Active investing’s banner year in 2023 saw many investors move assets into active strategies. Entering 2024, active strategies had a significant opportunity to show their worth. One strategy, the T. Rowe Price Blue Chip Growth ETF (TCHP), has done just that. The active ETF has proved itself as one of the top active ETFs in 2024, outperforming the S&P 500 in 2023 and so far year-to-date (YTD).
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TCHP has returned 11.7% YTD per YCharts, compared to 7.4% for the S&P 500. That gap underlines the potential of skilled and well-resourced active managers to outperform the benchmarks.
TCHP has benefitted from positive economic trends, adapting as the so-called “Magnificent Seven” has changed. Its active ETF flexibility has allowed it to over or underweight certain stocks. Tesla (TSLA), for example, entered 2024 among those top mega-cap tech names driving the economy forward but has since fallen off. TCHP Through proprietary analysis, TCHP’s portfolio team has maintained a far lower weight in TSLA than the S&P 500 and its exposure to TSLA, in turn
At the same time, active ETF strategies can avoid problematic trends or risks. Whether that entails underweighting stocks that active managers disagree with the big index managers on or adapting to big looming risks, active strategies operate with more freedom compared to passively managed ETFs.
TCHP charges a 57 basis point (bps) fee. That is very competitive compared to other actively managed strategies in the category. The fund focuses on firms with leading market positions and strong management of their own. It also eyes companies in industries with overall positive outlooks and strong fundamentals. Though information tech stocks may end up overweight, TCHP still retains the flexibility to pivot if market conditions change.
On top of those YTD returns from YCharts, the active ETF has returned 47.2% over one year, too. That stands out in the world of active strategies, and for investors looking for an active ETF, TCHP may stand out for them, too.
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