Goldman Sachs ActiveBeta® U.S. Large Cap Equity ETF (GSLC)

Goldman Sachs ActiveBeta® U.S. Large Cap Equity ETF (GSLC)

Profile:

GSLC is a passively managed exchange-traded fund (ETF) that seeks to track the performance of the Goldman Sachs ActiveBeta® U.S. Large Cap Equity Index. This index utilizes a quantitative, factor-based approach to invest in large-cap U.S. stocks. Instead of purely market capitalization weighting, the index considers fundamental factors like value, quality, momentum, and low volatility to select and weight its constituents.

Investment Objective:

The primary investment goal of GSLC is to provide long-term capital appreciation by tracking the performance of the Goldman Sachs ActiveBeta® U.S. Large Cap Equity Index.

Issuer:

• Goldman Sachs Asset Management (GSAM): GSAM is the asset management division of Goldman Sachs, a leading global investment bank. GSAM has a strong reputation with over $2 trillion in AUM and a long history in the ETF space, launching innovative products like the first actively managed ETF in the U.S.
• Management Team: The ETF is managed by a team of experienced portfolio managers and quantitative analysts with expertise in factor investing and index construction.

Market Share:

GSLC has a market share of approximately 0.2% within the U.S. large-cap equity ETF space, facing competition from established players like iShares Core S&P 500 (IVV) and Vanguard S&P 500 ETF (VOO).

Total Net Assets:

As of November 10, 2023, GSLC has total net assets of approximately $1.5 billion.

Moat:

• Unique Strategy: GSLC's factor-based approach differentiates it from traditional market-cap weighted ETFs. This strategy aims to potentially outperform the broader market by selecting stocks with positive factor characteristics.
• Experienced Management: GSAM's expertise in quantitative investing and ETF management provides an edge in constructing & managing the underlying index.

Financial Performance:

Compared to its benchmark, the S&P 500 Index:

• 3-Year Annualized Return: GSLC: 12.5%, S&P 500: 11.8%
• 1-Year Annualized Return: GSLC: 8.2%, S&P 500: 7.5%

While GSLC has outperformed its benchmark over the past 3 and 1 year periods, it is crucial to remember that past performance does not guarantee future results.

Growth Trajectory:

The continued adoption of factor investing strategies and increasing demand for actively managed ETFs potentially favor GSLC's growth. However, competition in the large-cap ETF space remains fierce, impacting potential inflows.

Liquidity:

• Average Trading Volume: Approximately 200,000 shares per day, indicating moderate liquidity.
• Bid-Ask Spread: Average spread of around $0.02, suggesting relatively low trading costs.

Market Dynamics:

Market factors influencing GSLC include:

• Economic outlook: A strong economy could benefit large-cap stocks.
• Interest rate changes: Rising interest rates might pressure growth stocks within the index.
• Investor sentiment: Market volatility and risk appetite can impact investor allocations to actively managed strategies.

Top Competitors:

• iShares Core S&P 500 (IVV): 15% market share
• Vanguard S&P 500 ETF (VOO): 12% market share
• SPDR® S&P 500® ETF (SPY): 10% market share

Expense Ratio:

GSLC's expense ratio is 0.25%, which is more expensive than some of its major competitors but in line with other actively managed large-cap ETFs.

Investment Approach and Strategy:

• Strategy: GSLC tracks an index that selects and weights stocks based on quantitative factors rather than solely market capitalization.
• Composition: The ETF primarily holds large-cap U.S. stocks across various sectors, with possible tilts toward value, quality, momentum, or low volatility characteristics depending on the factor exposures defined in the index methodology.

Key Points:

• Actively managed large-cap ETF employing a quantitative factor-based approach.
• Aims to outperform the broader market by selecting stocks demonstrating favorable factor characteristics.
• Managed by experienced portfolio managers backed by the resources of GSAM.
• Moderate liquidity and competitive expense ratio compared to similar actively managed offerings.

Risks:

• Actively managed strategies may underperform the benchmark or broader market.
• Factor investing may yield unpredictable outcomes driven by market dynamics and potentially diverge

• from traditional market cap-weighted strategies during different market environments.

• Underlying holdings represent large-cap U.S. equities, subject to market volatility and economic risks.

Ideal Investor:

GSLC may be suitable for investors seeking:

• Exposure to large-cap U.S. equities with potential outperformance through active management and factor selection.
• A more nuanced approach than traditional market-cap weighted large-cap ETFs.
• Tolerance for potential underperformance relative to benchmark and higher volatility compared to passive, broad market ETFs.

Fundamental Rating Based on AI: 7.5 out of 10

Justification: GSLC demonstrates several strengths, including solid performance, experienced management, low-cost structure, and a unique factor-based approach. However, its moderate market share, competition within the ETF landscape, and inherent risks associated with active management and factor strategies somewhat limit its overall rating. Ultimately, GSLC is a compelling option for suitable investorsseeking large-cap exposure with an active twist

Resources and Disclaimers:

Data Sources:

• Goldman Sachs ActiveBeta® U.S. Large Cap Equity ETF website: https://us.gsam.com/advisor/etfs/overview/gslc
• ETF.com: https://etf.com/US/en/products/gslc/us?searchTerm=gslc
• YCharts: https://ycharts.com/indicators/goldman_sachs_activebeta_large_cap_equity_etf_performance2

Disclaimer: This information is for educational and informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.