Goldman Sachs Asset Management (GSAM), the asset management unit of Goldman Sachs Group, Inc. (NYSE:GS), makes its foray into the world of exchange traded funds today with the debut of the ActiveBeta US Large Cap Equity ETF (NYSE: GSLC).
The ActiveBeta is the first in what could be an extensive lineup of ETFs to come from New York-based Goldman Sachs. Earlier this year, Goldman revealed plans for other actively managed ETFs that will trade under the ActiveBeta brand, including the ActiveBeta International Equity ETF, Goldman Sachs ActiveBeta Emerging Markets Equity ETF, Goldman Sachs ActiveBeta Europe Equity ETF, Goldman Sachs ActiveBeta Japan Equity ETF, Goldman Sachs ActiveBeta U.S. Large Cap and the ActiveBeta U.S. Small Cap Equity ETF.
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The ActiveBeta US Large Cap Equity ETF is the "first in a series of ETFs that will track GSAMs proprietary ActiveBeta index, GSLC is designed to offer many of the same benefits of traditional ETFs, with the potential to outperform the market,"according to a statement issued by GSAM.
The ActiveBeta index evaluates constituent companies based on low volatility, momentum, high quality and good value. While Goldman is late to the ETF game, its brand recognition is a massive advantage, but the investment bank turned ETF issuer is not relying on just that.
The index identifies stocks from companies that may be undervalued by the rest of the market. This can help investors to gain exposure to high potential stocks that others may have overlooked. The index identifies stocks from companies that demonstrate sustainable profitability over time. This allows investors to gain exposure to companies with strong fundamentals and potential for consistent returns, according to GSAM.
Goldman, quite possibly, could touch off a fee war in the fast-growing smart beta space. Some smart beta ETFs can cost up to 600 times more than their cap-weighted counterparts, but Goldman's will charge just 0.09 percent per year, or $9 per $10,000 invested. Said another way, Goldman's first ETF sports the same expense ratio as the Vanguard Value ETF (NYSE:VTV).
Institutional investors are betting GSLC will be a success as the new ETF comes to market with $50 million in assets under management from such investors. Among ETFs that have come to market this year, only the CSOP FTSE China A50 ETF (NYSE:AFTY) debuted with more assets under management.
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