Exchange-traded products (ETPs) provider Source has joined forces with Goldman Sachs to launch the Source Goldman Sachs Equity Factor Index Europe Ucits ETF.

This is the second Source ETF to be launched tracking Goldman’s multi-factor indices, following the Source Goldman Sachs Equity Factor Index World Ucits ETF, which has attracted assets of approximately $400m since its launch in 2014 and outperformed the MSCI World Net TR Index by 2.4%, after fees, to the end of the year. Smart beta funds have proven successful in certain markets, providing the potential for better returns than common market-cap weighted benchmarks, particularly on a risk-adjusted basis, said Michael John Lytle, chief development officer at Source. The Goldman series is unique in that it offers exposure to multiple factors, said Lytle.

The Goldman Sachs Equity Factor Index Europe Net TR offers broad, long-only European equity exposure with a focus on five common equity market factors – size, value, momentum, quality and low beta.

The index, said Lytle, aims to deliver consistent outperformance versus European market cap benchmarks on an absolute and risk-adjusted basis.

Goldman also has plans to expand its family of multi-factor indices to offer regional exposures, starting with Europe, following the success of its EFI World index in 2014, according to Jerome Brochard, managing director in equities and fund structuring at Goldman.

“Over the last year, we have continued to see increased appetite from investors searching for enhanced equity returns, and this ETF launch offers them regional access to our innovative ‘smart beta’ approach in a liquid and transparent wrapper,” said Brochard. “Investors have appreciated our careful portfolio construction around the five equity factors that we implemented in our global product, and we are using the same proven methodology here.”

The US bank’s Equity Factor Index Europe Net TR, which comprises 231 constituents from 15 countries, is reviewed monthly and calculated independently by Russell Investment Group.

The launch follows the recent expansion of Goldman's ETF range in the US market, with plans drafted for 11 new, passively managed ETFs, including six "active beta" structures, five hedge fund-themed funds and the debut of the first ever structured note in the US to offer exposure to the Eurostoxx Low Risk Weighted 50.

This is also the second product launched by Source with an investment bank after the ETP provider brought to market the Source JPMorgan Macro Hedge Dual Vega Target 4% TR UCITS ETF, the third ETF in the JPMorgan Macro Hedge series designed for sophisticated investors.

According to SRP data, there are 28 structured products featuring proprietary indices developed by Goldman Sachs across jurisdictions, of which 11 are still live products. SRP data also shows that Belgium, with six products, is the country with most products featuring Goldman Sachs indices, followed by Canada and Spain with three products each.

Related stories:
GS debuts Eurostoxx Low Risk Weighted 50-linked notes in US
Goldman bolsters ETF offering in US
Source teams up with JPMorgan to expand range of vol products