Significant shifts within the finance sector are evident as Danish pension firm Velliv and Goldman Sachs Asset Management (GSAM) make active adjustments to their investment strategies. Recent reports indicate Velliv has dismissed its alternatives and active equity teams, resulting in the exit of nine employees, five of whom were part of the alternatives team responsible for managing approximately €2 billion of assets.
Citywire Selector, which first reported on the situation, confirmed the layoffs were prompted by increased client appetite for passive investment products. A representative from Velliv acknowledged the change, signifying a wider trend where the demand for actively managed investments is seeing fluctuations amid changing market sentiments.
Meanwhile, on the horizon for GSAM is the upcoming launch of the Goldman Sachs Emerging Markets Green and Social Bond Active ETF, which received regulatory approval from the Central Bank of Ireland. This move marks the firm's expansion of its actively managed fixed-income strategies, which have been gaining traction as investor interest continues to grow.
The arena for green and social bond ETFs, particularly within Europe, presents mixed results. The largest offering to date is the Amundi Euro Government Tilted Green Bond UCITS ETF, currently holding $3.2 billion in assets under management. This product utilizes a tilting methodology, meaning only 30% of the fund's assets are committed to green sovereign bonds, leaving the rest to consist of standard government debt.
Despite the growing green bond movement, ETFs with stricter environmental mandates have struggled to attract capital. Across the remaining 16 green bond ETFs listed in Europe, only $1.8 billion is currently allocated, highlighting the varied performance of these sustainable investments.
GSAM's new ETF will not be its first foray there; last May, the firm unveiled the Goldman Sachs Global Green Bond UCITS ETF, which currently boasts $77 billion under management. The introduction of this product signals yet another strategic push by GSAM as it seeks to capitalize on the increasing demand for actively managed investment options.
Velliv's moves reflect broader industry dynamics, as the push for passive investments rises against the backdrop of fluctuated client confidence and economic pressures. By shifting resources and focusing on client preferences, firms like Velliv are re-evaluated their operational structures.
It's important to note the dual objectives of green and social bonds; green bonds are typically issued to fund environmentally friendly projects, whereas social bonds aim to finance initiatives with positive societal impacts. While both asset types are increasingly important within the investment community, their market realization proofs to be complex as evidenced by investor hesitance toward stricter ESG mandates.
GSAM, following suit with its upcoming strategies, acknowledges the necessity for innovation and adaptability. Facing competition from existing players, including three active green bond ETFs launched by Franklin Templeton and JP Morgan’s active green and social bond offering, GSAM will need to effectively demonstrate the unique advantages of its new product to attract investors.
The investment community will be watching closely as these developments unfurl, with both Velliv and GSAM poised to make significant waves within their respective markets. The trend of active investment strategy adjustments suggests not just changes at individual firms but also reflects greater shifts in how investment firms must respond to client needs and market conditions moving forward.