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Goldman's largest ETF gets a boost from late-day trading

A striking pattern emerges when you look at trading activity in the largest ETF run by Goldman Sachs.

Big blocks of shares in the bank’s ActiveBeta U.S. Large Cap Equity ETF (GSLC) have traded at 4:02 p.m. on three separate days during the past week, according to data compiled by Bloomberg. The transactions, worth about $630 million, have fed inflows into the fund of more than $1 billion in July.

The average expense ratio among the leading 20 is nearly 40 basis points cheaper than what investors paid on average last year.
July 10

The $6.3 billion fund, run by Goldman Sachs Asset Management, follows a so-called smart-beta strategy that tracks stocks exhibiting value, momentum, quality and low volatility. Quant-flavored equity ETFs have absorbed $37 billion this year, and multi-factor funds like Goldman’s have been among the most popular, data compiled by Bloomberg Intelligence show.

The Goldman Sachs Group Inc. logo is displayed in the reception area of the One Raffles Link building, which houses one of the Goldman Sachs (Singapore) Pte offices, in Singapore, on Saturday, Dec. 22, 2018. Singapore has expanded a criminal probe into fund flows linked to scandal-plagued 1MDB to include Goldman Sachs Group, which helped raise money for the entity, people with knowledge of the matter said. Photographer: Nicky Loh/Bloomberg
The Goldman Sachs Group Inc. logo is displayed in the reception area of the One Raffles Link building, which houses one of the Goldman Sachs (Singapore) Pte offices, in Singapore, on Saturday, Dec. 22, 2018. Singapore has expanded a criminal probe into fund flows linked to scandal-plagued 1MDB to include Goldman Sachs Group, which helped raise money for the entity, people with knowledge of the matter said. Photographer: Nicky Loh/Bloomberg

The 4:02 p.m. prints likely show a market maker squaring up. After filling client orders for the ETF during the trading day, traders buy the underlying securities to hedge their positions and then swap them for shares in the ETF. While the market ostensibly closes at 4 p.m., trades are often recorded later than that to reflect closing prices.

The trades began last Friday, when 6.4 million shares worth $387 million hit the tape, fueling a record daily inflow for the fund. A 1.7 million block then crossed the tape on Monday, with a third 2.3 million share transaction following on Wednesday.

Still, it may have taken traders a while to settle on the perfect time. The second-largest block this year printed at 4:06 p.m. on July 17, two days before the first 4:02 p.m. trade.