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Interview Highlights

Michael Crinieri
Managing Director, Global Head of ETF Strategy
Goldman Sachs Asset Management

Tell us why you’re here today.
First of all I just want to say that we’re thrilled to be here at the New York Stock Exchange this morning ringing the opening bell. We’re celebrating the launch of our newest ETF, the Goldman Sachs Access Investment Grade Corporate Bond ETF, ticker GIGB.

Tell us about GIGB, your first entry into the smart beta fixed income space.
As we've done with all of our ETF launches, we’re spending a lot of time focusing on feedback from our clients and developing portfolio solutions for them. Increasingly, our clients are looking for better asset allocation tools and better building blocks, specifically in fixed income; we’re focused on building a suite of products to meet these needs.

We’re starting with GIGB, which is the Goldman Sachs Access Investment Grade Corporate Bond ETF. This product gives investors the opportunity to access the corporate bond market in what we think is a more intelligent way.

We’re focused on doing a handful of screens: first, we start with a large index of corporate bonds, screening for liquidity; then, we conduct fundamental screens, looking at operating margin and leverage, with the goal being to identify the bonds that have the worst characteristics and potentially the worst performance, eliminating those from the index and from the portfolio.

The goal is to give clients a better risk-adjusted return and a smoother ride over various market cycles.

GIGB tracks the Citi Goldman Sachs Investment Grade Corporate Bond Index. Can you tell us a little bit about the index?
Absolutely. We’ve worked closely with Citibank, they’re real experts in fixed income indexing. This is collaboration between GSAM's fixed income experts and the index experts at Citibank.

We focused on creating an index that would be better suited for investors’ needs. Our goal is to create an index that will provide investors with a smoother ride over various market cycles and better risk-adjusted returns over time. We do that by focusing on, and eliminating, the potential worst performers in the index. To do this we conduct fundamental screens, then identify the worst 10% of the universe, removing those bonds from the index.

Can you tell us about your strategy around launching the fund? Why now?
Yes. Really, it's feedback from clients.

Increasingly our clients are asset allocators that are looking for building blocks to build model portfolios for their clients, and increasing we're hearing feedback that they don't have enough of those tools specifically in the fixed-income space. We’re committed to supplying those tools to build better portfolios for their clients.

ETFs have transitioned from a niche product to a mainstream investment in recent years. Why do you think that is?
The ETF market continues to grow every year. We had a record last year; we've had record inflows this year. I think there are a number of reasons for that.

First of all, it’s a broad group of investors that are finding ETF's useful building blocks for their portfolios—from retail advisors to the largest institutional investors. There are a lot of choices now; clients can get very, very focused exposure.

We’re seeing a lot of growth in the multi-factor smart beta segment of the market; that's an area we’ve focused on with our Goldman Sachs ActiveBeta ETF's. It’s a multi-factor approach that is designed to fit in the core of a portfolio and give a smoother ride over a long period of time.

In your view, what are some trends we can expect to see in the ETF market, and perhaps more specifically the smart beta ETF space over the next year?
Smart beta has gotten a lot of attention and gathered assets over the past several years—I think that will continue. I also think we’ll continue to see growth, specifically in the multi-factor space, which is meant to be more of a core portfolio holding as opposed to some of the single factor products which work well in specific markets, but may not be a comprehensive solution.

I also think we'll see more innovation in fixed income. Smart beta approaches to developing fixed income indices is very new, that’s where we’re focused right now; I think will continue to see additional development in that space in the coming years.

How did it feel to ring the bell today?
It's great to be here today, we’re thrilled to have the New York Stock Exchange as a partner. They’ve been incredibly supportive as we've built out our ETF business, and it's always a thrill to be here to ring the bell.

Goldman Sachs Asset Management

Listen to Michael Crinieri explain his goal of providing better risk-adjusted returns