Goldman Sachs Joins the Active ETF Frenzy with New Call-Writing Funds

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Goldman Sachs Asset Management is entering the increasingly competitive active ETF market with two new offerings: the Goldman Sachs S&P 500 Core Premium Income ETF (GPIX) and the Goldman Sachs Nasdaq-100 Core Premium Income ETF (GPIQ). These actively managed ETFs, which began trading on Thursday, aim to provide a combination of equity exposure with steady income streams and downside protection.

GPIX tracks the S&P 500, while GPIQ follows the Nasdaq-100. Both funds incorporate call-writing strategies tied to their respective benchmarks to generate additional yield. The ETFs charge a fee of 29 basis points. Goldman Sachs is following in the footsteps of JPMorgan, which has seen significant success with its active ETFs, including the JPMorgan Equity Premium Income ETF (JEPI) and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ). JEPI and JEPQ have attracted substantial inflows in 2023, driven by their promise of downside protection and consistent payouts, inspiring other fund issuers to launch similar products.

The active ETF space has become increasingly competitive, with issuers like BlackRock and Morgan Stanley introducing funds that resemble JPMorgan’s offerings. Goldman Sachs is confident in the growth potential of these strategies, particularly in a volatile financial market and against the backdrop of a still-hawkish Federal Reserve. Michael Crinieri, Global Head of ETF at Goldman Sachs Asset Management, noted that these strategies provide target yields that help reduce the volatility of equity exposure. They aim to deliver outperformance in a down market while still allowing for participation in an up market. JEPI, in particular, demonstrated its ability to limit losses during market downturns, dropping only 3.5% in 2022 compared to an 18% plunge in the S&P 500.

ETF Newz Says:

Goldman Sachs joins a growing trend of asset managers launching active ETFs with call-writing strategies, driven by investor demand for income and downside protection in a challenging market environment.

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