Evaluating Goldman Sachs MarketBeta Russell 1000 Value Equity ETF (GVUS) as a Core Holding in a Diversified Portfolio

In an era where growth stocks have dominated headlines and investor sentiment, contrarian value investing remains a compelling strategy for those seeking long-term resilience and cost efficiency. The Goldman Sachs MarketBeta Russell 1000 Value Equity ETF (GVUS) emerges as a standout option for investors looking to anchor their portfolios in a low-cost, defensively tilted vehicle that could outperform in a shifting macroeconomic landscape. This analysis explores GVUS's advantages as a core holding, contrasting it with its growth-focused twin, the Goldman Sachs MarketBeta Russell 1000 Growth ETF (GGUS), and broader market indices like the S&P 500.

Cost Efficiency: A Foundation for Long-Term Returns

GVUS's expense ratio of 0.12% positions it as one of the most cost-effective options in its category. This is notably lower than the 0.18% expense ratio of GGUS a fund with a similar structure, which has a growth-oriented mandate. While the difference may seem marginal, it compounds significantly over time, especially for investors with long horizons. In a market where average ETF expense ratios range from 0.3% to 0.9% GVUS's pricing reflects, Goldman Sachs' commitment to low-cost access to value equities. This cost advantage becomes even more pronounced when compared to the broader S&P 500, where active management and higher turnover often inflate fees.

Defensive Sector Tilts: Stability in a Volatile Market

GVUS's sector allocations underscore its defensive orientation. Financials constitute 22.5% of the portfolio, a sector historically resilient during economic transitions and rising interest rate environments. Healthcare and Industrials follow as the second and third largest allocations both of which are known for stable cash flows, and lower sensitivity to rate hikes. In contrast, GGUS is heavily weighted toward Information Technology (45.2% of its portfolio) a sector that thrives in low-rate environments, but often underperforms when yields rise.

The defensive tilt of GVUS is further reinforced by its 7.30% allocation to Consumer Staples a sector that typically retains demand, regardless of economic cycles. This contrasts sharply with GGUS's exposure to Consumer Discretionary and Telecom, which are more cyclical and vulnerable to macroeconomic shifts. For investors seeking stability, GVUS's sectoral composition offers a buffer against the volatility inherent in growth-centric portfolios.

Performance in Rising Rate Environments: A Historical Edge

While GGUS has outperformed GVUS in 2025 with year-to-date returns of 19.12% this reflects the current growth-driven market environment, however, historical data suggests that value-oriented portfolios like GVUS tend to outperform in non-bull markets and during periods of rising interest rates. For instance, value stocks have historically demonstrated resilience when borrowing costs increase, as their earnings are often less sensitive to discount rate fluctuations.

In contrast, the S&P 500-a broad mix of value and growth-has shown mixed performance during rate hikes. While it can benefit from sectors like utilities which thrive on non-rate fundamentals, it remains exposed to underperforming areas like real estate and consumer staples as highlighted in market analysis. GVUS, with its concentrated value tilt, avoids such vulnerabilities. Its beta of 0.81 and standard deviation of 13.27% further highlight its lower volatility compared to both GGUS (beta of 1.18, standard deviation of 19.09% which is higher than GVUS) and the S&P 500, making it a more predictable core holding.

Contrarian Case for GVUS in a Diversified Portfolio

The current market environment, characterized by a "growth at any price" mentality, presents an opportunity for contrarian investors to capitalize on undervalued assets. GVUS's low-cost structure, defensive sector allocations, and historical outperformance in rising rate scenarios make it an attractive counterbalance to growth-centric portfolios. While GGUS may deliver higher returns in a continuation of the current cycle, GVUS is positioned to thrive when market conditions normalize-a scenario increasingly likely as central banks unwind accommodative policies.

Moreover, GVUS's performance metrics-16.6% year-to-date and 15.69% over the past year demonstrate its ability to compete with growth-focused peers even in a growth-dominated environment. This suggests that the fund's value strategy is not merely a defensive play but a competitive one, capable of generating alpha when the market shifts.

Conclusion

As investors navigate an uncertain macroeconomic landscape, GVUS offers a compelling case for a core holding in a diversified portfolio. Its low expense ratio, defensive sectoral exposure, and historical resilience in rising rate environments position it as a counterpoint to the growth-centric narratives dominating today's markets. While GGUS and the S&P 500 may capture headlines, GVUS represents a disciplined, cost-effective approach to long-term wealth creation-one that aligns with the principles of contrarian value investing. For those seeking stability and outperformance in a shifting rate environment, GVUS deserves serious consideration.