Goldman Sachs Adds New 'ETF Look Through' Feature for SMAs

Goldman Sachs Asset Management has launched “ETF Look Through,” a new feature that allows registered investment advisors to combine exchange-traded fund positions with separately managed accounts without triggering immediate capital gains taxes, according to a company announcement Thursday.

The development addresses growing advisor demand for integrated portfolio management tools that can handle both ETF and individual stock positions while maintaining tax efficiency, according to the company announcement.

The feature debuts on the Goldman Sachs Tax-Advantaged Core Strategies platform, initially available to the RIA channel, according to the press release. The tool enables portfolio managers to "look through" ETF holdings to analyze underlying stock, sector and risk exposures at the individual account level, the firm said.

"Advisors have looked to us for 25 years to risk manage and diversify individual stocks tax efficiently," said Monali Vora, global head of wealth investment solutions at Goldman Sachs Asset Management, in the announcement. "As their clients' ETF exposure grew, their direct feedback to us was that they want us to consider current ETF exposure and tax consequences when merging their equity assets."

Portfolio Management Process

The platform analyzes multiple factors when deciding whether to hold, trim or sell ETF positions, according to the company. ETF positions with lower tracking error to SMA benchmarks and higher appreciation are more likely to be retained, while positions with higher tracking error and lower appreciation face potential sale.

The new capability also incorporates underlying ETF fees with the goal of reducing fees over time, according to the press release. SMAs will not hold 100% ETFs, so some eligible ETFs may be sold, the firm noted.

The analysis determines whether to manage, trim or sell existing ETF positions based on exposures and risk of the ETF's underlying constituents and tax considerations of reducing ETF exposure, according to the announcement. Goldman Sachs enhanced its portfolio management process to understand the stock, sector and risk of underlying constituents in the ETF.

Goldman Sachs Asset Management manages $411 billion in separate managed account assets and $191 billion in direct indexing assets as of December 31, 2024, according to the firm. The company ranks as the largest SMA asset manager in the United States, based on Cerulli Edge data cited in the announcement.