Goldman Sachs (NYSE:GS) Asset Management has expanded its product range with the launch of two equity income exchange-traded funds (ETFs), GPIX and GPIQ. The move comes on the back of robust inflows into its broad market equity ETFs in 2023. The new funds, designed to mirror the S&P 500 and Nasdaq-100 indices, seek to offer consistent income and capital appreciation through an options-overwrite strategy.
These new offerings reflect a similar approach to JPMorgan (NYSE:JPM)'s successful active strategy lineup, particularly its JEPI and JEPQ funds, which have led active inflows in the $7 trillion ETF market. Bloomberg Intelligence reported that JEPI demonstrated resilience last year, dropping just 3.5% compared to an 18% plunge for the S&P 500, and drawing about $12.6 billion this year, nearing the record-breaking inflow set by Ark Innovation ETF (ARKK) in 2022.
Michael Crinieri and Brendan McCarthy from Goldman Sachs Asset Management anticipate growth in this sector amidst volatile markets and a hawkish Federal Reserve stance. They attribute the surge in the premium income category to income-seeking investors moving away from broad beta exposures and dividend funds. Eric Balchunas of Bloomberg Intelligence also pointed out that older investors seeking equity exposure but playing preventative defense contribute to this trend.
According to a survey conducted by VettaFi, many advisors anticipate a flat stock market by 2024. This outlook underscores the potential of covered call strategies like those employed by GPIX and GPIQ. Representatives from Goldman Sachs will discuss these ETFs at the upcoming VettaFi Income Strategy Symposium.
The firm's ETF asset base now stands at about $30 billion, bolstered by-products such as the Goldman Sachs Access Treasury 0-1 Year ETF and the Goldman Sachs MarketBeta U.S. Equity ETF. These new funds join a universe of similar products offered by entities like Amplify, Global X, JPMorgan, and NEOS. With approximately 28% of this year’s ETF launches involving derivatives, it marks the highest percentage in at least a decade, indicating growing interest in such strategies.
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