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

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The Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC - Free Report) was launched on 06/28/2017, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Small Cap Blend category of the market.

What Are Smart Beta ETFs?

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.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

Managed by Goldman Sachs Funds, GSSC has amassed assets over $455.84 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. GSSC seeks to match the performance of the Goldman Sachs ActiveBeta U.S. Small Cap Equity Index before fees and expenses.

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

Cost & Other Expenses

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 GSSC are 0.20%, which makes it on par with most peer products in the space.

GSSC's 12-month trailing dividend yield is 1.25%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

GSSC's heaviest allocation is in the Financials sector, which is about 19.70% of the portfolio. Its Industrials and Information Technology round out the top three.

Taking into account individual holdings, Usd U.s. Dollar accounts for about 0.74% of the fund's total assets, followed by Emcor Group Inc (EME - Free Report) and Atkore Inc (ATKR - Free Report) .

The top 10 holdings account for about 3.77% of total assets under management.

Performance and Risk

Year-to-date, the Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF has gained about 4.34% so far, and is down about -11.84% over the last 12 months (as of 01/12/2023). GSSC has traded between $50.18 and $64.87 in this past 52-week period.

The ETF has a beta of 0.97 and standard deviation of 30.39% for the trailing three-year period. With about 1261 holdings, it effectively diversifies company-specific risk.

Alternatives

Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P SmallCap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $53.35 billion in assets, iShares Core S&P SmallCap ETF has $68.05 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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