If 2023 has been the year of active, the T. Rowe Price Blue Chip ETF (TCHP ) has been a key contributor. The active growth ETF has not only surpassed significant AUM thresholds, passing $400 million, but also led based on YTD returns. Among nonleveraged, hedged, or inverse active ETFs with more than $300 million in AUM, TCHP has been a top-five performer, per VettaFi data. That may invite investors to take a closer look at the strategy ahead of 2024.
2023 has seen active ETFs cap off three years of picking up significant flows relative to their AUM. Since October 2020, actives picked up 14% of net flows despite representing just 3.5% of the ETF market. A combination of investors looking to active to ride out a turbulent few years, active mutual fund investors looking to swap to ETFs’ tax advantages, and a crowded indexed ETF space have boosted active ETFs’ year.
See more: T. Rowe Price’s Active ETF Suite Hits $2 Billion AUM
Together, those have contributed to a strong overall performance and some notable organic growth for active strategies versus their passive rivals. So what, then, can investors attribute TCHP’s performance to, specifically? The active growth ETF has benefited not only from investing in market leaders that fit its “blue chip” approach but also from its flexibility.
The Active Growth ETF TCHP's Approach
TCHP holds the likes of Apple (AAPL) and Nvidia (NVDA), of course. But it also holds other robust firms that receive less notice, like cloud computing firm ServiceNow (NOW). For only 57 basis points (bps), TCHP actively seeks out firms with seasoned management, dividend growth, strong fundamentals, and leading market positions. In doing so, it has returned 45.1% YTD, the fifth most among traditional (those without leverage, hedging, or inverse screens). In sum, it may be worth considering entering the new year.
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