Goldman Sachs’ New ETF Strategy Mimics Private Equity with Public Stocks

Goldman Sachs’ entry into liquid-public-equity replication of private equity returns via GSPE (and its U.S. counterpart GTPE) marks a noticeable trend in the ETF landscape: delivering ‘private market-like’ exposure without the inherent illiquidity, opacity, and gatekeeping of actual private equity funds. The index underlying these ETFs—MSCI World Private Equity Return Tracker—relies on MSCI’s Private Capital Universe dataset, which, as of June 30, 2025, represents USD 7.7 trillion in private equity fund assets, covering over 9,700 funds and approximately 174,000 private companies. By matching region, sector, and style exposures with listed equities, the ETFs seek to mimic risk and return profiles associated with private equity without investing in that asset class.

From a structural perspective, the 0.50% fee is relatively high for passive equity index funds, but when considered against private equity fund fees (which often run 2-2-20 or similar), it may be appealing. The ETFs’ launch on regulated exchanges—Deutsche Börse for GSPE; NASDAQ for GTPE—enhances accessibility for European and U.S. investors respectively. Attempts to widen listing across exchanges suggest GSAM expects strong demand in jurisdictions favoring UCITS vehicles and transparent structures.

However, the strategy harbors strategic risks and trade-offs. First, the reliance on public equities to replicate private market exposures introduces potential tracking error—given differences in valuation frequency, leverage, governance, and illiquidity premiums. MSCI and GSAM explicitly state the ETFs do not invest in private equity funds or unlisted companies; investors get exposure only through public securities. Second, returns may lag or lead true private equity in different market environments: for example, in downturns, public markets may price risk much faster, while private valuations lag. Third, competitive pressure in the UCITS passive ETF market is high; a 0.50% fee may limit uptake against lower-cost peers, especially if performance doesn’t clearly approximate private equity over long horizons. Fourth, regulatory and investor education challenges may arise: defining what “private equity-like” means, transparency about exposure, and ensuring investors understand the trade-offs in liquidity and risk.

Strategically, GSAM is betting that demand from institutional, wealth, and advisory clients—especially in Europe—will favor these products as liquidity, transparency, and accessibility become increasingly important. The ETFs give access to the features private equity is prized for (such as diversification, outsized return potential, exposure to growth sectors) in a package that can fit into everyday portfolio allocations more easily. For GSAM, this may also serve as a way to extend its liquid alternatives franchise and deepen relationships with clients whose mandates restrict illiquid assets. But success will depend on execution: minimizing tracking error, emphasizing index construction transparency, competitive pricing, and strong distribution partnerships.

Open questions include: How will these ETFs perform during market stress relative to actual private equity funds? Over a full cycle, will fee-adjusted returns be sufficiently attractive to draw flows away from direct private market investments? Can GSAM scale assets under management for these funds without compromising liquidity or incurring bid-ask spreads and other costs that erode returns? What level of demand exists from retail versus institutional clients, and whether regulation or tax treatment (especially in Europe) favors UCITS ETFs in this strategy set.