With ETF investors interested in actively managed funds to better navigate uncertain and risky markets, the August launch of T. Rowe Price’s active ETFs have allowed for some innovative strategies to play into potential success. In particular, the T. Rowe Price Blue Chip Growth ETF (TCHP) can play a role in providing long-term capital growth thanks to its portfolio manager’s work.
Specifically, TCHP seeks to provide long-term capital growth by investing in common stocks of large and medium-sized blue chip companies that have the potential for above-average earnings growth and are well-established. It invests at least 80% of assets in the common stocks of those blue-chip companies.
Another element is identifying leadership companies that have generally performed well in the past, appearing well-positioned to lead their industries in the coming years. The ideal result is a portfolio of growth companies that meet or exceed profit targets, hopefully leading to investors being handsomely rewarded.
THCP should play well for investors with a long-term horizon seeking exposure to leadership companies and companies in sectors at the forefront of secular change. It’s suitable as a core holding for the growth portion of an investor’s domestic stock portfolio.
Actively Navigating Uncertain Markets
Along with the other active funds from T. Rowe Price, this fund launch was timely. As stated in a past webcast, “Advisors are looking critically at traditional market indexes and the challenges of navigating today’s new market environment.”
James Norungolo, Portfolio Specialist, U.S. Equity, T. Rowe Price, has kept track of how diversified active funds have performed to positive success rates, highlighting how, with this outperformance, even the smallest amount of excess returns can have a profound impact on results over a long-term horizon.
“This means that investors planning for retirement can feel greater relief and accumulate enough for additional years of spending,” Norungolo said.
While the growth of actively managed transparent ETFs can’t quite compare to the broader ETF universe at this current time, there is the hope that they will take off after building up some momentum.
What can help is the SEC-approved proxy basket for THCP. This ensures that market makers have enough information to quote prices with a high degree of confidence while also protecting the firm’s investment professionals’ intellectual property and its shareholders’ interests.
In addition to TCHP, T. Rowe Price currently offers three other actively managed ETF strategies, which are the T. Rowe Price Dividend Growth ETF (TDVG), T. Rowe Price Equity Income ETF (TEQI), and T. Rowe Price Growth Stock ETF (TGRW).
For more information and strategy related to active ETFs, visit our Active ETF Channel.