Active ETFs have exploded in popularity in recent years, with all kinds of funds looking to stake their claim. Amid that crush, however, are some active strategies that have already displayed a longer-term performance record. Given how many strategies are new, and how many investors are looking at active ETFs, strategies with longer track records may have a special appeal. The active T. Rowe Price Dividend Growth ETF (TDVG) is a clear example.
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TDVG has returned nearly 13% since launching in August 2020. The active dividend growth ETF has also returned about 8% over three years. Per ETF Database data, that three-year record has helped the strategy outperform its ETF Database Category and FactSet Segment averages. What’s more, among active equity ETFs with at least three years of operation and $300 million in AUM. And at only a 50 basis point fee, TDVG ranks in the top 20 for three-year performance.
Active Dividend Growth ETF TDVG and the Rest of 2024
What prospects might the strategy have for the rest of the year, then? The fund looks for large and mid-cap firms with sustainable, above-average growth potential in earnings and dividends. It’s TDVG’s approach of assessing a company’s prospects for dividend growth that helps the ETF set itself apart. By considering dividend growth, it can pick up on underlying positives and momentum for a given stock.
The strategy’s active manager, backed by T. Rowe Price’s significant research capabilities, search for factors like a competitive current dividend yield, a track record of dividend and earnings growth potential, and firms with attractive valuations.
Given the ongoing concern surrounding a potentially overvalued tech sector in the U.S., actively screening based on dividends could boost the ETF’s outlook. Furthermore, rate cuts could help firms already positioned to offer strong dividend yields. TDVG and its active style could adapt quickly to the Fed’s back-and-forth on cuts. Per YCharts data, the strategy also sees some notable price momentum. Its price has risen above both its 50- and 200-day simple moving averages.
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