A Gem Among Goldman Sachs ETFs

Goldman Sachs was a late arrival to the exchange traded funds party, but the company has asserted itself in the industry over the past four years and the the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF GSLC is a big reason behind the bank's ETF growth.

What Happened

Just ahead of its fourth anniversary, GSLC has $6.6 billion in assets under management and the fund is CFRA Research's focus ETF for the month of September.

GSLC has found success in a densely populated, highly competitive corner of the ETF market — that being domestic large-cap multi-factor funds. The Goldman Sachs ETF emphasizes these four investment factors: good value, strong momentum, high quality and low volatility.

Why It's Important

As of the end of August, GSLC was sporting a slight year-to-date advantage over cap-weighted S&P 500 ETFs.

“If the positive differential holds it would be the third consecutive year of outperformance as the smart-beta ETF declined less in 2018 and rose more in 2017 than the market-cap weighted SPY; we note GSLC did lag in 2016, its first calendar year,” said CFRA Director of ETF & Mutual Fund Research Todd Rosenbluth in a Tuesday note. “On a three-year annualized total return basis, GSLC’s was essentially in line at 12.0% (12.1%).”

GSLC holds 442 stocks, less than the 500-plus found in the S&P 500. What could make the ETF alluring in the current environment would be any noticeable ability to reduce volatility for investors and/or deliver less bad performances if stocks continue faltering.

What's Next

“From a fund perspective, GSLC is also highly appealing,” said Rosenbluth. “The ETF’s net expense ratio of 0.09% matches SPY and is below the equity ETF average. Meanwhile the fund trades with a tight bid/ ask spread of $0.02. Based on CFRA ‘s technical analysis GSLC has bullish trading tendencies.”

Indeed, GSLC's low expense ratio is inexpensive compared to some cap-weighted rivals and downright cheap when measured against many competing smart beta strategies.

Rosenbluth has an Overweight rating on the fund.

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