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

·4 min read

A smart beta exchange traded fund, the Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC) debuted on 06/28/2017, and offers broad exposure to the Style Box - Small Cap Blend category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

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.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

Managed by Goldman Sachs Funds, GSSC has amassed assets over $424.26 million, making 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.

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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.20%.

It has a 12-month trailing dividend yield of 0.71%.

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 16.60% of the portfolio. Its Industrials and Healthcare round out the top three.

Taking into account individual holdings, Gamestop Corp (GME) accounts for about 0.72% of the fund's total assets, followed by Mar 21 Cme Eminirus2k (RTYH1) and Builders Firstsource Inc (BLDR).

GSSC's top 10 holdings account for about 4.67% of its total assets under management.

Performance and Risk

The ETF return is roughly 21.87% and is up about 66.15% so far this year and in the past one year (as of 06/16/2021), respectively. GSSC has traded between $38.22 and $65.96 during this last 52-week period.

GSSC has a beta of 0.97 and standard deviation of 27.89% for the trailing three-year period. With about 1392 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) tracks Russell 2000 Index and the iShares Core S&P SmallCap ETF (IJR) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $69.13 billion in assets, iShares Core S&P SmallCap ETF has $72.14 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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Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC): ETF Research Reports
 
GameStop Corp. (GME) : Free Stock Analysis Report
 
Builders FirstSource, Inc. (BLDR) : Free Stock Analysis Report
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
iShares Core S&P SmallCap ETF (IJR): ETF Research Reports
 
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