U.S. equities are highly elevated relative to their counterparts across the globe and as investors have demanded more products that help to generate alpha and provide risk parity ETF issuers have obliged. Yesterday Goldman Sachs Asset Management (GSAM) entered the ex-US fray by launching their 3rd of 6 new smart-beta ETFs, branded ActiveBeta, the Goldman Sachs ActiveBeta International Equity ETF (NYSEarca: GSIE).
GSIE is trading on NYSE arca and has a 0.35% expense ratio.
GSAM launched their first ETFs in September – Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (NYSEarca: GSLC) and Goldman Sachs ActiveBeta Emerging Markets Equity ETF (NYSEarca: GEM) – and have quickly amassed over $100m and $150m respectively.
The ETF will track a proprietary index called the Goldman Sachs ActiveBeta International Equity Index, which is constructed using performance-seeking methodology from Goldman. It weights stocks in the MSCI World ex USA Index on the well-established attributes of value, momentum, quality, and low volatility. The aims of these attributes are to identify stocks with high potential, growth, consistency, and stability so “investors can stay invested for the long term” according to the press release.
When entering the international equity space this year the question often on the tip of everyone’s tongue is “will this be offered currency-hedged”? Tony Kelly, Head of ETF Product Development and Management at Goldman told us, “The current Active Beta products were developed and launched in response to client demand. Since these clients are using these products as long term investments they are not focused on near term fluctuations in currency or market timing. The flows into hedged ETFs does indicate that there may be interest in hedged versions down the road.”
Gary Chropuvka, Head of Customized Beta Strategies within the Quantitative Investment Strategies team at GSAM concluded, “We aim to consistently deliver world-class investment solutions to our clients, and the launch of our third ActiveBeta® product underscores our commitment to not only meet but to anticipate the needs of investors by offering what we consider to be the next generation of ETF investing”.
A lofty goal, indeed. But with GSAM’s scope, resources, and expertise it’d be a risky position to take to bet against them.