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

Zacks Equity Research
·4 min read

Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC) is a smart beta exchange traded fund launched on 06/28/2017.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

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But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

GSSC is managed by Goldman Sachs Funds, and this fund has amassed over $449.62 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund 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

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.20% for this ETF, which makes it on par with most peer products in the space.

GSSC's 12-month trailing dividend yield is 0.73%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

GSSC's heaviest allocation is in the Financials sector, which is about 17.80% of the portfolio. Its Industrials and Healthcare round out the top three.

Taking into account individual holdings, Usd U.s. Dollar (USD) accounts for about 0.43% of the fund's total assets, followed by Lattice Semiconductor Corp (LSCC) and Amc Entertainment Holdings Inc (AMC).

Its top 10 holdings account for approximately 3.06% of GSSC's total assets under management.

Performance and Risk

Year-to-date, the Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF return is roughly 23.87% so far, and was up about 48.53% over the last 12 months (as of 10/27/2021). GSSC has traded between $43.03 and $66.65 in this past 52-week period.

The ETF has a beta of 0.96 and standard deviation of 28.13% for the trailing three-year period. With about 1446 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 $70.40 billion in assets, iShares Core S&P SmallCap ETF has $71.52 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
 
Lattice Semiconductor Corporation (LSCC) : Free Stock Analysis Report
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
AMC Entertainment Holdings, Inc. (AMC) : Free Stock Analysis Report
 
iShares Core S&P SmallCap ETF (IJR): ETF Research Reports
 
ProShares Ultra Semiconductors (USD): ETF Research Reports
 
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Zacks Investment Research