Palo Alto Networks is among the stocks in the Goldman ETF’s portfolio.
David Paul Morris/Bloomberg
Goldman Sachs has apparently decided to take on ARK Invest in the market for innovation-focused exchanged traded funds.
Thursday morning, Goldman Sachs Asset Management is unveiling the Goldman Sachs Future Tech Leaders Equity ETF, an actively managed fund that will invest in listed technology companies with market capitalizations of less than $100 billion, across both developed and emerging markets. The fund, which is launching Thursday, will trade on the NYSE under the ticker GTEK.
In a call with reporters, portfolio managers Sung Cho and Brook Dane noted that the new fund is a version of a strategy Goldman has been managing for investors outside the U.S., with about $5 billion now under management. Their view is that investors should be diversifying their tech investments away from the five megacaps that now make up about a quarter of the S&P 500
— Apple (ticker: AAPL), Alphabet (GOOGL), Amazon .
com (AMZN), Facebook (FB), and Microsoft (MSFT)— and looking for companies that will drive innovation in the years ahead.
The new fund is reminiscent of the popular ARK ETFs created by high-profile portfolio manager Cathie Wood, and in particular, the ARK Innovation ETF (ARKK), a fund with about $25 billion in assets. But there are clear points of differentiation.
For one thing, the new Goldman fund is targeting small-cap and midcap stocks. That would rule out some names in the ARK fund, which has almost 10% of its assets in Tesla (TSLA). The Goldman fund also intends to cast a wide net, with nearly half of the holdings in companies based outside the U.S., and 25% to 35% in emerging markets.
“Many investors are overexposed to mature U.S. mega cap technology companies,” Katie Koch, co-head of the Fundamental Equity business within Goldman Sachs Asset Management, said in a statement. “We believe the dominant tech franchises in 10 years will be very different from the platforms we all know today. We are working diligently on behalf of our clients to try and identify future tech leaders with robust growth rates and the potential for outsized returns.”
The Future Tech Leaders fund intends to invest in areas like cloud computing, online entertainment, semiconductors, and fintech, the portfolio managers said.
Asked about stocks held in the portfolio, the managers offered a few examples. In enterprise software, they cited Atlassian (TEAM), an Australia-based provider of workflow management software, and Kingdee International Software (KGDEY), a Chinese company that sells cloud-based enterprise resource planning software. Their fintech bets include Adyen (ADYEY), an Amsterdam-based payments platform company, and Bill.com (BILL), which provides financial software for midsize businesses. Other investments include the security software company Palo Alto Networks (PANW) and Entegris (ENTG), which provides specialty chemicals and materials to the semiconductor market.
Write to Eric J. Savitz at [email protected]
