Goldman's ActiveBeta Suite Expands To Small Caps

Goldman Sachs Asset Management, the asset management and exchange-traded funds arm of Goldman Sachs Group Inc GS, added to its lineup of ActiveBeta smart beta ETFs Thursday with the debut of a small-cap fund.

The Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF GSCC is the newest member of GSAM's ActiveBeta suite. GSCC tracks the Goldman Sachs ActiveBeta U.S. Small Cap Equity Index.

“Over the last two years, we have focused on building a suite of innovative, low-cost ETFs that allow investors to access key markets while harnessing the time-tested benefits of a factor-diversified approach,” said Michael Crinieri, GSAM’s global head of ETF strategy, in a statement.

Deep Dive On GSCC

As is the case with its ActiveBeta predecessors, several of which have established considerable followings, GSCC tracks an index that “seeks to capture common sources of active equity returns, including value (i.e., the security's price compared to market value), momentum (i.e., performance history), quality (i.e., profitability relative to total assets) and volatility (i.e., consistency of returns),” according to Goldman.

GSCC looks to overweight small-cap stocks that display favorable traits of the aforementioned investment factors while underweighting smaller stocks that do not have positive low volatility, momentum, quality and value characteristics.

GSCC's underlying index “identifies stocks from companies that may be undervalued by the rest of the market. This can help investors gain exposure to high potential stocks others may have overlooked,” said GSAM. “The index identifies stocks from companies that are likely to avoid extreme swings up and down in price.”

A Favorable Fee

Goldman's new ETF charges 0.2 percent per year, or $20 on a $10,000 investment. That is inexpensive relative to other smart beta small-cap offerings and keeps with the issuer's tradition of cost-effective offerings.

The average expense ratio for ETFs in the Morningstar US ETF Large Blend Strategic Beta category is 0.38 percent per year, and the average annual fee for funds in the Morningstar US ETF Large Blend Index group is 0.36 percent, according to Goldman.

GSAM currently offers nine ETFs with a combined $4.4 billion in assets under management.