Goldman Sachs Access Treasury 0-1 Yr ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy’s management team earns an Average People Pillar rating. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a substantial underweight position in corporate bonds and A rated bonds compared with category peers. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Goldman Sachs Access Treasury 0-1 Yr ETF earns an Average Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. The leading factor in the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Low costs across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also support the rating. The pattern of low expenses at the firm indicates that it is focused on delivering strong results for investors. 

The investment strategy as stated in the fund's prospectus is: 

The investment seeks to provide investment results that closely correspond, before fees and expenses, and to the performance of the FTSE U.S. Treasury 0-1 Year Composite Select Index.  The fund seeks to achieve its investment objective by investing at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index. The index is designed to measure the performance of U.S. Treasury Securities with a maximum remaining maturity of 12 months. The investment adviser uses a representative sampling strategy to manage the fund.  

 This strategy's 12-month yield is 4.8%, which is neck-and-neck with its average peer. Plus, it has a 5.2% 30-day SEC yield (a measure similar to yield-to-maturity). The portfolio holds assets with a higher average surveyed credit quality of AAA, compared with the typical peers' A, and it holds no non-investment-grade assets, despite the average peers' 1%. Strategies with lower credit risk can typically withstand market turmoil more effectively. In terms of long-term interest-rate risk, this strategy is on par with peers. The longer a strategy's duration, the more sensitive it is to shifts in interest rates. This fund, with a 0.4-year duration, is expected to gain 0.4% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

Average

Process

Goldman Sachs’s team is good but unexceptional, earning the strategy an Average People Pillar rating. There are two managers listed on the fund: Todd Henry, David Westbrook. The team is well equipped, with an average of 10 years of portfolio management experience. Together, they manage a total of eight strategies, with a Neutral asset-weighted average Morningstar Medalist Rating, indicating the team will struggle to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

People

Goldman Sachs Asset Management heads into an uncertain direction on multiple fronts, underpinning its Average Parent rating.
GSAM has long struggled with personnel turnover, with a steady degree of analyst departures and additions coinciding with leadership reshufflings over the past few years that includes the September 2022 departure of equity head Katie Koch. Meanwhile, parent company Goldman Sachs elected to merge its asset management and wealth management units in October 2022, reversing a decision to split them in 2020, and assigned Marc Nachmann to lead the unit. Although he is a longtime Goldman veteran, most of his prior experience has been with the firm’s investment bank. Potentially complicating his remit is the firm’s December 2021 acquisition of NN IP, whose traditional and sustainable-investing branches could add capabilities but will take time to integrate. Bolstering the firm’s sustainability credentials could be especially pressing given the SEC’s November 2022 fining of GSAM for past failings in its ESG-related operations. 
GSAM has some strengths worth highlighting. Portfolio-manager ownership statistics across the firm’s U.S. lineup have improved dramatically since the firm instituted a deferred compensation program of fund shares in early 2020, and GSAM has compelling capabilities within its quantitative equity franchise.

Parent

Goldman Sachs TreasuryAccess 0-1 Year ETF

GBIL tracks an index comprised of US Treasury securities with less than one year remaining in maturity.

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It generally takes a few years for changes in Federal Reserve rates to fully impact bond fund dividends. Bond funds are still benefitting from prior rate hikes. Perhaps by enough to cancel out any future rate cuts. By my estimations, and under current Fed guidance, most bond funds would only start to see declining dividends in 2025, at the earliest.

Estimating The Impact Of Lower Rates On Bond Fund Dividends

The Fed may have shifted its policy stance, but the yield curve remains as inverted as ever. Market expectations seem aggressive and investors exposed to duration are risking quite a bit. Funds like GBIL, which offer the yield and principal protection benefits of the front-end, stand out.

GBIL: Get Paid More For Less With Treasury Bills

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Equity markets traded slightly up, while short-term Treasury yields increased by more than 2.0%. After logging a record-breaking weekly inflow last week, high-yield ETFs posted their second-largest weekly inflow. Short/intermediate investment grade funds have seen 10 straight weekly outflows while recording three consecutive weekly gains.

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Goldman Sachs Asset Management has seen strong net inflows in 2023 into its broad market equity ETFs and its income ETFs. Today, the firm expanded its exchange traded fund lineup to include two equity income ETFs.

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Policy rate hikes are likely at an end. But volatility across the Treasury yield curve isn't ending anytime soon.

GBIL: Balancing Income And Principal Protection

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The market is showing signs of weakness and lacks sustainable upside momentum. The recent sell-off has broken key moving averages, indicating a potential shift in market sentiment.

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It's no secret that we are currently in a high interest rate environment. The Federal Funds rate, the benchmark rate in the U.S. set by the Federal Open Market Committee (FOMC), currently sits between the range of 5.00% and 5.25%.

Three Ways to Take Advantage of High Interest Rates

Adding 10-year Treasuries to portfolios as inflation potentially peaks and economic indicators point to a cooling economy and softer labor market. The Federal Reserve may pivot towards easing and lower interest rates in 2024, making longer-term maturities more attractive than short-term Treasury bills. Investors should adapt their strategies to the changing economic landscape and not be blinded by the high spot interest rate.

GBIL: Shifting To Longer-Term Maturities

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When it comes to investing, some people don't think in terms of thousands of dollars, tens of thousands, or even millions.

What the really rich are doing with their money right now: Goldman Sachs

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Now is one of those rare times when taking less risk can actually pay off. And super-safe, short-term bond ETFs are an easy way to cash in.

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This ultra short-term bond ETF hits a new 52-week high. Are more gains in store for this ETF?

Ultra Short-Term Bond ETF (GBIL) Hits New 52-Week High

GBIL could help diversify some longer-term cash holdings for investors and serve as a yield anchor once the yield curve normalizes. While money market mutual funds will be popular for those looking for alternatives to their banks, GBIL could see inflows which should improve the overall yield.

GBIL: Part Of A Banking Alternative

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As we consider risks in the fixed income markets today, investors can turn to smart beta bond exchange traded fund strategies to better position for the unusual environment. In the recent webcast, Fixed Income is Back.

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Investors were net purchasers of fund assets (including those of conventional funds and ETFs) for the third week in a row, injecting a net $2.3 billion for the Refinitiv Lipper fund-flows week ended Jan 11. Equity ETFs experienced net inflows for the second week in three, attracting a little less than $2.0 billion for the most recent fund flows week.

U.S. Weekly FundFlows Insight Report: ETF And Mutual Fund Investors Pad The Coffers Of Taxable And Tax-Exempt Bond Funds For The Fund Flows Week

Some ultra-short duration funds are starting to look attractive vs their floating rate counterparts, especially if the Fed becomes less aggressive. GBIL has a low duration and a net indicated yield which continues to increase each month.

GBIL: Where To Park Cash To Keep Your Gunpowder Dry And Earn Income

Another milestone occurred for the ETF industry this month as a Goldman Sachs short-term Treasury fund was used in early November to meet initial margin requirements for derivatives trading by a hedge fund at the CME. We believe this opens the door for additional institutional usage of fixed income ETFs.

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As the U.S. Federal Reserve continues to increase interest rates, we still think that GBIL can play an important role when part of a diversified cash management portfolio. GBIL can be used to position cash holdings or short-duration fixed income allocations in a way to benefit once the Fed pauses or cuts interest rates.

GBIL: Rate Hikes Delivering Larger Monthly Distributions

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Interest rate hikes terrify most S&P 500 investors. And for good reason.

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Fixed-income investors should consider the benefits of short duration, cash alternative exchange traded fund strategies to hedge against ongoing bond market risks and produce yields along the way.

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With the Fed tightening monetary policy to combat inflation, fixed-income's future is uncertain. Investors have turned to short-duration bond strategies to sidestep volatility and continue generating income.

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Goldman Sachs Treasury Access 0-1 year ETF is a vehicle that invests in short-term U.S. Treasury T-Bills. The vehicle has an extremely short duration of 0.37 years and actively captures the rising front end of the yield curve.

GBIL: Ride The Upcoming Storm In Cash

With the U.S. Federal Reserve's aggressive interest rate hikes, investors should utilize short duration fixed income ETFs. GBIL is an ETF which has a large portion of the underlying portfolio maturing in the next 30-100 days and could see considerable increases to the monthly dividends.

GBIL: An ETF Which Could See Sharply Higher Monthly Dividends

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While there is upward pressure on market rates in 2022, it's not coming from higher net supply. In fact, lower net supply can help to richen government bonds. On top of that, we should see flatter curves over the whole of 2022. We also anticipate some upward pressure on USD Libor.

Rates Outlook: Swap Spreads To See Widening Pressure

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The deficit spending that supported the economy in 2020 is showing up in hot inflation numbers in 2021. While I think the inflation numbers will get better in 2022, I do not believe they will get back to pre-pandemic levels because of owners' equivalent rents and wage gains in the CPI.

Mind The Bond Market

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At the November FOMC meeting, the Fed officially announced that it would begin tapering its bond purchase program, starting in mid-November. When the Fed began tapering its QE3 program over the course of 2014, the coupon supply from the U.S. Treasury was stable, leading to an increase in net supply takedown from the private market.

Tapering Impact On Treasury Supply

News for Goldman Sachs TreasuryAccess 0-1 Year ETF ETF (GBIL)