Are you looking at opportunities to help client portfolios? For those nearing retirement, especially, it could be time to think about current income. Inflation may have dropped over the last 12 months or so, but prices remain much higher.
What’s more, volatility could be on the horizon. The election and a possible come-down from rate cut excitement could raise concerns over pure growth equities. Perhaps most significant could be an opportunity in tax-loss harvesting to bolster portfolios with an active equity income-focused ETF.
See more: This Active ETF Is Beating SPY Over Multiple Time Frames
The T. Rowe Price Equity Income ETF (TEQI ) could offer one appealing landing place for assets in motion from tax-loss harvesting or those seeking to move out of less efficient vehicles, like mutual funds. The active equity income ETF’s approach combines exposure to equities with a helpful boost from dividends. It does so by actively investing in large-cap names believed to be undervalued. The ETF’s managers look for names with low price/earnings ratios and above-average dividend yields.
Its focus on dividends helps it provide income to investors. What’s more, for investors looking to move out of mutual funds, TEQI can also provide tax efficiencies. ETFs offer some notable tax advantages over mutual funds thanks to their creation/redemption mechanism for shares.
In terms of performance, TEQI has beaten its benchmark over one year since its inception in 2020. The active income ETF has returned 16.2% over one year, per T. Rowe Price data. That beats the 13.1% return delivered by its benchmark over the same one-year period. Since inception, the strategy has also outperformed, returning approximately 15% annually compared to the benchmark’s 13%.
The fund charges just a 54-basis-point fee and offers a potent combination of income and equity upside. For investors looking to boost their portfolios’ income in case of volatility, the strategy’s active flexibility and income attributes could appeal.
For more news, information, and analysis, visit our Active ETF Channel.
