With a focus on artificial intelligence, an exchange traded fund will be launched on Thursday, becoming the first ETF in Europe to debut through a platform managed by Goldman Sachs catering to small fund managers.
The AI-Enhanced Eurozone Equities Ucits ETF, overseen by Baader Bank in Germany and driven by an investment strategy designed by Ultramarin, a specialist in AI-based forecasting models, is set to be listed on the Xetra exchange in Frankfurt.
This milestone launch signifies the growing significance of the ETF industry in Europe, which recently surpassed $2 trillion in assets. It also marks the first instance of a major financial institution aiding a European ETF issuer in bringing a fund to market.
Goldman’s ETF Accelerator, similar to “white label” platforms that support the launch of third-party funds, has gained traction in the US and is making inroads in Europe. The platform provides smaller fund managers and new entrants the opportunity to launch ETFs more efficiently and affordably, offering services such as distribution, marketing, capital market support, custody, compliance, seed funding, and administration. Since its launch last year, Goldman’s platform hosts five US-listed ETFs with a combined $3 billion in assets.
The global head of the Goldman Sachs ETF Accelerator, Lisa Mantil, emphasized the benefits of the Ucits fund structure, highlighting its potential distribution to over 80 countries across Europe, Asia, and Latin America. She views this launch as a validation of their ETF Accelerator’s global capabilities and foresees more launches in the future.
In the US, platforms like Tidal Financial Group, Exchange Traded Concepts, and Alpha Architect service hundreds of ETFs. In Europe, London-based HANetf leads with 32 ETFs and other exchange traded products totaling $4 billion in assets, with plans to launch a dozen more funds soon, according to Hector McNeil, co-chief executive.
McNeil welcomed Goldman’s entry into the European market, expressing a desire for more competition to foster industry growth. He highlighted that the white-label route could be appealing to small ETF issuers and new entrants, who are faced with the option of building their own infrastructure, acquiring an existing issuer, or utilizing a white-label platform.
Some new entrants have recently pursued acquisitions, with Ark Investment Management acquiring Rize ETF and Janus Henderson acquiring Tabula as an alternative to the white-label route.
Comparing the US and European markets, McNeil argued that America’s more advanced white label sector was a key reason for having more issuers, with only about 10% of meaningful asset managers in Europe having launched ETFs so far, compared to 50-60% in the US.
The head of product at Leverage Shares, José Poncela, stated that their pipeline of potential sign-ups is growing, reflecting an industry-wide trend. He highlighted the interest from various players, including hedge funds, seeking to translate their strategies into an ETP.
Paul Heffernan, CEO of Waystone ETFs, expressed that the wider asset management industry sees the benefits of the ETF wrapper, especially in the fragmented European market, making the white-label business highly appealing in the region.
Poncela, while disappointed by the relatively lower prevalence of white labeling in Europe, mentioned that scaling up to $100 million is easier in the US than in Europe, emphasizing the differences between the two markets.
Ultramarin’s founder and managing director, Daniel Willmann, described the launch as the first AI-based active ETF in Europe and a starting point for a family of ETFs they aim to introduce in the next five to ten years.