00:00Equities have recovered far faster than the other asset classes since the start of the Iran war.
00:05How actively are clients positioning in equities, trading equities right now?
00:09It's definitely every single day we're seeing, you know, just new inflows coming in.
00:14And it's really been diverse across a number of different types of equity strategies,
00:18whether it's active, whether it's index strategies, whether it's U.S.
00:22International has seen a ton of inflows this year, which is interesting with what is going on overseas right now.
00:28So we're seeing, you know, a lot of really, really healthy diversification,
00:32but also into equity strategies that offer a different type of outcome potentially,
00:36whether it's income or potential downside protection.
00:39Yeah. Talk to us about income because it's interesting.
00:42You take a look at the Goldman Sachs year to date leaderboard when it comes to flows.
00:47I see GPIC up there. That, of course, is a NASDAQ 100 premium income ETF.
00:52Then you have GPICs. That is S&P 500 premium income.
00:55I know that you just filed for a Bitcoin income ETF as well.
01:00So, I mean, again, looking at your lineup, it seems like income is still the name of the game here.
01:04And income has been the name of the game for quite some time for many investors,
01:07and we don't really see that going away anytime soon.
01:10As investors are seeking diversification across asset classes,
01:13they also need diversification of income sources.
01:15You know, option writing strategies, whether it's GPICs or GPIQ,
01:18which as of last Friday brought in almost $2 billion combined,
01:21we're still continuing to see that need for income.
01:24And, you know, now you're seeing to kind of play into other asset classes as well
01:28beyond just equities with option writing strategies.
01:31What do you see changing that demand for income?
01:34What would get people away from that idea?
01:36I think demographic shifts, number one.
01:38I think, you know, many, many of the investors that are in ETFs today,
01:43whether it's in their IRAs or just their, you know, saving for retirement,
01:46replacing their income, that's the bulk of the investor base that are purchasing ETFs today.
01:52I mean, I think as that demographic potentially changes,
01:55you might see a little bit of a shift there, you know,
01:58with maybe younger investors starting to come into the market
02:00looking for maybe different outcomes.
02:02And I wonder how, you know, in your role as being in with product development,
02:07how you're thinking about sort of the after-tax returns,
02:09because with income, you also have tax implications as well.
02:13And we've seen, you know, tax alpha as a category really emerge.
02:18So, I mean, what are your evolving thoughts on that topic?
02:20So, the tax efficiency of the ETF wrapper is one of, you know,
02:24the main reasons why investors have gravitated towards this.
02:27And it's definitely at the forefront of all of our portfolio managers' thoughts
02:31about how they manage the portfolios,
02:32whether it's through active tax loss harvesting within the ETFs themselves,
02:36whether it's through, you know, for option writing strategies,
02:39thinking about return of capital types of strategies to try to reduce
02:43a little bit of that tax burden at year-end,
02:45so it's not true ordinary income.
02:47You're starting to see a lot more of the innovation within the ETF wrapper
02:50be more around tax deferral and tax management.
02:54I'm so glad you bring that up, because there's a great story on the Bloomberg
02:56that Denisa Sokova and or Isabel Lee wrote about Gabe Plotkin.
03:00He was a big figure in the movie Dumb Money.
03:02I remember him well.
03:03And, of course, in the whole meme stock craze,
03:05he's planning to convert some of his own assets into an ETF using that $351 conversion,
03:09which would help him defer taxes.
03:12It is just amazing.
03:13$351s have become super popular when it comes to some of these very wealthy people
03:18trying to sort of defer taxes.
03:20And then, you know, you go down the spectrum of wealth,
03:23and it seems like after-tax returns are very top of mind right now.
03:27Absolutely.
03:28So, Alison, when you think about the closing of the Innovator purchase,
03:31Goldman Sachs Asset Management, of course, buying Innovator ETFs,
03:35giving you that exposure to buffer ETFs,
03:37what does that acquisition allow you to do in terms of addressing your, not audience,
03:43but your total customer base out there?
03:45Because they targeted different customers than what Goldman Sachs Asset Management did.
03:49So we're so excited to have, you know,
03:52the Innovator Capital as part of Goldman Sachs Asset Management now.
03:55Really, you know, I think the hallmark of what our strategy is as a firm,
03:58Goldman Sachs, is providing total portfolio solutions to our clients.
04:02Buffer strategies are very, very much aligned with our goal of providing total portfolio solutions
04:07for a range of different outcomes.
04:09They solve for very different needs.
04:11They also allow our own professional investors and financial advisors across the country
04:16to think about keeping, maintaining, adding equity exposure,
04:19but having a little bit of, you know, that buffer to the downside
04:22is a great tool from a portfolio construction standpoint.
04:26And we're really excited to bring together, you know,
04:29the range that we've been developing at Goldman Sachs
04:32with the range that Innovator has built
04:33and address a wider audience of clients.
04:36So we're super excited to now bring both of those capabilities
04:39to a much wider audience of clients, whether it's RIAs,
04:42you know, the entire financial advisor community,
04:45but also institutional investors as well,
04:47and overseas investors who can buy 40-act ETFs.
04:50You know, it's really interesting,
04:51and it's something that I've been wondering about
04:53when it comes to M&A, specifically in the ETF landscape.
04:56How much thought goes into, you know,
04:59just what you can add in terms of products?
05:02Obviously, Innovator, a huge, you know, industry leader
05:06when it comes to buffer ETFs,
05:08but you also think about the investors in their buffers.
05:11I have to imagine that, you know,
05:12that might be a little bit different
05:14than the typical investor in existing Goldman ETFs.
05:17So how much of that was a consideration, you know,
05:20not just what we can add in terms of product,
05:22but how we can expand the investor base as well?
05:26Education, I think, is the first and foremost.
05:28I think Innovator has been, you know,
05:30very highly regarded for the education
05:32and the information that they provide to their investors.
05:34We want to make sure that we're cascading
05:36that type of dialogue and that type of engagement
05:38across all of our clients for all of our ETFs.
05:41And we're definitely looking at best practices
05:43from, you know, each of our, you know, firms
05:46and really trying to figure out
05:48how do we harness for one coherent message
05:51that provides education first and foremost.
05:54Buffers is one that does require a lot of education,
05:56particularly as they get more complex over time.
05:58When you think about what's happening
05:59in the structured note market
06:00and now how ETFs can tap into that,
06:02there's a level of education that goes into that
06:05that we have to be really, really thinking of
06:07in our kind of a client-obsessed perspective.
06:10What's the thinking behind purchasing, you know,
06:14a product lineup like that
06:15versus growing it organically, developing it in-house?
06:17Sure. So, I mean, developing it in-house,
06:19growing organically, it just takes more time.
06:21There's certainly pros and cons to either scenario.
06:23We've also done a lot of organic growth
06:25at Goldman Sachs as well.
06:27And I think, you know, with Innovator,
06:29with the number one, the brand,
06:31the market penetration,
06:33and the relationships that they have with their clients,
06:35it was actually more than just the products themselves
06:38that made it make a lot of sense for us to consider.
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