It’s not often that an ETF rises to more than $1 billion in AUM, but that’s just what happened for the active dividend ETF TDVG in the last month. The fund currently sits at about $1.06 billion in AUM per ETF Database data, rising from just under $900 million last month. The strategy’s active dividend ETF approach could intrigue amid rising market uncertainty on top of that big AUM jump.
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The T. Rowe Price Dividend Growth ETF (TDVG ) charges a 50 basis point (bps) fee to investors and recently celebrated its fifth birthday as an ETF. The fund added $155 million in net inflows over the last month, as well, per ETF Database data. That helped it cross that $1 billion threshold for the first time.
The strategy could be seeing that interest for a few reasons. For one, its focus on strong dividend payers could help it identify firms positioned well for an uncertain end of the year. Where other growth strategies might apply a simple screen or track an index, TDVG operates differently. It leans on T. Rowe Price’s research capabilities to find those companies with healthy dividend outlooks. Also, for some investors, crossing the 5-year mark is a significant milestone. It’s a time frame often used to see if a fund follows a reliable methodology. Since its inception, TDVG’s active approach to dividend payers has been very consistent.
Specifically, the active dividend ETF looks to mid and large cap firms with above-average and sustainable dividend and earnings growth. Its managers emphasize factors like current dividend yield, balance sheets, cash flow, sustainable competitive advantage, and more. Together, that has helped to beat its Factset Segment average on a YTD basis. The strategy has returned 9.7% in that time, outperforming the average at 8.8%.
What role could the fund play looking ahead, then? Dividend paying companies could prove to be an intriguing play. Market volatility could really harm portfolio performance to end the year if policy or geopolitics have a say, while declining economic data may be showing some warning signs. Looking forward, a growth strategy that leans on dividend growth could make for an appealing play.
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