Goldman moves into active fixed income ETFs in Europe

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Goldman Sachs Asset Management has entered the active exchange traded fund market in Europe as it shifts its focus towards the rapidly growing sector.

The US fund house listed an active investment grade corporate bond ETF last week, denominated in both US dollars and euros, and is set to launch a high yield strategy as it looks to reignite its ETF business across the continent.

Having launched its first European ETF in 2019, Goldman Sachs has struggled to build scale in its passively managed product range.

The new launches come as the cohort of asset managers looking to enter the active ETF space in Europe has been growing steadily because the ability to gain scale with passive products has become more challenging.

This article was previously published by Ignites Europe, a title owned by the FT Group.

Mara Dobrescu, fixed income ratings manager at Morningstar, said Goldman Sachs was turning to active ETFs as a result.

“From recent conversations with Goldman Sachs, it seems clear the firm plans to focus its product development on active rather than passive ETFs going forward,” she said.

“It’s extremely difficult to compete on passive ETFs for firms if you’re not able to build critical scale. By comparison, the barriers to entry on active ETFs are somewhat lower.”

Goldman Sachs said the two new ETFs would be managed by its fixed income and liquidity solutions team, which oversees $1.8tn of assets globally.

Dan Caps, investment manager at wealth manager Evelyn Partners, said Goldman Sachs’ move into active ETFs “makes perfect sense”.

“The ETF industry is used to a focus on passive strategies which, given the scale required to be competitive, is a difficult market to disrupt. With the rise of active ETFs, the strategies themselves are the differentiators,” he said.

Listed on the Deutsche Börse and the London Stock Exchange, the ETFs will aim to outperform their respective Bloomberg benchmarks using an “active investment strategy”.

Caps added Goldman Sachs’ new active ETFs appeared more “benchmark aware” than other products in the space as the company “looks to strike a balance between active risk and alpha opportunities”.

“We have seen a number of these beta-plus type strategies launch in the last year or so, but most notably in the equity space,” he said.

“I’m not surprised that we’re seeing similar strategies launched within the fixed income asset class. There are also some concerns about fixed income index construction, which could make an active overlay even more attractive.”

Assets under management in active ETFs in Europe rose to $56.7bn in 2024, according to Morningstar data, but remain a tiny slice of the overall $2.2tn European ETF market.

“It’s not surprising to see Goldman Sachs testing the active ETF waters [in Europe] with fixed income products,” Dobrescu said.

Hilary Lopez, head of the Europe, Middle East and Africa third-party wealth business at Goldman Sachs AM, said: “We believe the active ETF market is poised for continued growth, particularly in fixed income.

“Recent trends demonstrate strong demand for active strategies, with active fixed income ETFs seeing remarkable inflows globally.”

The asset manager has a more established active ETF business in the US, which recorded $667mn net inflows in 2024, taking its assets under management to $1.8bn across 13 ETFs, according to Morningstar data.

The group houses $38.7bn across 49 ETFs globally, covering both active and passive strategies.

*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at igniteseurope.com.