Goldman Sachs Bloomberg Cln Enrgy Eq ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy's effective investment philosophy supports an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in quality exposure and yield exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

NextEra Energy

Tesla

Duke Energy

Exelon

Suncor Energy

Sempra Energy

American Electric Power Company

Public Service Enterprise Group

Dominion Energy

PG&E

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Goldman Sachs Bloomberg Cln Enrgy Eq ETF earns an Above Average Process Pillar rating. The most important driver of the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Low costs across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also influence the rating. The pattern of low fees at the firm indicates that it is focused on delivering strong results for investors. Lastly, the process is limited by the small size of its portfolio management team of one.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Bloomberg Goldman Sachs Global Clean Energy Index.  The fund seeks to achieve its investment objective by investing at least 80% of its assets in securities included in its underlying index, and in depositary receipts representing securities included in its underlying index and in underlying stocks in respect of depositary receipts included in its underlying index. The index is designed to deliver exposure to companies that are expected to have a significant impact on energy decarbonization through their exposure to clean energy. 

 The portfolio is overweight in utilities and industrials relative to the category average by 55.2 and 15.0 percentage points, respectively. The sectors with low exposure compared to category peers are energy and healthcare, with energy underweighting the average portfolio by 86.4 percentage points of assets and healthcare similar to the average. The strategy owns 211 securities and its assets are more dispersed than peers in the category. In particular, 33.1% of the fund’s assets are concentrated in the top 10 fund holdings, compared to the category average's 51.9%. And in closing, in terms of portfolio turnover, on a year-over-year basis, 23% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

Goldman Sachs’s team is valuable but does not stand out as one of the industry's best, warranting an Average People Pillar rating. The fund takes a solo manager approach, with Raj Garigipati as the only listed manager at the helm, who brings eight years of portfolio management experience to the table. They manage a total of 20 strategies, with a Bronze asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate. With only one manager listed on the strategy, the passive strategy is vulnerable to key-person risk. 

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Average

People

Goldman Sachs Asset Management heads into an uncertain direction on multiple fronts, underpinning its Average Parent rating.
GSAM has long struggled with personnel turnover, with a steady degree of analyst departures and additions coinciding with leadership reshufflings over the past few years that includes the September 2022 departure of equity head Katie Koch. Meanwhile, parent company Goldman Sachs elected to merge its asset management and wealth management units in October 2022, reversing a decision to split them in 2020, and assigned Marc Nachmann to lead the unit. Although he is a longtime Goldman veteran, most of his prior experience has been with the firm’s investment bank. Potentially complicating his remit is the firm’s December 2021 acquisition of NN IP, whose traditional and sustainable-investing branches could add capabilities but will take time to integrate. Bolstering the firm’s sustainability credentials could be especially pressing given the SEC’s November 2022 fining of GSAM for past failings in its ESG-related operations. 
GSAM has some strengths worth highlighting. Portfolio-manager ownership statistics across the firm’s U.S. lineup have improved dramatically since the firm instituted a deferred compensation program of fund shares in early 2020, and GSAM has compelling capabilities within its quantitative equity franchise.

Parent

Goldman Sachs Bloomberg Clean Energy Equity ETF

GCLN tracks an index of global companies expected to have significant impact on the clean energy industry. Holdings are market-cap weighted and tilted towards those with more relevance to clean energy and decarbonization.

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