In another marker of active ETFs’ significant growth over the last year, blue chip ETF TCHP just crossed $500 million in AUM, having accrued more than $40 million over the past month. According to VettaFi data, that growth has stemmed from both price increases as well as inflows, with TCHP adding $14 million in that time.
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How has the blue chip ETF reached that milestone? The T. Rowe Price Blue Chip Growth ETF (TCHP) has seen its AUM grow by more than $220 million over the last year. That may be due to its exposure to the Magnificent Seven, which have continued to push forward despite doubts about the concentration risk they pose to markets. However, the strategy does not simply provide exposure to those large tech firms and just call it a day. Its approach applies much more scrutiny to its stocks than that while also actively managing the amount of exposure to high profile stocks. Despite market perception, the Magnificent Seven stocks are not all the same. TCHP manages this nuance through its exposure weightings that differ from the indexes. TCHP actively invests in firms that meet its “blue chip” standard: companies with seasoned management, strong fundamentals, and leading market positions.
Blue Chip ETF TCHP’s Approach
While that may create an overweight to tech from time to time, the blue chip ETF also includes major names outside tech. TCHP holds names like, e.g., Visa (V) and Eli Lilly (LLY) in its top 10 firms. In doing so, it has returned 46.8% over one year, outperforming both its ETF Database Category and FactSet Segment averages. TCHP charges only 57 basis points for its actively managed approach.
What, then, is the ETF’s outlook in 2024? Consider the ongoing back and forth between markets and the Fed about rate cuts. If the markets’ predictions about several rate cuts miss, disappointment could take a bite out of weaker firms. When index ETFs have little to no ability to adapt, active strategies like TCHP can take action as needed.
At the same time, if those cuts do come to fruition, growthier firms could benefit. An active ETF like TCHP can handle the former scenario with its strong firms, while also benefiting if rates do drop. Taken together, TCHP’s year of returns, growing AUM, and active management make it an intriguing strategy to watch in the months ahead.
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