Goldman Sachs recently filed paperwork with the Securities and Exchange Commission (“SEC”) for an innovative new product that might represent the “next frontier” in hedge fund ETFs: the Goldman Sachs Hedge Fund VIP ETF will be based on the popular “Hedge Fund Trend Monitor” research report put out by Ben Snider, David Kostlin, and other analysts from Goldman’s Global Investment Research division. The ETF’s reliance on Wall Street research is unique and may portend other entrants to the field.
The Hedge Fund Trend Monitor report tracks the 50 companies that matter most to fundamentally driven hedge funds, based on their 13F filings with the SEC. A 13F is a quarterly holdings report that fund management companies with more than $100 million invested in U.S. equities are required to file. Other ETFs, such as the Global X Guru Index ETF (GURU) and the AlphaClone Alternative Alpha ETF (ALFA), rely on hedge funds’ 13F filings, but the Goldman Sachs Hedge Fund VIP ETF would be the first put out by a Wall Street bank using its own research as the basis for the fund.
According to Bloomberg, the filing shows that Goldman Sachs is looking to leverage one of its greatest strengths to make its new product stand out among a crowded field of more than 1,800 ETFs put out by more than 50 companies. Indeed, Bloomberg’s Eric Balchunas goes so far as to question how long until Goldman and other Wall Street banks start packaging market calls and stock picks into ETFs – which would then allow investors to skip all the middlemen and their fees. Such a move could be devastating to less-resourceful competitors.
Based on its filing statement, the Goldman Sachs Hedge Fund VIP ETF is expected to debut sometime around April 23. Information about fees was not included in the filing, which also included information on another ETF: the Goldman Sachs High Sharpe Ratio ETF. Goldman has several other ETFs in the pipeline, awaiting SEC approval, including three smart-beta strategies and five hedge fund replication strategies. The big bank is making bold moves in the world of liquid alts.
For more information, read the SEC filing.