Many investors understand the appeal of an active growth ETF, given the success of growthier market segments over the last year. Not all growth investments are alike, however. Indeed, with tech investments facing headwinds like high interest rates and concentration risk by the biggest players, a new course might appeal. TDVG’s active growth approach may stand out thanks to its use of dividends in its strategy.
See more: Active ETFs to Hit $4 Trillion AUM by 2030? What You Need to Know
TDVG, the T. Rowe Price Dividend Growth ETF, actively invests in large cap names. The strategy looks for stocks believed to have good growth prospects with factors like dividend yield and potential for dividend growth. The active strategy’s manager also considers valuations and whether firms have sustainable competitive advantages.
However, approach of assessing a company’s prospects for dividend growth is what stands out the most. Dividends provide current income to a portfolio, but more than that, they also provide helpful information. Identifying a track record of increasing dividends can be an indicator of firms in strong positions. For active managers, that data can help guide the way to some real standout opportunities.
In an environment where high rates may be taking their toll, with other headwinds looming, the combination of price growth and dividends could provide a key advantage. Separating out firms with healthy internal outlooks from those simply puttering along could make an important difference for investors. TDVG’s active remit also gives it the flexibility to maneuver if headwinds start to cause problems for some of its large caps.
The active growth ETF has returned 17% over the last one-year period, per T. Rowe Price data. TDVG charges only 50 basis points (bps) for its approach. For those investors feeling positive but wanting active adaptability in a strategy with a slightly different view, TDVG may appeal.
For more news, information, and analysis, visit the Active ETF Channel.
