Goldman Sachs launches equal-weight US large cap ETF

Sep 15th, 2017 | By | Category: Equities

Goldman Sachs has introduced the Goldman Sachs Equal Weight US Large Cap Equity ETF (Bats: GSEW) which provides access to the 500 largest US-listed equities while mitigating some of the biases inherent in traditional market cap-weighted indices.

Goldman Sachs launches equal-weight US large cap ETF

GSEW provides equal-weight exposure to the 500 largest US-listed equities.

Proponents of equal-weighted indices highlight that the weighting methodology avoids overweighting the largest caps in the index universe, a criticism of traditional market cap-weighted approaches. Equal-weighted strategies help to reduce the stock-specific risk of these largest companies.

“GSEW seeks to help investors looking for a low cost way to avoid market cap biases, by allocating evenly to the largest US companies, independent of their relative size,” said Michael Crinieri, GSAM’s global head of ETF strategy.

The fund tracks the Solactive US Large Cap Equal Weight Index. Each constituent is assigned a 0.2% weight in the index as of the index’s time of rebalance.

The largest sector exposures of the index are currently information technology (15.1%), consumer discretionary (14.3%), financials (14.0%), health care (12.5%) and industrials (12.4%).

GSEW has a total expense ratio (TER) of just 0.09%.

In July, rival provider Guggenheim Investments halved the management fee charged on its largest ETF, the $13 billion Guggenheim S&P 500 Equal Weight ETF (NYSE Arca: RSP), from 0.40% to 0.20% in a bid to position itself as one of the lowest cost providers of smart beta ETF strategies (See: “Guggenheim slashes fees on smart beta S&P 500 ETF”). While clearly a bold move, the launch of GSEW might force Guggenheim to further reduce the fees charged on RSP in order to maintain competitiveness.

Investors looking for a Europe-listed equally weighted US equity large-cap exposure could try the db x-trackers S&P 500 Equal Weight UCITS ETF (LON: XDWE) which was launched in June 2014 and has $460 million in assets under management with a TER of 0.25%.

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