As active ETFs play a bigger and bigger role in investors’ portfolios, certain strategies will start to stand out. The rising active ETF TSPA may just be one of those ETFs, hitting its three-year ETF milestone this month and having recently crossed $700 million in AUM. It may, then, be worth a closer look from investors as an addition to their core holdings.
See more: T. Rowe Price Research Leader Jay Nogueira on 2024’s Outlook
The T. Rowe Price U.S. Equity Research ETF (TSPA ) sat at $700.6 million in AUM, per ETF Database data, as of June 27. The strategy follows the T. Rowe Price Capital Appreciation Equity ETF (TCAF ) in AUM. TCAF leads the firm’s suite of active ETFs at more than $1.7 billion.
The active ETF TSPA offers an easy way for investors to access T. Rowe Price’s research capabilities. TSPA’s team of analysts looks to identify firms that could perform regardless of the macro environment. It aims to craft a sector-neutral portfolio by weighting industries similarly to the S&P 500 but then selecting and weighting individual firms based on fundamentals.
While that means it holds those big names that have driven the stock market so much this year, like other funds, it also holds other stocks like Broadcom (AVGO) that aren’t as commonly held. Together, that has helped the strategy return 34.2% over the last year and averaging 11% per year since inception. Those returns outpace the strategy’s S&P 500 benchmark in those periods, which returned at 29.9% and 9.8%, respectively.
Active ETF investing has taken off significantly as investors understand how they work and how they can adapt to market changes, unlike passive ETFs. A higher-for-longer interest rate regime will likely create more dislocations in the U.S. economy, too, providing more opportunities for active to perform. For those looking to add active ETF offerings to their portfolios, TSPA may appeal.
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