The combination of an Average People Pillar rating and a Below Average Process Pillar rating limit  Goldman Sachs Equal Wght US Lg Cp Eq ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy receives a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in liquidity exposure and an underweight in quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. 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

United Continental Hlds

UnitedHealth Group

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PepsiCo

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American Express

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 Equal Wght US Lg Cp Eq ETF earns a Below Average Process Pillar rating. 

The process is bolstered by tracking an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. However, the rating is limited by the fund's unimpressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year retention rate of 75% also weakens the process.

 This strategy leans toward smaller, more undervalued companies compared with its average peer in the Large Blend Morningstar Category. Analyzing additional factors, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also favored low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Such positions do not tend to provide much ballast for a portfolio. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. Such exposure tends to pay off when markets are hot and to be costly when they are not. In this month, the strategy also had more exposure to the Volatility factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in industrials and real estate relative to the category average by 4.4 and 4.1 percentage points, respectively. The sectors with low exposure compared to category peers are technology and communication services, underweight the average by 9.1 and 4.5 percentage points of assets, respectively. The strategy owns 496 securities and its assets are more dispersed than peers in the category. In particular, 2.4% of the strategy's assets are concentrated in the top 10 fund holdings, compared to the category average's 48.8%. And in closing, in terms of portfolio turnover, on a year-over-year basis, 44% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Below Average

Process

Goldman Sachs’s team is good but unexceptional, earning the strategy 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, demonstrating their 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 Equal Weight U.S. Large Cap Equity ETF

GSEW tracks an equal-weighted index of US large-cap stocks.

Making its debut on 09/12/2017, smart beta exchange traded fund Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (GSEW) provides investors broad exposure to the Style Box - Large Cap Blend category of the market.

Is Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (GSEW) a Strong ETF Right Now?

The Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (GSEW) was launched on 09/12/2017, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Blend segment of the US equity market.

Should Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (GSEW) Be on Your Investing Radar?

Goldman Sachs Equal Weight U.S. Large Cap Equity ETF aims to provide a more balanced exposure to large-cap stocks, reducing the impact of mega-cap Tech names. Equal-weight portfolios offer greater diversification and potential for higher returns but may require more frequent rebalancing. GSEW stands out with its unique equal-weight approach, lower Tech exposure, and competitive pricing compared to similar ETFs.

GSEW: The Answer To Idiosyncratic Risk In The S&P 500

Goldman Sachs Equal Weight U.S. Large Cap Equity ETF is a competitor to Invesco S&P 500 Equal Weight ETF with cheaper fees and a monthly rebalancing. A more frequent rebalancing may be an edge in certain market conditions, but a drag in other ones. An equal-weight methodology may be a good choice in some sectors, but in 20 years, it has brought negligible excess return and higher volatility in the S&P 500 universe.

GSEW: Is Equal-Weight Really Worth It?

The large-cap mega-tech companies have rallied hard in 2023, causing market-weight funds to outperform equal-weight ETFs. Equal-weight ETFs like GSEW provide an allocation of roughly 0.2% to each individual equity in the S&P 500 index. The allocation will drift as the market moves, but it gets moved back to the original level on the re-balancing date.

GSEW: An Equal Weight Fund For 'V'-Shaped Recoveries

Goldman Sachs

GSEW holds 500 of the largest U.S. companies in equal weight. It differs from RSP by having a more objective selection process, a monthly rebalancing process, and lower fees. Fundamentally, the two ETFs are similar, although GSEW has higher growth rates and valuation ratios, indicating it should perform better in rising markets. Monthly rebalancing isn't always optimal, as it involves repeated buying of poor-performing stocks. This feature negatively impacted GSEW as regional bank stocks declined over the last year.

GSEW: Is Goldman Sachs' Equal-Weight Large-Cap ETF Better Than Invesco's RSP?

GSEW is an equal-weighted large-cap blend ETF with a 0.09% expense ratio, the second-cheapest on the market. This 500-stock fund has $670 million in assets under management. However, its track record is disappointing, ranking 19/25 and 12/19 on three- and five-year total returns when compared to other large-cap equal-weighted funds.

GSEW: The Equal-Weight ETF With Pocket-Friendly Fees

Invesco S&P 500 Equal Weight ETF

The Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (GSEW) can invest in Large-Cap stocks in or outside of the S&P 500 Index. The Invesco S&P 500 Equal Weight ETF (RSP) only uses S&P 500 Index stocks, providing investors a choice. Has it made a difference?

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GSEW has a smart-beta strategy focusing on the most expensive U.S. companies with an equal-weight approach at its core instead of traditional market cap weighting. Anecdotal evidence suggests that equal-weight strategies should perform better during times of market stress. Yet this is not always the case.

GSEW: Smart Beta Not Supportive Of Higher Returns, Lower Volatility

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The 60-40 stock-bond allocation did a lot of investors favors during the Covid-19 selloffs back in March as investors rushed to safe havens when equities were selling off and rates were dropping. Those low yields are now making investors rethink that 40% bond allocation as they look to other alternative assets to fill the void.

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When it comes to stocks and bonds, global investment firm Goldman Sachs gives the former a 90% chance that it will outperform its fixed income counterpart over the next decade. Given those odds, it’s time to push all-in on stocks.

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As markets flux, different sectors will tend to outperform others thereby requiring money managers to increase exposure to certain sectors or specific equities and then limiting exposure to others via active management. When it comes to passive management, exposure via market capitalization size could expose investors to certain concentration risks, but there’s an alternative—an equal [.

Get Equal Cap Weighting to the Large Cap Equities via the “GSEW” ETF

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A lot of the investing game is not just quantitative and qualitative analysis. While these factors can certainly help in the screening process, Zurich-based value investors Guy Spier acknowledges that a lot of investing is mental, which includes knowing your limitations.

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Value investing icon Warren Buffett hasn’t been as active during the coronavirus pandemic. It could be that his 90th birthday is around the corner, but more importantly, he’s keeping his emotions in check during a volatile coronavirus pandemic environment–a valuable lesson when value investing.

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News for Goldman Sachs Equal Weight U.S. Large Cap Equity ETF ETF (GSEW)