Goldman Sachs ActiveBeta® Emerging Markets Equity ETF (GEM)

Overview

The Goldman Sachs ActiveBetau00ae Emerging Markets Equity ETF (GEM) seeks to track the performance of an index of emerging market equities. It focuses on providing exposure to companies in developing economies, aiming to capture their growth potential while employing a systematic approach to factor investing. The strategy aims to outperform traditional market-cap-weighted indices by overweighting stocks with characteristics historically associated with higher returns, such as value, momentum, and low volatility, and underweighting those with less favorable characteristics. The asset allocation is primarily in equities of emerging market companies.

Reputation and Reliability

Goldman Sachs Asset Management is a globally recognized and reputable financial institution with a long-standing history and extensive experience in managing various asset classes, including ETFs. Their reputation is built on a foundation of robust research, sophisticated investment strategies, and a commitment to client service.

Management Expertise

The ETF is managed by Goldman Sachs Asset Management, which leverages the firm's deep expertise in quantitative research and portfolio management. The team utilizes a systematic, factor-based investment process, backed by extensive research and data analysis to construct and manage the portfolio.

Goal

The primary investment goal of the Goldman Sachs ActiveBetau00ae Emerging Markets Equity ETF is to provide investors with exposure to emerging market equities, with an aim to achieve risk-adjusted returns that are potentially higher than those of traditional emerging market equity benchmarks.

Investment Approach and Strategy

Strategy: The ETF aims to track the performance of an underlying index that is constructed using a proprietary quantitative methodology based on multiple factors known to drive returns, such as value, momentum, and low volatility. It is not designed to track a specific market-cap-weighted index, but rather to deliver returns based on these identified investment factors within the emerging markets universe.

Composition The ETF primarily holds equities of companies located in emerging market countries. The selection and weighting of these equities are determined by the ETF's active beta strategy, which favors companies exhibiting specific factor characteristics.

Market Share: Information on specific market share for individual ETFs can fluctuate and is proprietary. However, the emerging markets equity ETF space is highly competitive, with numerous players offering broad and targeted exposure.

Total Net Assets (AUM): 747700000

Key Competitors

• iShares Core MSCI Emerging Markets ETF (IEMG)
• Vanguard Emerging Markets Stock ETF (VWO)
• iShares MSCI Emerging Markets ETF (EEM)

Competitive Landscape

The emerging markets ETF landscape is mature and highly competitive, dominated by large providers offering broad, market-cap-weighted exposure. Goldman Sachs ActiveBetau00ae Emerging Markets Equity ETF differentiates itself through its active beta (factor-based) strategy, which aims to enhance risk-adjusted returns beyond traditional indexing. Its advantage lies in its systematic, quant-driven approach potentially capturing alpha through factor tilts. However, it faces the challenge of educating investors on factor investing versus simple index tracking and competing with the vast asset bases and lower expense ratios of some of its larger, passive competitors.

Historical Performance: Historical performance data for GEM shows varied results across different timeframes, influenced by the cyclical nature of emerging markets and the effectiveness of its factor strategy. Investors should consult the latest prospectus and fund fact sheets for up-to-date performance figures and analysis, which typically include 1-year, 3-year, 5-year, and since inception returns.

Benchmark Comparison: The ETF's performance is often compared to indices like the MSCI Emerging Markets Index. Its active beta strategy aims to deviate from and potentially outperform these benchmarks on a risk-adjusted basis, though this is not always guaranteed and can lead to periods of underperformance.

Expense Ratio: 0.35

Average Trading Volume

The ETF exhibits moderate average daily trading volume, indicating reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread for the ETF is generally tight, reflecting good trading liquidity and minimizing transaction costs for investors.

Market Environment Factors

The performance of GEM is significantly influenced by global economic growth, commodity prices, geopolitical stability in emerging markets, currency fluctuations, and interest rate differentials between developed and emerging economies. Emerging markets are generally more volatile than developed markets, making them sensitive to these macro factors.

Growth Trajectory

As an active beta ETF, its growth trajectory is tied to the increasing adoption of factor-based investing strategies and the ongoing demand for emerging market exposure. Changes in its strategy or holdings would typically be driven by evolving factor premiums and rebalancing of its underlying quantitative model.

Competitive Edge

Goldman Sachs ActiveBetau00ae Emerging Markets Equity ETF's competitive edge stems from its proprietary, quantitative 'ActiveBeta' methodology. This systematic approach aims to systematically exploit market inefficiencies and factor premiums (value, momentum, low volatility) within the emerging markets universe, offering a potential for enhanced risk-adjusted returns beyond traditional passive strategies. The backing of Goldman Sachs' extensive research capabilities and global infrastructure provides a strong foundation for its quantitative investment process and product development.

Volatility

The ETF exhibits higher historical volatility compared to broad developed market equity ETFs, which is characteristic of emerging market equities. Its factor strategy can also lead to periods of volatility that differ from broad market movements.

Market Risk

Specific risks include political and economic instability in emerging market countries, currency fluctuations, potential for lower liquidity in some emerging market securities, and sensitivity to global economic downturns. The factor-based strategy itself carries risks, as factor premiums can diminish or reverse.

Ideal Investor Profile

The ideal investor for the Goldman Sachs ActiveBetau00ae Emerging Markets Equity ETF is one seeking diversified exposure to emerging markets with a systematic, factor-based approach to potentially enhance returns and manage risk. They should have a higher risk tolerance and a long-term investment horizon, understanding the inherent volatility of emerging markets.

Market Risk

This ETF is best suited for long-term investors who are looking for a more sophisticated approach to emerging market allocation, beyond simple market-cap indexing, and who are comfortable with the active beta strategy. It may also appeal to investors seeking to diversify their portfolios with assets that have historically exhibited different return drivers.

The Goldman Sachs ActiveBetau00ae Emerging Markets Equity ETF (GEM) offers a systematic, factor-based approach to investing in emerging market equities. It aims to enhance risk-adjusted returns by focusing on value, momentum, and low volatility factors. While it leverages Goldman Sachs' robust research and management expertise, it operates in a competitive landscape with higher inherent volatility typical of emerging markets. GEM is best suited for long-term investors with a higher risk tolerance seeking diversified emerging market exposure beyond traditional indexing.

Data Sources:

• Goldman Sachs Asset Management Official Website
• Financial Data Providers (e.g., ETF.com, Morningstar, Bloomberg)

Disclaimers:

The information provided is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Investors should consult with a qualified financial advisor before making any investment decisions. Market share data and AUM are subject to change.