Liquid Alternatives: The Goldman Sachs “Stealth” ETF

January 29, 2020 | Fund Updates, Liquid Alternatives

A new stealth exchange traded fund by Goldman Sachs will not disclose holdings daily.

Earlier this month, Goldman Sachs filed to set up a non-transparent ETF that would not disclose its investments daily, reports Markets Insider. The fund would, therefore, be different from run-of-the-mill ETFs which are required to publish details of their holdings every day in the interests of transparency.

The exchange-traded fund, dubbed The Goldman Sachs Multi-Asset Income ETF, plans to invest in American stocks, ADRs, master limited partnership investments, even other ETF’s.

More expensive but more beneficial?

According to Goldman Sachs, the new ETF would be more expensive than traditional ones. However the investment bank thinks, in the long run, it will prove more profitable for investors. That’s because it’s investment strategies would not be duplicated by other funds or traders.

“By keeping certain information about the ETF secret, this ETF may face less risk that other traders can predict or copy its investment strategy. This may improve the ETF’s performance,” the fund managers wrote in the filing.

This ETF is not so novel wrote in November about the SEC’s preliminary approval to the launch of non-transparent ETFs by T. Rowe Price, Natixis, Fidelity, and Blue Tractor.

In April last year, the SEC accorded preliminary approval for a non-transparent ETF model to Precidian Investments. So Goldman Sachs is not the pioneer in the field of stealth ETF.

The rationale behind these stealth ETF’s was that inflow-starved active fund managers could muscle into the ETFs arena. Investors have flocked to passively managed ETFs for their low costs and easy trading.

Related Story: Non-transparent ETFs Will Soon Get Active Managers Into the Act                                                  

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