Goldman Plans Equal Weight Large Cap Fund

April 18, 2017

Goldman Sachs has recently filed for an ETF that will compete directly with the $13 billion Guggenheim S&P 500 Equal Weight ETF (RSP). The proposed Goldman Sachs Equal Weight U.S. Large Cap Equity ETF will track an index from Solactive that covers the 500 largest companies in the U.S. based on market capitalization, and weights them equally.

RSP is considered by many to be the first smart-beta ETF due to its alternative weighting. RSP has outperformed the SPDR S&P 500 ETF (SPY) in most years since RSP’s inception in 2003. That’s largely due to the equal weighting, which gives smaller stocks just as much influence as larger stocks, thus giving the fund more exposure to the small-cap premium.

Competing With RSP?

The most compelling question raised by the filing is whether Goldman will look to compete with RSP on price. RSP comes with an expense ratio of 0.40%, which is perfectly reasonable, but leaves significant room to come in at a lower price point.

Keep in mind that Goldman Sachs rolled out the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC) at a cost of 0.09%, which puts it even with the plain-vanilla SPY, and fired a shot over the bows of all its competitors in the multifactor ETF space.

It should also be noted that the filing is a departure for Goldman Sachs, which has previously rolled out ETFs with far more complex methodologies, such as its multifactor ActiveBeta family.

Contact Heather Bell at [email protected].

 

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