Active ETFs continue to rise in significance for investors, with flows on track for another record amid more and more launches. Amid that rise for the category, certain ETFs have stood out of late, the T. Rowe Price Health Care ETF (TMED ) included. The fund is not only performing well in the last month, but also sending a buy signal according to its buy chart.
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TMED charges a 44 basis point fee to actively invest in healthcare stocks. That not only includes more defensive, dividend-paying names, but also firms offering healthy exposure to innovators. The active healthcare ETF has returned 11.8% over the last three months, and 10% over the last month.
That has beaten both its ETF Database Category and FactSet Segment averages in both time frames. The former average sat at 8% and 6.3% over three- and one-month periods, and the latter at 7.6% and 5.3%, respectively.
What’s more, per YCharts data, the fund is sending a buy signal right now amid that performance. TMED’s price of $27.97 as of October 6 sat above its 50-day simple moving average (SMA) of $25.37.
How, then, has the fund — in a traditionally defensive area — provided those solid returns? The ETF’s active approach and focus on fundamental research may be the key driver therein. Specifically, TMED actively invests in healthcare stocks from around the world. The fund includes biotechnology, pharmaceuticals, products and device providers, and health care service companies. Together, its bottom-up approach applies growth and value styles as needed to hold a portfolio of 100–150 stocks.
So, while it’s performing well now, what might its prospects be moving forward? TMED’s active approach to healthcare stocks could benefit from a few factors. For one, falling interest rates could help companies in the biotech space. For another, AI innovation can also continue to drive innovation and productivity gains for healthcare firms. Overall, then, the active healthcare ETF could make for an intriguing option in the months ahead.
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