Interested in small-caps but not satisfied with vanilla index approaches? Smaller firms could play a big part for portfolios to close out 2025, but there are real doubts, too. Small-caps face both headwinds and tailwinds from the tariff situation, but of course, rate cuts could help. One way for investors to actively take charge of the situation may be with a multifactor small-cap ETF like the TR Activebeta US Small Cap Equity ETF (GSSC).
GSSC charges a 20 basis point (bps) fee for its strategy. The fund leans on Goldman Sachs’ research capabilities with its proprietary multifactor approach. Specifically, the ETF seeks stocks that exhibit good value, strong momentum, high quality, and low volatility.
That can, of course, help investors get exposure to small-caps able to do well despite economic uncertainty. Perhaps more important, however, is the ETF’s ability to find small-caps able to offer significant “growth” as well. Given how exposed investors are to mega-caps to begin with, small-caps can offer much more upside by comparison.
For example, GSSC offers exposure to StoneX Group (SNEX), which YCharts puts in the “small-caps/growth” category. Despite being in financials, the firm has returned a whopping 54.7% YTD, according to YCharts. It has done so with a 16% return on equity and a 24.87% five-year revenue growth.
That has helped the small-caps multifactor ETF return 8.5% YTD. That performance beat both its ETF Database Category and FactSet Segment averages. What’s more, it has done even better long term, returning 12.7% over the last five years. That beat its averages, coming in at 8.3% and 5.1%, respectively.
Looking ahead, then, the fund could provide a strong alternative in the equities category. Where regular small-cap strategies may struggle in continued uncertainty, screening with a multifactor approach can find standouts on the road ahead.
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