The T. Rowe Price U.S. Equity Research ETF (TSPA) just wrapped up a very healthy month. The active ETF, which celebrates its fifth year of operation in June, added more than half a billion in net inflows in May. The fund did so while also crossing the $3 billion AUM mark overall, lifting it into a higher echelon of active ETFs. That success may speak to the continued interest among investors in index-adjacent, active equity funds.
Key Takeaways:
- Active ETF investing has changed the ETF investing landscape, with active strategies picking up steam as core and core plus additions.
- The fundamental research-focused TSPA saw its flows spike in May as it hits its five-year anniversary in June.
- The fund’s outperformance and fundamental approach could make it a worthy core equity option for the active ETF curious investor.
Specifically, according to ETF Database data, TSPA added $536 million in net inflows in the month of May, as of May 26. The strategy has returned 23.3% over the last three years as of that date, as well. That performance has outperformed the ETF Database Large Cap Blend Equities category average in that time. That average came in at just under 15% in that same multiyear period.
The active ETF has outperformed by leaning heavily on the firm’s fundamental research capabilities. According to the firm, it leverages the work of around 30 analysts, aiming to outperform the S&P 500. TSPA has done just that over the last three years, according to YCharts data.
In doing so, it looks to produce a level of risk and exposure types similar to that found in the index. At the same time, however, it provides active adaptability that index funds may lack. That can help in a few key ways.
Consider, for example, the concentration risk looming over the S&P 500. The AI hyperscalers have delivered huge performance gains for portfolios, but getting stuck with the risk may pose problems. Active adaptability can help fund managers tamp down on individual firms that may be riskier when needed.
See more: The Long-Term Case for Tax-Free ETF Income
The fund’s half billion in net inflows, then, may mark an opportunity to take a closer look at the fund. TSPA has also seen its price rise above its 50- and 200-day simple moving averages. That indicates momentum for the strategy according to its tech chart, and may invite investors to consider the opportunity in its upwards swing.
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