The Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC) is a still a couple of weeks' shy of its first anniversary, but that says Goldman's oldest exchange-traded fund has not needed much time to be a one of clearest success stories among ETFs that debuted last year.
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What A First Year
GSLC is now home to $1.15 billion in assets under management, an impressive feat for an ETF of its age. More impressive is the fact that GSCL has been steadily attracting new investments. That $1.15 billion figure is as of August 25, which is up from $367.1 million in early March.
Part of GSLC's advantage is its low fees. Actually, GSLC's annual fee of 0.09 percent is downright scant when measured against other strategic beta 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.
GSLC is also asserting itself as a dominant name among the burgeoning group of multi-factor ETFs. In the case of GSLC, the ETF offers investors exposure to the value, momentum, quality, and low volatility factors.
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GSLC tracks the Goldman Sachs ActiveBeta U.S. Large Cap Equity Index, which 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.
The fund's index is made up of four subportfolios that set out to harness value, momentum, quality, and low volatility. Each subportfolio will either over- or underweight stocks based on the strength of their factor traits. The index then equally weights these four factor portfolios, according to Morningstar.
GSLC's largest sector weight is 20.1 percent to technology. The S&P 500 also has technology as its largest sector weight, but GSLC relegates financial services, the S&P 500's second-largest sector weight, to the fifth spot.
Because the fund allocates a quarter of its portfolio to each of these factor sleeves, the magnitude of these factor bets will be modest in aggregate, added Morningstar. A low fee and modest, sensibly constructed and simply combined bets on vetted factors make GSLC a potential low-risk, medium-reward proposition relative to an index fund or ETF offering broad, market cap-weighted exposure to U.S. large-cap stocks.
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