A Look at Goldman's Flagship ETF

Cap-weighted indices may also expose investors to other fundamental risks as the weighting methodology would attach more weight toward indebted countries or companies Multi-factor benchmarks attempt to avoid such problems. Frequently used factors in multi-factor indexes include, value, growth, quality and low volatility.

“Stocks with low valuations, strong recent performance (momentum), strong profits, and low volatility have historically offered strong performance in most markets studied over the long term. There are reasonable economic explanations behind each effect, ranging from compensation for risk to behavioral mispricing, suggesting they will continue to work over the long run,” according to Morningstar.

GSLC is also one of the least expensive smart beta ETFs investors can find.

“For example, the cost of our ActiveBeta US Large Cap ETF is 9 basis points, compared to the industry average for smart beta ETFs of 35 basis points,” according to Goldman Sachs Asset Management.

For more information on multi-factor strategies, visit our smart beta category.