The Goldman Sachs Group GS, through its subsidiary Goldman Sachs Asset Management ("GSAM"), has agreed to acquire Standard & Poor's Investment Advisory Services LLC ("SPIAS"), a wholly-owned subsidiary of S&P Global SPGI. The deal is expected to close in the first half of 2019.
SPIAS manages portfolios using Exchange Traded Funds (“ETFs”) and mutual funds, as well as equity portfolios produced employing a rules-based investment process. It is a provider of non-discretionary advisory services to institutional clients on a global level.
As of Dec 31, 2018, it advises on more than $33 billion in assets across multi-asset, equity and fixed income strategies.
Goldman’s ETFs sales are likely to get a boost from this acquisition, which will expand the unit’s multi-asset offerings and rules-based equity strategies. The expansion is in sync with the growing demands of customers.
Notably, ETFs are one of the fastest-growing products in the asset management industry. These allow investors the ease of trading the entire portfolio of stocks against trading only one stock.
Lately, companies offering ETFs services have been facing strong competition and price wars. Earlier in March, JPMorgan JPM launched its lowest-fee ETFs, JPMorgan BetaBuilders U.S. Equity ETF, pushing the fee war to even lower levels.
Further, in February 2019, Charles Schwab SCHW doubled the number of ETFs that can be traded without paying commission on its platforms.
Goldman’s focus on capitalizing on new growth opportunities through several strategic investments, including the digital consumer lending platform, will likely bolster overall business growth. However, it continues to face probes and queries from several federal agencies, which remains a concern.
Shares of the company have lost around 14% in the past six months compared with the 11.9% decline of its industry.
Goldman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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