Goldman Sachs would like a 175,000% return on its latest investment. “Join the club,” said everyone who has ever made an investment.
On Thursday, the investment bank debuted an actively managed exchange-traded fund that will bet on emerging technology companies — basically, trying to strike iron on whatever becomes the next rapidly disruptive and valuable firm a la Facebook or Amazon.
Goldman is getting in line behind hedge fund trailblazer Cathie Wood. Her Ark Invest has a wildly successful Innovation Fund with $23 billion in assets and an average annual return of 45% in the past five years. Like Elon Musk, Wood is adored by Reddit’s WallStreetBets, Stocktwits, and other online investors.
But Ark’s Innovation fund has lost a lot of its sheen this year. The Fund shot up 150% in 2020 as tech companies made bank off digital demand under lockdown, but it’s lost 5% in 2021, way behind the S&P 500’s 20% gain. Michael Burry — the famous “Big Short” investor who was one of the first to forecast the 2007 subprime crisis — is now shorting Ark.
But where Goldman might be taking Wood’s idea, it won’t be using her playbook:
- Unlike Ark’s Innovation Fund — which holds a mix of small firms and big name holdings like Tesla and Coinbase — Goldman’s Future Tech Leaders ETF will not hold mega caps and will target smaller tech companies. Half of them will be outside the U.S.
- The fund will own shares in 60 to 80 listed global tech firms that have a market cap below $100 billion.
“It’s going to be another company’s chance to be up another 175,000% since its IPO,” Katie Koch, co-head of fundamental equities at Goldman’s asset management unit, told Bloomberg. “We’re working hard at finding those companies.”
Can’t Blame Her: Holding those major stocks isn’t always bad. This month, Ark has sold $266 million in Tesla shares, capitalizing its 22% gain in the last three months.