Goldman Launches Another Well-Heeled Strategic Beta ETF

Goldman Sachs Group Inc.'s GS Goldman Sachs Asset Management (GSAM) has rapidly become a credible play in the fast-growing strategic beta segment of the exchange traded funds universe.

GSAM bolstered its ETF lineup again Tuesday with the debut of the Goldman Sachs ActiveBeta International Equity ETF GSIE, Goldman's third ETF. Like its stablemates, the Goldman Sachs ActiveBeta US Large Cap Equity ETF GSLC and the Goldman Sachs ActiveBeta Emerging Markets Equity ETF GEM, GSIE emphasizes low volatility, momentum, quality and value in its stock selection process.

“GSIE seeks to track the Goldman Sachs ActiveBeta^® International Equity Index, which is constructed using a performance-seeking methodology from Goldman Sachs. The index weights stocks in the MSCI World ex USA Index – which as of November 6, 2015, consisted of 1005 securities from issuers in 22 developed market countries – on four well-established attributes of performance,” according to a statement issued by GSAM.

In terms of geography, Goldman's new ETF is Europe ex-U.K. Heavy as corresponding countries combine for over 42 percent of the fund's weight with another 22.8 percent allocated to Japanese stocks. U.K. stocks account for 17.4 percent of GSIE's weight. As is the case with many ETFs that compete with legacy EAFE funds, GSIE's combined weight to U.K. and Swiss stocks is solid.

The weighted average market value of GSIE's holdings is $40.55 billion and the new ETF has a price-to-earnings ratio of 16.33, according to GSAM data, a slight discount to the S&P 500. 

Importantly, GSIE shares a couple of things in common with the aforementioned GSLC and GEM. Like its predecessors in the Goldman ETF suite, GSIE came to market with a solid asset base. GSIE debuted with nearly $20 million in assets. As GSLC and GEM, that head start is significant as those ETFs now have nearly $300 million in combined assets under management, ranking each among the most successful new ETFs to come to market this year.

Second, as is the case with GSLC and GEM, GSIE is competitively priced, particularly among smart beta ETFs. GSIE debuted with an annual expense ratio of 0.35 percent, which is 26 percent lower than the Strategic Beta average in the Foreign Large Blend Morningstar Category and 13 percent lower than the Index Fund average in the category, according to GSAM.

GSAM had $1.9 trillion in assets under management at the end of the third quarter.