Goldman Sachs ETF chief breaks down new investment trend

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.GoldmanSachs ETF chief Steve Sachs breaks down a new investment trend (via ETFEdgeCNBC)

div > div.group > p:first-child"> The big bank has doubled down on a concept called smart beta, which blends passive and active investing strategies to build portfolios based on non-traditional metrics. At Goldman, the strategy is branded as ActiveBeta and revolves around four factors: value, quality, momentum and low volatility.

The large-cap ETF counts the stocks of technology giants Microsoft, Apple, Amazon and Facebook among its holdings and has attracted nearly $5 billion in assets from investors, according to Sachs. "We think single-factor investing is very, very difficult," he said."Very hard to time factors. Very hard to pick which one is going to be in favor this year. When you combine four factors like the ones that we do, they actually have a very low — or even, in most cases, very negatively correlated — relationship to each other."

Not everyone's convinced by Goldman's new strategy. Dan Wiener, chairman of Adviser Investments, drew a comparison with Vanguard, which introduced its own factor-based investing products a year ago.

 

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