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Goldman Sachs (GS) Slashes Fees for its Smart-Beta Funds


The Goldman Sachs Group, Inc. GS is on track to develop and build a successful smart-beta investing strategy, which is more complex but cheaper than the conventional indexes that are weighed according to market capitalization, per a Bloomberg report. As part of this effort, the asset management division of the company has lowered the fees for its smart-beta funds.

The company is offering a new fund to its clients, where investors need to pay only 0.09% to gain exposure to a portfolio of equal-weighted large-cap stocks.

With this, the company’s funds will become cheaper than any other comparable fund that is weighed equally.

It goes without saying that asset managers have finally realised that investors get more attracted toward low-cost products. Hence, they need to develop alternate strategies, which can assure better business from their clients.

Smart-beta investing strategies offer better risk and return trade-off to clients by using objective factors such as volatility or dividends and not market cap to weigh indexes.

Given that investors are getting obsessed with cost, Goldman Sachs now dreams of being at the forefront of smart-beta investing by coming up with products that are cheaper than any other asset managers’ products.

However, this is not the first time that the company has taken such a drastic step. Two years ago, the company developed its first fund, which also charges 0.09%, and is skewed toward large-cap stocks with value, momentum, low volatility and quality.

The company’s shares have gained 32.4% in the past 12 months, outperforming the 28.3% growth for the industry it belongs to.

Currently, Goldman Sachs carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the same space are Morgan Stanley MS, E*TRADE Financial Corporation ETFC and LPL Financial Holdings Inc. LPLA, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Morgan Stanley witnessed an upward earnings estimate revision of nearly 3% for the current year over the past 60 days. Its share price has increased 43.6% in a year’s time.

E*TRADE Financial’sZacks Consensus Estimate for the current year has been revised 14.2% upward in the last 60 days. Its shares have gained 51.2% in the past 12 months.

LPL Financial has witnessed an upward earnings estimate revision of 4.1% for the current year over the past 60 days. Its shares price has surged 59.1% in a year’s time.

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