This Week's ETF Launches: Goldman Sachs Expands Its Active Beta Lineup
The ETF industry continues to gain billions of dollars in new inflows and fund providers continue cranking out new products to fill the demand.
With the number of new ETF launches in 2017 topping 100, providers continue to tap into the popularity of smart-beta funds, while others target specific niches to try to get in on the action.
This week’s batch of new launches saw new offerings in both of these groups.
Ticker | Name | Issuer | Launch Date | ETFdb.com Category | Expense Ratio |
|---|---|---|---|---|---|
(VSMV n/a) | VictoryShares U.S. Multi-Factor Minimum Volatility ETF | 06/22/2017 | 0.35% | ||
(VESH n/a) | Virtus Enhanced Short U.S. Equity ETF | 06/28/2017 | 0.55% | ||
(TTAI n/a) | TrimTabs All Cap International Free Cash Flow ETF | 06/28/2017 | 0.59% | ||
(OCIO n/a) | ClearShares OCIO ETF | 06/28/2017 | 0.67% | ||
(GOAU n/a) | U.S. Global GO Gold and Precious Metal Miners ETF | 06/28/2017 | 0.60% | ||
(GSSC n/a) | Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF | 06/27/2017 | 0.20% |
Goldman Adds to Its Smart-Beta Offerings
Goldman Sachs’ existing lineup of five ActiveBeta funds manages more than $4 billion in total assets. So it makes sense that it would add a sixth fund to the lineup to expand its smart-beta offerings. The Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC n/a) follows in the footsteps of its predecessors by grading each of the stocks in its available universe, the Goldman Sachs ActiveBeta U.S. Small Cap Equity Index, by four common smart-beta factors:
Value – measured by price-to-book-value, price-to-sales, price-to-earnings and price-to-free-cash-flow. Momentum – looks at beta and volatility-adjusted daily price returns. Quality – measured by profit-to-total-assets and return on equity. Low Volatility – assesses the standard deviation of daily total returns.
Stocks that score well in the composite of these factors get overweighted, while those that score poorly get underweighted.
With this fund, Goldman Sachs takes a bit of a unique approach to its smart-beta methodology. Many such funds target a specific subset of stocks that score well in their own proprietary ratings systems. Goldman, however, holds nearly every one of the roughly 2,000 components in the underlying index but merely adjusts the weightings according to the stocks’ composite scores. One advantage of the fund is its low expense ratio. At just 0.20%, the Small Cap Equity ETF will be one of the cheaper alternatives in the space.
To check out other small-cap ETFs, click here.
ClearShares Implements Outsourced CIO Model in New ETF
The outsourced chief investment officer is a fairly straightforward concept. Institutions may face any number of challenges in fulfilling the fiduciary responsibility on behalf of their clients. They may not have the resources to effectively manage their portfolios. They may be burdened by the increasing complexity of investment options available. To address the problem, they engage with an outsourced CIO. This allows the institution to focus on other matters while performing their fiduciary duty in a cost-effective manner.
The new ClearShares OCIO ETF (OCIO n/a) uses that concept in a “fund of funds” that combines the benefits of both passive and active management. It holds more than 30 different primarily passive index funds that get strategically weighted according to where the fund’s managers believe there are opportunities for outperformance. The fund looks to maintain a balance of 60% global equities and 40% fixed income.
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Rounding out This Week’s Other New Launches
The VictoryShares U.S. Multi-Factor Minimum Volatility ETF (VSMV n/a) targets primarily large- and mid-cap stocks and screens for fundamental factors such as earnings quality, momentum, profitability and valuation to deliver superior risk-adjusted returns while minimizing overall portfolio volatility.
The Virtus Enhanced Short U.S. Equity ETF (VESH n/a) is an actively managed inverse fund that seeks to outperform -100% of the S&P 500. It does this by taking a short position in the S&P 500 while overweighting the short exposure to the specific S&P 500 sectors that exhibit the weakest relative strength.
Free cash flow is the amount of cash a company has leftover after paying all of its obligations and reinvesting back in the business. The TrimTabs All Cap International Free Cash Flow ETF (TTAI n/a) is an equal-weight portfolio of non-U.S. companies that are generating significant free cash flow, have healthy balance sheets and are completing share buybacks financed by free cash.
The U.S. Global GO Gold and Precious Metal Miners ETF (GOAU n/a) uses a multi-factor model to identify opportunities among companies engaged in the production of gold and other minerals. Companies can be engaged either in the mining and production of these metals or passively through royalties or production streams.
For a list of all new ETF launches, take a look at our ETF Launch Center.
The Bottom Line
This week’s batch of launches demonstrates how fund providers continue to try to identify popular yet unique products. ETFs targeting increasingly narrow market niches or strategies have had some trouble gaining traction lately. We’ll need to give each of these funds a little time to see if they’re more the exception rather than the rule.
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