Legendary investment bank Goldman Sachs (NYSE:GS) might not be the biggest name in the ETF game, but it is a powerful emerging force that passive investors might wish to look to if they seek unique traits at an incredibly competitive price of admission. Undoubtedly, there’s a little something for everyone in the Goldman ETF lineup.
Whether you’re a young growth-minded investor looking for capital appreciation without neglecting on quality and value or a retiree who’s all about the yield, Goldman has some very interesting options that are worthy of a second look, especially as the S&P 500 approaches year-end with a rather swollen multiple. Perhaps passive investors looking for more cost-effective diversification may wish to add the following to a watchlist ahead of the new year.
Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF
Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (NYSEARCA:GSLC) stands out as a multi-factor ETF that has more to offer than a run-of-the-mill S&P 500 index fund. The ETF seems better balanced, with a weighting that’s not based on market cap but various traits that I believe are far more meaningful.
Undoubtedly, size isn’t everything. Factors like value, quality, momentum, and, of course, relative volatility are worth careful consideration. And while the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF shares many top holdings with the S&P 500, the weightings and sector breakdown are slightly different. Perhaps the biggest takeaway is that Goldman’s ETF is a tad cheaper (27.4 times trailing price-to-earnings (P/E) vs. 28.8 for the S&P 500), while offering returns that aren’t that much lower than the S&P 500.
Either way, if you are a fan of the S&P 500 but want weightings adjusted based on attributes that actually matter more than something as arbitrary as market cap, Goldman’s ActiveBeta strategy stands out as enticing. The biggest draw, in my view, has to be the slight tilt towards value, which could lead to less downside once the next market-wide correction hits. Of course, it will be interesting to see how the ActiveBeta stacks up against the S&P 500.
Goldman Sachs Future Tech Leaders ETF
Goldman Sachs Future Tech Leaders ETF (NYSEARCA:GTEK) is probably my favorite Goldman ETF to go with right now if you’re not shying away from tech after a little bit of November volatility. Though the Nasdaq 100 is enough to get the job done for most tech-hungry investors, I must say Goldman Sachs has a “growthier,” perhaps more exciting take on the tech sector with its Goldman Sachs Future Tech Leaders ETF. Either way, I think the early-stage growth focus makes the ETF a solid complement to a Nasdaq 100 or S&P 500-focused portfolio.
For investors striving to get a piece of the next big thing, I think the “future tech leaders” methodology is intriguing, especially when you consider the type of hyper-growth names underneath the hood, which I find to be lacking in cap-weighted growth and tech ETFs. If you’re serious about making the most of the AI boom, I think adding some Goldman Sachs Future Tech Leaders ETF really is a must, provided you can put up with the added volatility.
Underneath the hood, you’re getting some exposure to some very impressive AI innovators that have serious growth prospects. Though I have no idea if the top holdings will emerge to become the next big multi-trillion-dollar titans, I think the basket has a lot to offer. Underneath the hood, you’re getting names like South Korean memory chip maker SK Hynix as well as emerging stars in AI like Snowflake (NYSE: SNOW) and Cadence Design Systems (NASDAQ:CDNS), both of which I’m a big fan of.
While the net expense ratio might be higher than for the indices (0.75%), I do find that the active approach makes the higher fee worth the while, especially when you consider the active managers behind the scenes are Goldman veterans. Also, you’re gaining broad exposure to international tech innovators (most notably across Asia), many of which (like SK Hynix) you may never have heard of.
With shares of the Goldman Sachs Future Tech Leaders ETF up nearly 27% year to date, the ETF is up more than the S&P and Nasdaq 100. Though the added volatility (1.36 beta) makes for a choppier ride, I do think younger investors should consider the ETF for a long-term jolt.