETFs) are still struggling to resonate with investors.
GSAM’s new ETFs might be flashy, but that doesn’t mean they’ll catch the eye of investors.