Is Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC) a Strong ETF Right Now?

Is Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC) a Strong ETF Right Now?

Designed to provide broad exposure to the Style Box – Small Cap Blend category of the market, the Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC) is a smart beta exchange traded fund launched on 06/28/2017.

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

If you’re the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

GSSC is managed by Goldman Sachs Funds, and this fund has amassed over $542.87 million, which makes it one of the average sized ETFs in the Style Box – Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the Goldman Sachs ActiveBeta U.S. Small Cap Equity Index.

The Goldman Sachs ActiveBeta U.S. Small Cap Equity Index is designed to deliver exposure to equity securities of small capitalization U.S. issuers.

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Annual operating expenses for this ETF are 0.20%, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 1.16%.

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Representing 20.70% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Healthcare round out the top three.

Taking into account individual holdings, Dec 24 Cme Eminirus2k (RTYZ24) accounts for about 0.64% of the fund’s total assets, followed by Sprouts Farmers Market Inc (SFM) and Mueller Industries Inc (MLI).

Leave a Reply

Your email address will not be published. Required fields are marked *