relates to Five ETFs to Watch in 2021

While compiling a list of 50 company stocks worth watching in the year ahead, the analysts at Bloomberg Intelligence identified five exchange-traded funds, or ETFs, that they consider similarly deserving of attention. The analysts considered the funds’ makeup, growth, management, fees, and other factors such as economic conditions—and, of course, Covid-19—to arrive at this list.

Goldman Sachs Active Beta U.S. Large Cap Equity ETF (GSLC US Equity)

Goldman Sachs checks all the boxes with GSLC, its ActiveBeta U.S. Large Cap Equity exchange-traded fund. GSLC is low-cost, sophisticated, and overseen by a major Wall Street brand. GSLC is a “smart beta” ETF with the look and feel of an actively managed investment vehicle, but it’s packaged as a passively run product. The fund was set up to produce a low tracking error, meaning its composition and returns should mimic the S&P 500’s yet give it room to outperform its U.S. large-cap benchmark. That’s because GSLC screens out weaker-performing stocks, enhancing its viability as a core portfolio holding. GSLC packs a lot of punch at just a 0.09% expense fee, targeting undervalued companies with high-quality earnings. Other financial houses have been quick to follow the template for this $10 billion fund, including JPMorgan Chase & Co. and newcomer Dimensional Fund Advisors, which also seek to provide ETFs with active characteristics at little additional cost. —Athanasios Psarofagis

relates to Five ETFs to Watch in 2021
Featured in Bloomberg Businessweek, Jan. 25, 2021. Subscribe now. Find more stories at The Year Ahead.

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Xtrackers S&P 500 ESG ETF (SNPE Equity)

Environmental, social, and governance (ESG) strategies are subjective, as some investors may care more about a company’s fossil fuel emissions while others want stocks of businesses that are diverse and support equal pay. The Xtrackers S&P 500 ESG exchange-traded fund (SNPE) flips the industry’s most frequently employed script on its head, offering a “sleep well at night” approach for retail investors fearful of deviating from the broader stock market. Instead of buying the greenest or most socially responsible companies in a given sector, SNPE uses a blended approach that cuts down on potential volatility from highly concentrated holdings relative to other ESG-oriented ETFs. It avoids S&P 500 companies it sees as the worst actors from each sector or those involved in controversial industries, such as weapons or tobacco. This fund’s potential to outperform peers could get a lift if governments and regulators come down heavier on companies that ignore core ESG tenets. A low fee of just 0.10% also makes SNPE one to watch in 2021. —James Seyffart

Vanguard Total Stock Market (VTI US Equity)

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