Derivative-Income Strategies Gobble Up Active Flows: GSAM

Derivative-income strategies proliferate, although sector innovation is coming incrementally, said Alyson Shupe, head of the global product strategy group for Goldman Sachs Asset Management.

These strategies are gobbling up most of the active ETF inflows. Morningstar said derivative-income strategies saw over $29 billion in net flows during the first half of 2025, and it was the top category for all active ETF flows. 

GPIX, GPIQ Gather Assets

Two of GSAM’s derivative strategy ETFs, the Goldman Sachs S&P 500 Core Premium Income ETF (GPIX) and the Goldman Sachs Nasdaq-100 Core Premium Income ETF (GPIQ), have each gathered more than $1 billion in assets.

ETF issuers often launch many of these strategies, so what seems like proliferation doesn’t mean a different approach, she said. The difference is either in duration levels for the option or for the underlying index for the option.

As the strategy matures, innovation comes incrementally, such as improving tax efficiency by paying out income at the capital gains tax rate rather than at the income tax rate, Shupe said. Covered-call strategies are also moving into the less-liquid options markets of single stocks and cryptocurrencies.

Using less liquid, more esoteric options could make these types of ETFs riskier. Yet, increased trading by market makers and authorized participants begets liquidity, Shupe explained.

“It's not like this shadow market that people might have thought it was in the past,” she said.

She noted that options strategies in niche markets are untested; however, she said that the ETF market “has a really good mechanism for self-hygiene and self-correction,” adding that authorized participants will choose not to participate in certain markets if they believe there’s too much risk since they bear the risk.

Private Assets ETFs

ETF issuers will continue to launch more active products with the “conversation” around private assets and ETFs evolving, she said. While a few private credit ETFs have launched, she said they won’t proliferate unless buyers benefit from paying more for private assets in ETFs relative to buying public fixed income.

As more visibility into private-market data becomes available, she expects index providers to try to replicate the return stream of private markets through liquid indexation. Index providers and others can purchase that data but would use liquid public assets to emulate the private-market return stream. 

“Obviously, it's going to still carry public-market data and therefore some public-market volatility, but that's another way that you're starting to see the concept of private investing potentially weave its way into ETFs as well,” she said.