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

Launched on 09/12/2017, the Goldman Sachs (NYSE:GS) Equal Weight U.S. Large Cap Equity ETF (GSEW) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Blend segment of the US equity market.

The fund is sponsored by Goldman Sachs Funds. It has amassed assets over $236.49 M, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.63%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 16.30% of the portfolio. Financials and Healthcare round out the top three.

Looking at individual holdings, General Electric Co (GE) accounts for about 0.22% of total assets, followed by Northrop Grumman Corp (NOC) and L3harris Technologies Inc (LHX).

The top 10 holdings account for about 2.15% of total assets under management.

Performance and Risk

GSEW seeks to match the performance of the Solactive US Large Cap Equal Weight Index before fees and expenses. The Solactive US Large Cap Equal Weight Index is an equal-weight version of the Solactive US Large Cap Index including equity securities of approximately 500 of the largest U.S. companies.

The ETF return is roughly 1.38% so far this year and is up about 19.65% in the last one year (as of 02/05/2020). In the past 52-week period, it has traded between $43.51 and $52.19.

The ETF has a beta of 1.03 and standard deviation of 13.07% for the trailing three-year period. With about 494 holdings, it effectively diversifies company-specific risk.

Alternatives

Goldman Sachs Equal Weight U.S. Large Cap Equity ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, GSEW is a reasonable option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (NYSE:SPY) track a similar index. While iShares Core S&P 500 ETF has $207.95 B in assets, SPDR S&P 500 ETF has $314.72 B. IVV has an expense ratio of 0.04% and SPY charges 0.09%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

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.