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Is Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (GSEW) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (GSEW - Free Report) is a smart beta exchange traded fund launched on 09/12/2017.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Goldman Sachs Funds, and has been able to amass over $924.99 million, which makes it one of the larger ETFs in the Style Box - Large Cap Blend. GSEW, before fees and expenses, seeks to match the performance of the Solactive US Large Cap Equal Weight Index.
The Solactive US Large Cap Equal Weight Index is an equal-weight version of the Solactive US Large Cap Index including equity securities of approximately 500 of the largest U.S. companies.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.13%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 19.60% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Qualcomm Inc (QCOM - Free Report) accounts for about 0.23% of total assets, followed by Etsy Inc (ETSY - Free Report) and Exact Sciences Corp (EXAS - Free Report) .
Its top 10 holdings account for approximately 2.2% of GSEW's total assets under management.
Performance and Risk
Year-to-date, the Goldman Sachs Equal Weight U.S. Large Cap Equity ETF has added roughly 25.11% so far, and is up about 25.58% over the last 12 months (as of 12/08/2021). GSEW has traded between $56.47 and $72.67 in this past 52-week period.
GSEW has a beta of 1.07 and standard deviation of 23.50% for the trailing three-year period. With about 500 holdings, it effectively diversifies company-specific risk.
Alternatives
Goldman Sachs Equal Weight U.S. Large Cap Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $329.66 billion in assets, SPDR S&P 500 ETF has $428.70 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 - Large 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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Is Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (GSEW) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (GSEW - Free Report) is a smart beta exchange traded fund launched on 09/12/2017.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Goldman Sachs Funds, and has been able to amass over $924.99 million, which makes it one of the larger ETFs in the Style Box - Large Cap Blend. GSEW, before fees and expenses, seeks to match the performance of the Solactive US Large Cap Equal Weight Index.
The Solactive US Large Cap Equal Weight Index is an equal-weight version of the Solactive US Large Cap Index including equity securities of approximately 500 of the largest U.S. companies.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.13%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 19.60% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Qualcomm Inc (QCOM - Free Report) accounts for about 0.23% of total assets, followed by Etsy Inc (ETSY - Free Report) and Exact Sciences Corp (EXAS - Free Report) .
Its top 10 holdings account for approximately 2.2% of GSEW's total assets under management.
Performance and Risk
Year-to-date, the Goldman Sachs Equal Weight U.S. Large Cap Equity ETF has added roughly 25.11% so far, and is up about 25.58% over the last 12 months (as of 12/08/2021). GSEW has traded between $56.47 and $72.67 in this past 52-week period.
GSEW has a beta of 1.07 and standard deviation of 23.50% for the trailing three-year period. With about 500 holdings, it effectively diversifies company-specific risk.
Alternatives
Goldman Sachs Equal Weight U.S. Large Cap Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $329.66 billion in assets, SPDR S&P 500 ETF has $428.70 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 - Large 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.