Small caps – so often hyped up, but all too often investors approach the category with hesitation. That may be a mistake, especially as economic uncertainty continues. Small caps not only can include some serious growth opportunities, but also firms that can drive economic recoveries coming out of downturns. The active SMID cap ETF TMSL has already seen big flows and performance this year, and could offer some great opportunities in 2H.
Key Takeaways:
- Active ETFs have become a key part of the ETF landscape in recent years, picking up outsize flows and adding major launches.
- Small and mid-sized companies offer potential and adaptability, with active SMID cap ETF TMSL performing well YTD.
- The strategy is signaling a buy right now according to its tech chart, too, potentially
The T. Rowe Price Small-Mid Cap ETF (TMSL ) has outperformed the Russell 2500 Small Cap index over the last three months and the last three years per YCharts data. The strategy has pulled in almost half a billion in net inflows YTD, too. Indeed, the fund’s performance has helped its price rise above its 50 and 200-day Simple Moving Averages (SMAs). That indicates that now may be a good time to buy.
See more: Eyeing Healthcare Stocks? TMED Is Smashing Its Benchmark
TMSL charges a competitive 55 basis point (bps) fee to actively invest in small and midcap stocks. The fund applies a blend of growth and value styles with an active, bottom-up portfolio construction approach. The strategy assesses stocks for quality and future potential by leaning on T. Rowe Price’s fundamental research capabilities.
So, while the fund has done well for much of 2026 so far, what might the rest of the year hold? As TMSL approaches its 3-year anniversary this June, the fund continues to provide a dual purpose ETF for investor portfolios. Its active focus and deep assessment of stocks can make it a powerful tool to navigate volatility. Volatility has been all over the place with the ongoing, globally disruptive U.S.-Israel-Iran conflict.
At the same time, its exposure to smaller firms could help it outperform after a downturn. Small caps have the potential to outperform in “phoenix” scenarios, making finding the right option — the kind of thing active funds do well – even more important. Overall, for those wanting to add active exposure and consider small and midcap options, TMSL can appeal.
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