Many investors have started to turn to active ETFs to boost their portfolios. Active strategies can offer some significant benefits like flexibility, research-driven management, and potential outperformance. One active blue chip ETF in particular is standing out right now thanks to those attributes and its managers. The strategy is a top five performer YTD, perhaps meriting a closer look from investors seeking to boost their portfolios.
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The T. Rowe Price Blue Chip Growth ETF (TCHP) has returned 27.5% YTD, per YCharts and ETF Database data, charging only a 57 basis point fee. That net performance places it in the top five YTD performers for nonleveraged equity active ETFs with at least $500 million in AUM. The strategy has also returned 38.9% on an average annual returns basis since inception, per T. Rowe Price data. That beats its benchmark’s return of 24.56% in that time.
Active Blue Chip ETF TCHP’s Outlook
How, then, has the active blue chip ETF managed to produce that performance, and what kind of outlook does the strategy have looking forward? TCHP’s approach emphasizes identifying firms with leading market positions. The strategy seeks out companies with seasoned management, strong fundamentals, and positive dividend growth.
So far, that has led to a significant allocation toward the big tech firms that have led the market this year. Moving forward, however, the active blue chip ETF can outdo its passive rivals when it comes to those major names. Where index funds with heavy allocations to big tech require their index committees to meet in order to make changes, actively managed funds can adapt much more quickly. Given that concentration risk does loom and indexes have structural challenges in the face of change, that could help TCHP stand out.
What’s more, TCHP’s fundamentals-driven approach, leaning on T. Rowe Price’s research capabilities, could help the fund identify the next set of blue chip names to push the market forward. With rate cuts boosting equities, an active equity ETF could be poised to do well. An active blue chip ETF with momentum, like TCHP, then, may be worth a closer look.
For more news, information, and analysis, visit the Active ETF Channel.
