Finance

Goldman Sachs’ new downside protection ETF

Published

3 months ago

March 15, 2025

Business Finance News

Protect your portfolio from market volatility with these new ETFs

Goldman Sachs Asset Management is trying to serve more investors looking for downside protection from market turmoil.

Bryon Lake helped the firm launch its newest buffer exchange-traded fund this month: the Goldman Sachs U.S. Large Cap Buffer 3 ETF.

“I’m an investor. You’re an investor. The folks watching are investors, and there’s an incredible amount of uncertainty right now: Tariffs, the widening out of equity markets away from Mag 7 [and] geopolitical issues,” the Goldman Sachs chief transformation officer told anchor Bob Pisani on CNBC’s “ETF Edge.”

Lake joined Goldman Sachs last summer. According to the firm’s press release, it was for a newly created role aimed at expanding its investment strategies. Previously, Lake headed the global ETF business at JPMorgan Chase

“The buffer products are designed to help protect people to the downside while also allowing them to participate to the upside,” he said. “The way they’re designed, is they’ll protect from down 5% to 15% while still allowing you to participate upwards of 5% to 7%. And, then those reset on a quarterly basis.”

Lake suggests the buffer ETFs use approaches that have strong track records.

“These are… tried and true strategies that have been used by investors for decades now,” he said.

The Goldman Sachs U.S. Large Cap Buffer 3 ETF is down about 3% since it started trading on March 4. The S&P 500 is off almost 4% in the same time frame.

Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

1 day ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

2 days ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”