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Should Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC) Be on Your Investing Radar?

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Zacks Equity Research
·3 min read
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The Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC) was launched on 06/28/2017, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.

The fund is sponsored by Goldman Sachs Funds. It has amassed assets over $257.27 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

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

It has a 12-month trailing dividend yield of 0.89%.

Sector Exposure and Top Holdings

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.

Looking at individual holdings, Usd U.s. Dollar (USD) accounts for about 3.80% of total assets, followed by Redfin Corp (RDFN) and Irhythm Technologies Inc (IRTC).

The top 10 holdings account for about 6.85% of total assets under management.

Performance and Risk

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.

The ETF has added roughly 6.56% so far this year and it's up approximately 22.32% in the last one year (as of 01/11/2021). In the past 52-week period, it has traded between $28.45 and $57.58.

The ETF has a beta of 1 and standard deviation of 27.08% for the trailing three-year period. With about 1475 holdings, it effectively diversifies company-specific risk.

Alternatives

Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, GSSC is a reasonable option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P SmallCap ETF (IJR) and the iShares Russell 2000 ETF (IWM) track a similar index. While iShares Core S&P SmallCap ETF has $59.69 billion in assets, iShares Russell 2000 ETF has $64.44 billion. IJR has an expense ratio of 0.06% and IWM charges 0.19%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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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