The active ETF story has been one of the most exciting market narratives in recent years, with actively managed funds proliferating and delivering for their investors at a high level. As more and more active funds accumulate longer track records, then, investors can start to identify those active ETFs that have displayed consistent outperformance. One such strategy TCHP, may intrigue with its combination of deep, research-driven fundamental analysis and active adaptability.
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The T. Rowe Price Blue Chip Growth ETF (TCHP ) launched in August 2020. Charging only a 57 basis point (bps) fee, the strategy targets companies with potential for above-average growth. Specifically, it looks for those firms with leading market positions, healthy fundamentals, continued growth, and seasoned management.
Together, that has helped the fund, which recently celebrated its fifth birthday, return an annualized average of 29% over the last three years. That outperformed both the fund’s ETF Database Category and Factset Segment averages of 20.7% and 5.8%, respectively. What’s more, that also outperformed the SPDR S&P 500 ETF Trust (SPY ) in that time frame. The notable S&P 500 ETF returned 21.39% over the same time frame. Looking a bit further out, TCHP has also outperformed its averages over five years, as well.
That long term active ETF performance may speak to the case for either adding an active ETF to an existing equities portfolio or perhaps swapping out passive equities for an active strategy. TCPH, for example, could take the place of a passive growth fund that has lagged.
With uncertainty lingering from stubborn inflation, active could help identify firms able to perform even if the economy slows down. Where index funds have to maintain their allocations to segments even as they struggle, active ETFs can maneuver into opportunity. At the same time, by leaning into firms poised to outperform, TCHP, for example, could take advantage of further rate cuts. For those wanting a longer term active ETF play, TCHP may present one appealing option.
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