Dive Brief:
- Goldman Sachs said Tuesday it will liquidate its exchange traded fund of companies aligned with the Paris climate accord in the new year, delisting the climate-aligned index. The fund will cease trading on the Cboe BZX Exchange at close of market Jan. 12, 2024, and liquidate any remaining shareholders Jan. 19.
- The liquidation is specific to the company’s ActiveBeta Paris-Aligned Climate U.S. Large Cap Equity ETF, and the company said the closure is not indicative of its broader firm positions.
- The closure of the fund bookends a year of downsizing for the sustainable fund market, which saw four consecutive quarters of outflows through 2023’s third quarter and more fund closures than openings that quarter.
Dive Insight:
The announcement to shutter the fund came almost exactly two years from its inception on Dec. 13, 2021. The fund had $7.82 million in net assets as of close of day Thursday, though its net asset value declined by 1.64% from its inception through Nov. 30. Shares of the fund are issued and redeemed at their net asset value in specified creation units, or large blocks of shares. The fund’s net asset value stood at $39.10 at close on Thursday.
The delisting and liquidation plan comes at the recommendation of Goldman Sachs Asset Management team, which serves as an advisor to the ETF. The fund’s board of trustees approved the liquidation plan, which won’t be subject to shareholder approval.
“We constantly evaluate our lineup to ensure our funds serve the best interest of shareholders,” an asset management team spokesperson said in an emailed statement. “After careful consideration of a number of factors, the Board concluded that it is advisable and in the best interest of the Fund and its shareholders to liquidate the Fund.”
The closure of the ActiveBeta Paris-aligned ETF leaves Goldman Sachs with one other fund aligned with an index of Paris climate accord-aligned companies, though it will not be traded within the U.S. The Goldman Sachs Paris-Aligned Climate World Equity UCITS ETF will continue to trade on the London Stock Exchange and Germany’s Xetra, the latter a leader in the European ETF market. That fund has $6.03 million assets under management, with a net asset value of $33.49.
2023’s third quarter also saw $2.7 billion in assets pulled from the sustainable fund market, which analysts contributed, in part to rising energy prices, political backlash and greenwashing fears. Asset management firms Vanguard and BlackRock approved fewer ESG shareholder proposals in 2023, helping dampen the environment, and BlackRock also recently shifted some resources from ESG funds to more narrowly climate-focused funds.
Alyssa Stankiewicz, Morningstar’s associate director of sustainability research, told ESG Dive she attributed part of the continued contraction to the ongoing maturation of the sustainable fund market after a few years of rapid expansion.
