As investors continue to benefit from a strong performance by tech firms, many may be looking for new views into the space. Active ETFs, in particular, could provide tools to energize tech investing, with active ETFs growing into a new level of prominence in recent years. Leaning on proprietary research and offering adaptable, high-conviction investment ideas, an active tech ETF could appeal. The T. Rowe Price Technology ETF (TTEQ ) offers one compelling example therein.
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TTEQ, which launched last October, charges 63 basis points for its approach, which is competitively priced when considering its market segment. The active tech ETF aims to invest in key large-cap tech names defined by the global impact and significance of their related technologies. TTEQ leans on T. Rowe Price’s fundamental research capabilities to do so, assessing firms’ stock valuations and growth potential. The fund also retains the flexibility to invest in particularly disruptive new firms, including those that have just IPO’d.
The portfolio is not constrained to companies only formally labeled as being in the technology sector. Many of today’s leading tech-focused firms are actually categorized in different sectors. That flexibility is one of the elements to set TTEQ apart from passive ETFs.
Putting In the Weight
What kind of stocks might help define the active tech ETF’s approach? For one, TTEQ has a notably higher weight toward ongoing tech leaders like Nvidia (NVDA) than in a major passive fund like the SPDR S&P 500 ETF Trust (SPY ). TTEQ weights NVDA at 9.76% as of January 23, per T. Rowe Price data, compared to 6.7% for SPY.
TTEQ holds some firms that SPY lacks, e.g., ASML Holding NV (ASML). The Dutch firm’s highly specialized photolithography work enables other firms to produce some of the world’s most advanced semiconductors. While ASML has faced some recent headwinds, its significant advantage in a key technology speaks to its long-term appeal.
Finally, TTEQ also invests in Tencent (TCEHY), an important name in global electronic entertainment. A huge player in the global video game market, its sheer potential for leadership in the space makes it an intriguing tech firm to watch. Not only does it operate in video games, it operates in e-commerce, payment systems, and more.
Together, that has helped TTEQ return 9.29% over the last three months, as of January 23, per YCharts data. For those seeking ways to enhance their tech exposures, TTEQ may merit a closer look.
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