On Thursday, Goldman Sachs Asset Management launched its Future Planet Equity ETF, the firm’s first transparent, actively-managed equity ETF, according to a statement. Through the fund, GSAM will expose U.S. investors to companies that adhere to five main themes: clean energy, resource efficiency, sustainable consumption, circular economy, and water sustainability.
For GSAM, thematic investing isn’t new, said Katie Koch, GSAM’s co-head of fundamental equity, in a media roundtable on Wednesday. In fact, the firm has been involved with thematic investing for over six years, targeting mainly its European and Asian clients. With the Future Planet ETF, Koch said GSAM will be able to tap into its U.S. base and take advantage of the “sustainability revolution.”
“We are of the investment view that we are the world is changing very rapidly and that levels of innovation and disruption are extremely elevated,” she said.
According to Koch, the smartest way for GSAM clients to build out their public equity exposure is through “underrepresented,” yet innovative themes, such as technology, healthcare, and climate change. Koch said these themes are going to encompass the “great wealth-creating opportunities of the next decade,” emphasizing climate-related matters as “very important.”
In November 2020, GSAM introduced its first thematic ETF, the Innovate Equity ETF, which exposes investors to companies in the technology sector. For GSAM, after technology, climate was the obvious next step in the thematic ETF space, it said.
Alexis Deladerriere, GSAM’s head of international developed markets equity, said his team has been managing a similar strategy for offshore investors for about 18 months, and that he believes U.S. investors are finally ready to adopt what the new ETF has to offer. He attributed this to the increased awareness of environmental challenges on a global scale and asserts the new “green revolution” could be an attractive investment for long-term investors.
For Deladerriere, while challenging, now is an ideal time to release a climate-focused ETF: “For the first time ever, all the entities, whether it's governments, corporates, or consumers, are actually aligned in trying to drive this global sustainability revolution,” he said.
While the firm is still in the early stages of thematic ETF development, and overall has a smaller ETF suite compared to the majority of its competitors, Michael Crinieri, GSAM's global head of ETFs , said the new fund fits into the firm’s goal of creating an ETF suite with innovative products. For Crinieri, the Future Planet ETF is the “next evolution” in the institution’s overall ETF strategy.
“From the investment team perspective as we mentioned, we think market capitalization-weighted indices are very backward-looking, so we're innovating products to help clients future-proof their portfolio and tilt towards the themes that are going to drive a lot of great things in the world over the next 10 years,” said Koch.