Are you looking for an active ETF? In a strong year for active, retail and institutional investors have flocked to active strategies’ adaptability and potential for outperformance. The latter factor there, outperformance, can be harder to identify in an ever-growing active ETF universe. However, one strategy, the T. Rowe Price Blue Chip Growth ETF (TCHP ), stands out. Not only does it make the top five $100 million AUM-plus, three-year track record active ETFs based on YTD returns, but it also charges the lowest fee in that elite group per VettaFi data.
Entering 2023, market watchers talked up a major earnings dip and a recession on the horizon. That, and the top-heavy concentration risk in the S&P 500, saw actives’ freedom to invest outside an index and its consideration of fundamentals stand out. What’s more, active ETFs outperformed passive funds in the first half of 2023, suggesting that managers’ expertise did stand out.
How the Active ETF TCHP Invests
Those and other factors have helped contribute to TCHP’s strong YTD performance. On a YTD basis, TCHP has returned 31.7%. That places it in the top five among active ETFs that have operated for longer than three years and have more than $100 million in AUM. Many passive ETFs have very low fees because they simply replicate an index. However, active ETFs typically have additional expenses in order to provide the necessary research and analysis not needed by index-based ETFs.
While some active ETFs can seem somewhat expensive, TCHP stands out from its rivals by charging just 57 basis points (bps), which is inexpensive for a fully active strategy. That charge is less than the other four ETFs that make up the top five, two bps fewer than the next most expensive strategy.
What, then, does TCHP do to deliver its strong returns? The active ETF, which recently hit its three-year mark in August, focuses on firms with leading market positions, strong management, and sound financial fundamentals. The active ETF holds names like ServiceNow (NOW) and Mastercard (MA), in addition to the big names that have driven so much growth this year. For investors looking to add a leading active strategy, TCHP may be worth watching.
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