The exchange-traded funds industry continues to grow by leaps and bounds, both in assets and number of new funds. For the first time, there are now more than 6,000 exchange-traded products listed around the world.
While the November data is not out yet, as of the end of October, U.S.-listed ETFs had hauled in a record $174 billion in new assets on a year-to-date basis, according to ETF research firm ETFGI.
The ETF/ETP industry in the United States had 1,803 ETFs/ETPs with assets of U.S. $2.13 trillion, from 90 providers listed on three exchanges at the end of October, said the research firm.
There has also been another surge in new ETFs coming to market. Last year, approximately 200 new ETFs debuted and with a full month of trading still left in 2015, that number could and should easily be eclipsed. Of course, many new ETFs come from established issuers such as iShares, Vanguard and WisdomTree (WETF), but some new issuers are getting into the ETF game and finding quick success.
The latter group includes Goldman Sachs (GS). Goldman Sachs, the largest and most venerable investment bank, had been largely absent from the booming U.S. ETF business, but that changed in the third quarter when the New York-based company rolled out its first ETFs.
While many new ETF issuers struggle to attract assets, it’s probably not surprising to learn that is not an issue for Goldman Sachs. In fact, the three Goldman Sachs ETFs that have come to market this year are among this year’s most successful rookie ETFs, particularly when considering how long these funds have been available to the investing public.
Goldman Sachs is a prestigious name and the Goldman Sachs ETFs have enjoyed rapid success, but investors should not make decisions based on brand recognition alone. So let’s have a deeper look at the Goldman Sachs ETFs.
Goldman ETFs: Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC)
Expense Ratio: 0.09%
The Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC) is the most seasoned of the Goldman Sachs ETFs, as this new ETF debuted in mid-September. In less than three full months of trading, GSLC has managed to accumulate nearly $157 million in assets under management, according to Goldman Sachs data, easily making this one of the most successful rookie ETFs of 2015.
GSLC tracks the Goldman Sachs ActiveBeta U.S. Large Cap Equity Index, which “seeks to capture common sources of active equity returns, including value (i.e., the security’s price compared to market value), momentum (i.e., performance history), quality (i.e., profitability relative to total assets) and volatility (i.e., consistency of returns).”
Translation: GSLC is one of those smart/strategic beta ETFs investors keep hearing about.
While it is early to be judging this Goldman Sachs ETF on performance, this fund has advantages beyond the Goldman Sachs name. Primarily, GSLC charges just 0.09% a year, or $9 per $10,000 invested. Put simply, that is Vanguard or Charles Schwab ETF cheap and a downright paltry fee compared to the average large-cap smart beta ETF, which charges more than quadruple what GSLC does.
This Goldman Sachs ETF features Apple (AAPL), Microsoft (MSFT) and Exxon Mobil (XOM) among its top 10 holdings.
Goldman ETFs: Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM)
Expense Ratio: 0.45%
The Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM) is the first Goldman Sachs ETF that targets developing economies. GEM debuted just a few days after the aforementioned GSLC, the first Goldman Sachs ETF.
GEM has been an even more impressive asset gatherer than GSLC, raking in $182.7 million in assets since coming to market. For any new ETF, that is a fast start, but this Goldman Sachs ETF deserves some credit for attracting institutional investors at a time when many investors have to be dragged kicking and screaming to emerging markets ETFs.
As is the case with GSLC, it is too early to pass judgment on GEM’s performance, though the ETF has slightly trailed the MSCI Emerging Markets Index since coming to market. GEM keeps with the Goldman Sachs ETF trend of being affordable relative to competitors. The new ETF charges 0.45% per year — that is higher than the fees on traditional cap-weighted emerging markets ETFs, but significantly less expensive than most smart beta emerging markets funds.
Goldman ETFs: Goldman Sachs ActiveBeta International Equity ETF (GSIE)
Expense Ratio: 0.35%
The Goldman Sachs ActiveBeta International Equity ETF (GSIE) is the newest Goldman Sachs ETF, having debuted in November. Like the other Goldman Sachs ETFs, GSIE is off to a solid asset-gathering start, with a current assets under management tally of nearly $35 million.
“GSIE seeks to track the Goldman Sachs ActiveBeta International Equity Index, which is constructed using a performance-seeking methodology from Goldman Sachs. The index weights stocks in the MSCI World ex USA Index — which as of Nov. 6, 2015, consisted of 1005 securities from issuers in 22 developed market countries – on four well-established attributes of performance,” according to a statement issued by Goldman Sachs.
GSIE can be used as a replacement to traditional MSCI EAFE Index funds as the Goldman Sachs ETF features a combined 40% of its weight Japanese and British stocks. Europe ex-UK represents over 42% of GSIE’s weight.
GSIE’s roster of nearly 780 stocks includes plenty of names familiar to U.S. investors, including HSBC (HBC), Novartis (NVS) and Toyota (TM).
Like the other Goldman Sachs ETFs, GSIE is attractively priced. The new ETF charges 0.35% per year. That is well below the Strategic Beta average in the Foreign Large Blend Morningstar Category and lower than the Index Fund average in the category, according to Goldman Sachs.
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.
