Goldman Sachs Plans ETFs Mirroring Popular JPMorgan Strategy

Option income funds mimic JEPI and JEPQ, two of the year’s most successful ETFs.

Goldman Sachs Group appears to be treading on territory that was wildly successful this year for rival JPMorgan Chase & Co, as it plans a pair of exchange-traded funds that would use options-writing to generate income on a U.S. stock portfolio. 

The New York-based bank last week filed with the Securities and Exchange Commission to issue The Goldman Sachs U.S. Equity Premium Income ETF and the Goldman Sachs U.S. Tech Index Equity Premium Income ETF.  

The bare-bones filing offered little details. Still, the proposed funds bear similarities to the JPMorgan Equity Premium Income ETF (JEPI) and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ).

JEPI has been among the most popular ETFs this year, with $9.07 billion in new money coming into the fund, according to etf.com data. Three years after its launch, it’s grown into the largest actively managed U.S.-listed exchange-traded fund. Its assets under management surged 49% this year, to $26.1 billion from $17.5 billion at the start of the year.  

JEPI holds stocks from the S&P 500, while JEPQ’s focus is the tech-centric Nasdaq-100. Both funds’ strategies call for writing out-of-the-money options on stocks in those indexes to generate income.  

Goldman may seek to lure away some of JEPI’s and JEPQ’s investors, which would be a difficult task. 

“First-mover advantage is a powerful moat in the ETF industry,” etf.com Senior Analyst Sumit Roy said. “It’s hard to see the Goldman copycats shifting meaningful flows away from them—at least initially.”  

Still, because the funds are managed actively, they will compete in terms of performance and the data will be available to potential clients. If Goldman’s funds can demonstrate that they have significantly better performance, they may be able to sway investors’ funds to their options funds.  

Another variable is cost. While the expense ratios of the Goldman funds haven’t been announced, competition in the ETF market has pushed costs down, and that may be another area where the funds may compete. 

Contact Gabe Alpert at [email protected]