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Goldman Sachs Launches Cheapest Equal-Weight ETF

ETF Professor

Goldman Sachs Asset Management (GSAM), the asset management and exchange traded funds arm of Goldman Sachs Group Inc. (NYSE: GS), expanded its fast-growing ETF lineup Thursday with the debut of the Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (BATS:GSEW).

The equal-weight methodology is considered one of the oldest iterations of fundamental indexing or smart beta. True to previous form, GSAM is pricing smart beta products in comparable fashion to plain vanilla, cap-weighted index funds. The new Goldman Sachs Equal Weight U.S. Large Cap Equity ETF charges just 0.09 percent per year, or $9 on a $10,000 investment, making it the cheapest equal-weight ETF on the market.

GSEW tracks the Solactive US Large Cap Equal Weight Index. The new ETF “seeks to avoid concentration in the largest names. This approach may allow the fund to participate in a broad range of market cycles and potentially reduce exposure to isolated market incidents,” according to GSAM.

Established Competition

GSEW will compete directly with the Guggenheim S&P 500 Equal Weight ETF (NYSE: RSP), the largest equal-weight ETF in the U.S. Guggenheim recently cut RSP's annual expense ratio in half to 0.2 percent, but that is still more than double the fee found on the new Goldman Sachs ETF.

“GSEW seeks to help investors looking for a low cost way to avoid market cap biases, by allocating evenly to the largest U.S. companies, independent of their relative size,” said Michael Crinieri, GSAM’s global head of ETF strategy, in a statement.

GSEW allocates 15 percent of its weight to the technology sector, while consumer discretionary and financial services names each command around 14 percent of the new ETF's weight. Healthcare and industrial stocks combine for a quarter of the new ETF's roster.

GSAM Is Growing

GSEW is the third ETF launched by GSAM since June. Earlier this month, the issuer introduced the Goldman Sachs Access High Yield Corporate Bond ETF (NYSE:GHYB), one of the cheapest junk bond ETFs on the market. In June, GSAM introduced the Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (NYSE:GSSC).

GSAM has been offering ETFs for two years with GSEW being the firm's 11th ETF. The firm had $5.6 billion in ETF assets under management as of Aug. 31, 2017, according to issuer data.

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