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Get to Know Our 3 Portfolio Themes

July 31, 2023

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What we’ll cover:

Every investor has a unique set of investment objectives and priorities
Our portfolio design starts with strategic asset allocation
Our customers are then able to customize their portfolio by selecting one of our 3 portfolio themes: Core, Impact, and Smart Beta

Every customer has their own unique set of financial goals and priorities. With that in mind, we at Marcus Invest strive to understand your needs and preferences. We’ll ask you about your goals and timeline, and recommend an approach that could help you reach them.

You can customize your approach by selecting one of our three portfolio themes that’ve been designed to meet the investment preferences of our customers (that’s you!).

All three of the portfolio themes we offer are based on our strategic asset allocation framework. We believe that a well-designed portfolio should be:

Globally diversified
Suited to your risk tolerance
Built to navigate through market ups and downs

Let’s take a closer look into our three portfolio themes and see what sets them apart from each other. Understanding the investment style, design and risks behind these strategies can help you choose the right investment approach.

Our investment teams have designed our portfolio themes based on years of experience and proprietary research.

Rest assured, all of our portfolio themes are designed by Goldman Sachs investment professionals. We’re here to help you navigate through market ups and downs.

First, some background

Creating and managing a diversified investment strategy on your own can feel like a full-time job. Luckily, we can help make your life a little easier.

First up: Selecting your portfolio allocation. To do this, we first ask some questions to determine your risk tolerance, and then we recommend an efficient mix of assets that are designed to provide long-term returns for the given level of investment risk.

We know that might sound like a lot of fancy words. But essentially, once you tell us your risk tolerance and comfort level, we at Marcus Invest use that information to help recommend a portfolio suited for you.

Marcus Invest portfolios are built to include low-cost ETFs.

Our investment teams have designed our portfolio themes based on years of experience and proprietary research.

We continuously monitor your account(s) and keep an eye on developments in global economies and financial markets so we can refine our asset allocation when needed. We’re always working to help ensure your portfolios are prepared for evolving markets.

Marcus Invest portfolios are built to include low-cost ETFs. You can think of ETFs (exchange-traded funds) like a basket of different investments such as stocks, bonds and other securities that get traded as one individual security. ETFs have grown in popularity for a number of reasons, such as their ease of trading and the fact that ETFs typically have lower total costs compared to most actively managed mutual funds.

Now that you’ve got the basics down, let’s jump into the three portfolio themes: Core, Impact and Goldman Sachs Smart Beta!

Goldman Sachs Core

Who’s it for?

The Core is designed for investors who aren’t necessarily trying to beat the returns of market benchmarks. The Core portfolio theme could be a good fit for you if you believe markets offer efficient returns and prefer to track market benchmarks. In other words, you’re less concerned about outperforming the market and care more about having an efficient strategy with risk mitigation factors in place.

What is the Core portfolio theme?

The Core strategy offers you the benefits of diversification (as do all our portfolios). With our Core portfolios, we invest in market-cap index tracking ETFs that include a mix of asset classes, which can include U.S. and international stocks, investment grade bonds, and real estate securities.

Your portfolio is diversified and optimized to track the market for the long-term with ETFs selected based on our strategic asset allocation views.

What’s our philosophy behind it?

Our philosophy behind the Core portfolio strategy is centered around a passive investment approach.

As mentioned, for Core portfolios we invest in market-cap-weighted ETFs selected to track major market indices like the S&P 500 index or MSCI Emerging Market Index. (“Market-cap weighted” means that companies with the biggest market value will proportionally carry the biggest weight in the index and the ETF. Put simply - the financial performance of the biggest companies will impact the returns of your ETFs the most.)

Goldman Sachs Impact

Who’s it for?

The Impact portfolios are suited for people who aim to support sustainable business practices and avoid environmental and social harm while tracking market benchmarks.

This could be the right portfolio for you if you’re looking to support some companies that promote environmentally-and socially-responsible policies as well as good corporate governance. Like our Core portfolios, the Impact portfolios take a passive approach to investing, tracking market benchmarks while keeping costs low.

What is the Impact portfolio theme?

The Impact portfolio is based on the same design as the Core portfolio but with a more socially and environmentally-conscious focus (where appropriate ETF options are available). The Impact portfolios are diversified and optimized to track the market while including ETFs that meet ESG (Environment, Social, and Governance) criteria, and can also include market-cap based ETFs like those in the Core portfolios.

What’s our philosophy behind it?

In the Impact portfolios, rather than focusing on market-cap ETFs, we focus on including ESG ETFs (market-cap weighted ETFs can still make up part of the Impact portfolios and it’s possible that not every Impact portfolio will include ESG ETFs, depending on the specific risk portfolio customers choose). ESG ETFs use criteria for evaluating companies based on environmental, social and governance criteria. ESG ETFs try to avoid exposure to sensitive sectors such as coal, firearms, and fossil fuels.

Our investment team looks “under the hood” to determine which ESG ETFs are a good fit for your portfolio. That includes taking into account the ETF construction methodology, historical performance, track record, and (of course) costs.

Not all of the ETFs in the Impact portfolio will be ESG ETFs.

If we’re looking to add a large-cap ETF to the portfolio and there are two options (one that’s ESG-friendly and one that’s not), our team evaluates both options. Our team will look at their costs, methodology, performance and so on, and if all of those factors are similar, we’ll favor the ESG ETF.

Goldman Sachs Smart Beta

Who’s it for?

Our Smart Beta portfolios are designed for investors who are looking to outperform market benchmarks and/or decreasing volatility and risk.

These portfolios are suited for investors who believe there are inefficiencies in financial markets and that it’s possible to get better outcomes by carefully selecting companies using a disciplined, rules-based approach.

Smart Beta investors are those who believe that more information is better. They are willing to deviate slightly from the Core portfolio in searching for potential outperformance over time and are comfortable investing in Goldman Sachs-affiliated products.

This strategy is not available for Individual Retirement Accounts (IRAs).

What is the Smart Beta portfolio theme?

The Smart Beta strategy also prioritizes a robust asset allocation. Like the Core and Impact portfolios, Smart Beta portfolios invest in a similar mix of asset classes but also include carefully selected Goldman Sachs Smart Beta ETFs.

In investing jargon, “beta” refers to market exposure. Our Smart Beta portfolios are designed to access the market judiciously and seek to modestly outperform the market based on our ETF construction. Smart Beta investing strategies refer to investments that generally employ factor-based quantitative criteria to select and weigh investments.

These factors (such as valuation and quality) are chosen based on economic rationale and historical data. Different institutions and/or investors do Smart Beta investing a little differently, though, in terms of what factors they decide to look at and how to weigh said factors.

What’s our philosophy behind it?

Smart Beta aims to go a step beyond traditional passive investing and consider information specifically about how over/undervalued a company might be or how profitable it is. In other words, Smart Beta looks at a bigger picture.

Instead of using plain index funds as a baseline, our Smart Beta portfolios score and weigh investments based on a number of different factors to find opportunities for higher returns.

The Smart Beta portfolios use Goldman Sachs Active-Beta® ETFs for equity exposure and Goldman Sachs Access ETFs for bonds exposure (in addition to market-cap weighted ETFs, again depending on the customer's chosen risk portfolio). These are managed by our professionals in house and track indices constructed based on years of research and experience.

A note about fees: All of our portfolio themes carry the same management fee of 0.25%. Our customers pay us the same fee for our advice and investment management, regardless of the portfolio theme they choose. (Our 0.25% annual management fee covers all trade commissions, plus monitoring, rebalancing and ongoing management.)

Additionally, all customers holding Affiliated ETFs, including Smart Beta Portfolio customers who hold Goldman Sachs Asset Management (“GSAM”, an affiliate of GS&Co.) ETFs, bear the ETFs’ applicable expense ratios. Please consult each ETF’s respective prospectus or collective investment trust document for information about the specific expense ratio. If you wish to change your portfolio theme or your ETF allocation, please log in to your dashboard.

You know you. We know investing.

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This article is for informational purposes only and shall not constitute an offer, solicitation, or recommendation to buy or sell securities, or of an account type, securities transaction, or investment strategy. This article was prepared by and approved by Marcus by Goldman Sachs®, but does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA and Goldman Sachs & Co. LLC are not providing any financial, economic, legal, accounting, tax or other recommendation in this article and it is not a substitute for individualized professional advice. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, none of which are a fiduciary with respect to any person or plan by reason of providing the material or content herein. Neither Goldman Sachs Bank USA, Goldman Sachs & Co. LLC nor any of their affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.

Investing involves risk, including the potential loss of money invested. Past performance does not guarantee future results. Neither asset diversification or investment in a continuous or periodic investment plan guarantees a profit or protects against a loss.

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