Active ETFs have come on in leaps and bounds in recent years, and of late it’s active fixed income ETFs that have taken a particularly big step. Where historically investors looked to mutual funds for active fixed income, active fixed income ETFs have started to play a significant role. For a variety of reasons, the category is picking up steam now, perhaps with investors looking to adopt ETFs more broadly. That has helped the active core bond ETF TAGG rise above $1 billion in AUM, which may invite more attention.
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The T. Rowe Price QM U.S. Bond ETF (TAGG ), charges a very low fee of 8 basis points (bps) for its actively managed approach, which is below the fee-range found in many passive strategies. The strategy actively invests in a wide cast of U.S.-dollar denominated, investment-grade debt securities.
Specifically, the fund looks for investment-grade corporate and government debt, asset-backed securities, and agency obligations. Primarily U.S.-focused, it may situationally seek out U.S. dollar-denominated foreign-issued debt, as well. Applying quantitative models and fundamental research, its active managers look to closely scrutinize issuers’ overall credit quality and positions.
That has helped the active core bond ETF reach and surpass that $1 billion AUM total per YCharts data. The fund has done so with more than half a billion in net inflows over the last month. Specifically, it has added $640.99 million in that time per ETF Database data. In the last five days as of April 8th, the fund has added a quarter billion, as well.
What place, then, can TAGG take in a portfolio? TAGG can potentially play that core role in an active side of a portfolio which is often defaulted to passive U.S. aggregate bond exposure. With ETFs’ transparency, flexibility, and potential for lower tax impact, as well as TAGG’s lower fee, its approach could make an intriguing add. For those looking to add active adaptability in uncertain times, TAGG could be worth a look.
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