CBOE tells Goldman climate ETF it must find more investors

A Goldman Sachs environmental, social and governance-focused ETF may be delisted because it has not attracted enough investors, filings show.

The $8.5mn Goldman Sachs ActiveBeta Paris-Aligned Climate US Large Cap Equity ETF (GPAL) has had fewer than 50 beneficial owners for more than 30 days and is therefore in violation of the Chicago Board Options Exchange BZX Exchange’s listing standards, the firm disclosed in a filing earlier this month.

However, the specific number of investors was not publicly available, said Bryan Armour, director of passive strategies research at Morningstar.

The fund first listed in December 2021, and it was found to have been short of the listing requirements since early January 2023, the filing states.

The company has 180 days to present CBOE with a plan for how it will increase its number of shareholders, the filing shows, or else face potential delisting.

Goldman Sachs is working with CBOE on the plan, a company spokesperson said, but declined to comment further. A CBOE spokesperson declined to comment.

Nearly 80 per cent of the fund’s assets are owned by Goldman Sachs, the firm disclosed in November. The remainder of the fund’s assets is primarily controlled by Bank of America Securities.

“I’m not sure what the remedy is beyond getting more shareholders,” said Todd Rosenbluth, head of research at VettaFi.

CBOE is not required to delist the fund, the filing notes. All exchanges have had the same minimum shareholder listing requirements since 2019, when the ETF rule passed, Armour said.

This was a “rare issue”, he added. “I expect Goldman Sachs will either find more clients for the ETF or close it, rather than allow it to be delisted.”

Funds typically shutter “because they have a small asset base and it is not profitable to continue to offer the product”, VettaFi’s Rosenbluth said.

GPAL has only managed to achieve between $5.8mn and $8.5mn in assets over its entire 16-month life, Morningstar Data shows.

Goldman Sachs would better serve investors by closing the ETF and distributing its assets, rather than having to sell the shares after it is delisted, Morningstar’s Armour said.

The fund, which launched with $8.1mn in assets, has only recorded one month of net flows, according to Morningstar Direct — in October 2022, when the fund added $1.6mn in net inflows.

Goldman Sachs has at least three other ETFs with ESG-related branding that have attracted $84.7mn in combined net inflows in the 12 months ended March 31, according to Morningstar Direct.

Overall, Goldman Sachs’ ETFs had $28.8bn in assets as of March 31, according to Morningstar’s database. They added $2.7bn in net inflows during the year ended last month.

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