Goldman Sachs Asset Management has threw its hat into the ring of increasingly popular buffered ETFs, just as the stock market shows signs of vulnerability. On Tuesday, the company announced the launch of Goldman Sachs US Large Cap Buffer 3 ETF (GBXC). This follows two similar funds that have started in recent months. Each fund is reset quarterly. That means investors have a fresh version to choose from each month. Buffer funds fall into a category called predefined results products, which have been collecting billions of dollars from investors in recent years. Buffer funds often use derivatives in the form of equity-linked notes to trade off potential potentials in the market for negative side protection. There are various buffer funds in the market, with different levels of protection and upside down participation. For the new Goldman Fund, they protect against 5% to 15% losses in the market, represented by the underlying SPDR portfolio S&P 500 ETF (SPLG). In exchange, the capital increase cap is between 5% and 7%. Brendan McCarthy, global head of ETF distribution at Goldman Sachs Asset Management, said the company considers the 5% to 15% range to be a “sweet spot.” “The feedback we got from our clients was I was in the market. I can live with a few percent. It's like what I expect. When I'm 5 to 15 down, it's going to be painful,” McCarthy said. The two key differences between Goldman Funds from other buffer funds is that most of their competitors reset annually rather than quarterly, and they incorporate additional floors into the Goldman Fund. In addition to the 5-15% protection band, funds have fallen by around 25% in the market, with the total losses in each outcome limiting about 15%. Fund Mechanism Buffer Funds are designed to be very close to the remaining dates or to be held throughout the entire period. Fund prices may drop more than the buffer zone indicates during the interim period, based on how options pricing changes over time. “You can show losses in your position, but as long as you stay on the next reset, you will get the published parameters,” said Stuart Chargee, a Beverly Hills, California-based registered investment advisor who regularly uses buffer ETFs from multiple fund issuers. The funds are designed for each outcome period, but if investors keep them through multiple resets, the impact can worsen over time. For example, if the market is falling sharply in one quarter, but the next quarter is collected, the buffer fund gathering will come from a higher starting point. “We are pleased to announce that Olivervan, the portfolio manager and global head of the Quantitative Investment Strategy Alternative Team within Goldman Sachs Asset Management,” said: Of course, the same can be said for the opposite case. If the market is steadily rising and exceeding the upside cap, the performance of the buffer fund will suffer over time. Some of the other biggest players in the buffer fund space are Innovators, First Trusts and Allianz. The new Goldman Sachs fund has a 0.50% fee, which is cheaper than many of the largest buffer funds already on the market. Market environment ETF launches are usually a one-month process, with timing for a particular market period being difficult. Still, Goldman's funds could be at the right time for early adoption. On Monday, the S&P 500 fell 1.76%, the worst session since December. The index is currently 4.84% below its record high. The .spx ytd mountain S&P 500 has a rough start in 2025. Shawsey said clients often ask about buffer funds when volatility recovers. “With all the uncertainty we have now and the fact that stocks are trading at a noble multiple, that's when you might have some protection,” Chaussee said.
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