Active ETFs continue to take on the investing world with more options, performance, and, crucially, flows. The active growth ETF TGRW is no exception, adding a strong $501 million to close out July per ETF Database. The move marks a major jump in AUM for the strategy, so what might be drawing that attention – and what might the fund do in the months ahead?
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TGRW, the T. Rowe Price Growth ETF, charges a 52 basis point (bps) fee to actively invest in growth stocks. The strategy’s inflows bring its AUM to more than $800 million. The active growth ETF looks to companies that appeal based on fundamental research metrics. Specifically, the strategy invests in firms with strong cash flow, above-average earnings growth, and earnings momentum stability. In addition, it also looks for firms capable of growing even during uncertain markets beset by headwinds.
That has helped TGRW return an average of 20.99% over the last three years, per ETF Database. That outperformed both the fund’s ETF Database Category and Factset Segment averages. Those numbers come in at 16.1% and 10.3%, respectively. This year, the active growth ETF has also done well. It has returned 19.49% over the last three months. That beat the above averages, both at 14.7% over the last three months, respectively.
So, with that big inflow mark and strong performance, what role might TGRW play moving forward? The strategy could prove a worthwhile investment as an alternative to passive growth equities. Many investors are potentially overweight frothy growth stocks due to the stringent rules growth indexes must follow. An active growth ETF approach, by contrast, can examine firms more closely and lean into its own views based on fundamentals. What’s more, that approach can find potential upside absent in more staid, passive funds.
Looking ahead, should tariffs or concentration risk take another bite out of markets, active growth investing could outperform. Many investors don’t want to forgo growth stocks even amid headwinds; a fund like TGRW can provide one way to hold on and perform even in those times.
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