Is now the time to move off of cash? Cash has been offering some potent yields for investors this year as rates rose very quickly. The Fed has paused its rate hikes over the last few months, however, leading many market watchers to look ahead to rate “cuts.” Rate cuts would give a surprisingly durable U.S. economy a further boost, perhaps enough to see investors move assets off cash and into strategies like an active growth ETF.
An Active Growth ETF for 2024
Why move now in the period between pauses and a first cut? Analysis suggests that since 1990, stock investments in the “pause to cut” period have even outperformed some stocks following a cut. While cash will likely provide some solid yields to start next year, it may then be worth moving some part of that allocation back to stocks.
So, what would be the right vehicle for doing so? An active growth ETF could be a solid option to consider. Active ETFs have had a strong year in 2023, picking up significant flows relative to their smaller AUM as a category. Actively managed ETFs have picked up that interest largely due to their ability to adapt and their appealing use of the tax-efficient ETF wrapper.
See more: “Active ETF TCAF Nearing Half a Billion in AUM“
One candidate to take on some of those cash assets may be the active growth ETF TGRW. The T. Rowe Price Growth Stock ETF (TGRW) could appeal to investors who are coming off the sidelines. The fund hit its three-year ETF milestone this past August, charging only 52 basis points for its fully active approach. TGRW focuses on firms that meet certain standards, like earnings momentum stability, capacity to grow during “unfavorable” conditions, and strong cash flow.
In doing so, TGRW has returned 44.7% year to date. That has nearly doubled the performance of its ETF Database Category and FactSet Segment averages. Investors looking for a growth-minded ETF to adjust from a cash-heavy portfolio could consider TGRW.
For more news, information, and analysis, visit the Active ETF Channel.