Finance
Goldman Sachs helps its clients launch ETFs
Investor demand for exchange-traded funds is not slowing down, and firms without ETF offerings may risk losing business, according to one Goldman Sachs expert.
Steve Sachs, global chief operating officer of Goldman’s ETF Accelerator, notes that despite the time and resources required to launch an ETF, not offering current and new investment strategies as ETFs may prove even more costly.
“Any number of our clients would tell you, the opportunity cost of not [offering ETF products] is greater,” he recently told CNBC’s “ETF Edge.”
If a firm does not have ETF offerings, Sachs thinks “eventually those assets are going to leave and go to a competitor that does.”
To help clients through the process of launching their own ETF products, Goldman Sachs created its ETF Accelerator, a digital platform that helps clients launch, list and manage their own ETF products. The accelerator launched in 2022 in response to what Sachs described as significant client demand.
“Our core institutional clients were calling and asking, ‘How do we get into this ETF space? How do we deliver our strategy, active and otherwise, in an ETF wrapper?'” he said.
According to Sachs, client inquiries about launching ETFs surged following the passage of SEC Rule 6c-11 in 2019, which intended to help these funds launch more efficiently.
“While we wouldn’t call that a big boom, it was certainly a catalyst. The idea was it made it easier to launch an ETF, but it didn’t make it easy,” Sachs said. “At one point, we had more than 41 clients that had called us with exactly the same problem: ‘How do I do this, how do I move quickly and can you help us?'”
It can still take years to build the expertise, headcount and risk management framework necessary to launch an ETF, said Sachs. That is where Goldman’s accelerator platform aims to help.
“[It] allows our clients to come in, launch, list and manage their own ETF — but do it off of the technology, infrastructure and risk management expertise that Goldman’s known for and essentially get to market faster and cheaper than they could do it on their own,” Sachs said.
Since its inception, the accelerator has facilitated the launch of five ETFs. The most recent is Eagle Capital Management’s Select Equity ETF (EAGL), which listed last week.
Other ETFs launched through the accelerator include GMO’s U.S. Quality ETF (QLTY) and three funds from Brandes Investment Partners: the Brandes Small-Mid Cap Value ETF (BSMC), U.S. Value ETF (BUSA) and International ETF (BINV).
“GMO, Brandes [and] Eagle Capital all felt that the journey to build it on their own would be too expensive and too long,” Sachs said. “They didn’t want to miss the opportunity cost of not delivering their investment strategies in the wrapper.”
Chinese e-commerce company Alibaba has invested heavily in its fast-growing international business as growth slows for its China-focused Taobao and Tmall business.
Nurphoto | Nurphoto | Getty Images
BEIJING — Chinese e-commerce giant Alibaba‘s international arm on Wednesday launched an updated version of its artificial intelligence-powered translation tool that, it says, is better than products offered by Google, DeepL and ChatGPT.
That’s based on an assessment of Alibaba International’s new model, Marco MT, by translation benchmark framework Flores, the Chinese company said.
Alibaba’s fast-growing international unit released the AI translation product as an update to one unveiled about a year ago, which it says already has 500,000 merchant users. Sellers based in one country can use the translation tool to create product pages in the language of the target market.
The new version is based only on large language models, allowing it to draw on contextual clues such as culture or industry-specific terms, Kaifu Zhang, vice president of Alibaba International Digital Commerce Group and head of the business’ artificial intelligence initiative, told CNBC in an interview Tuesday.
“The idea is that we want this AI tool to help the bottom line of the merchants, because if the merchants are doing well, the platform will be doing well,” he said.
Large language models power artificial intelligence applications such as OpenAI’s ChatGPT, which can also translate text. The models, trained on massive amounts of data, can generate humanlike responses to user prompts.
Alibaba’s translation tool is based on its own model called Qwen. The product supports 15 languages: Arabic, Chinese, Dutch, English, French, German, Italian, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Turkish and Ukrainian.
Zhang said he expects “substantial demand” for the tool from Europe and the Americas. He also expects emerging markets to be a significant area of use.
When users of Alibaba.com — a site for suppliers to sell to businesses — are categorized by country, developing countries account for about half of the top 20 active AI tool users, Zhang said.
Chinese companies have increasingly looked abroad for growth opportunities, especially e-commerce merchants. PDD Holdings‘ Temu, fast fashion seller Shein and ByteDance’s TikTok are among the recent global market entrants. Many China-based merchants also sell on Amazon.com.
Contextual clues
Since Alibaba launched the first version of its AI translation tool last fall, the company said merchants have used it for more than 100 million product listings. Similar to other AI-based services, the basic pricing charges merchants by the amount of translated text.
Zhang declined to share how much the updated version would cost. He said it was included in some service bundles for merchants wanting simple exposure to overseas users.
His thinking is that contextual translation makes it much more likely that consumers decide to buy. He shared an example in which a colloquial Chinese description for a slipper would have turned off English-speaking consumers if it was only translated literally, without getting at the implied meaning.
“The updated translation engine is going to make Double 11 a better experience for consumers because of more authentic expression,” Zhang said, in reference to the Alibaba-led shopping festival that centers on Nov. 11 each year.
Alibaba’s international business includes platforms such as AliExpress and Lazada, which primarily targets Southeast Asia. The international unit reported sales growth of 32% to $4.03 billion in the quarter ended June from a year ago.
That’s in contrast to a 1% year-on-year drop in sales to $15.6 billion for Alibaba’s main Taobao and Tmall e-commerce business, which has focused on China.
The Taobao app is also popular with consumers in Singapore. In September, the app launched an AI-powered English version for users in the country.
Nomura analysts expect that Alibaba’s international revenue slowed slightly to 29% year-on-year growth in the quarter ended September, while operating losses narrowed, according to an Oct. 10 report. Alibaba has yet to announce when it will release quarterly earnings.
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