Actives ETFs have come a long way from their first years in operation. Indexed ETFs can still claim the largest AUMs, of course, but actives haven’t lacked for flows this year. In fact, when looking at active ETF flows compared to their AUMs, 2023 has been the year of the active investor so far. That’s showing up in performance, too, per LOGICLY, with more than half of the top twelve YTD performers active funds.
Active strategies offer a fundamental flexibility that shows up in those returns, meanwhile, looking at areas from fintech to electric vehicles. So what might be helping active strategies perform this year, particularly given that upswing for tech?
For one thing, active investing lets managers take big swings and go for those exciting returns. In tech, that means investing in disruptive innovation, but perhaps with a quality or fundamental screen given rising rates. What’s more, while indexed investing must stick to its investing remit, active investing can adapt more quickly. That helps in a year in which one week, the Fed’s rate agenda casts a shadow over the markets, and then in another, Nvidia (NVDA), brightens the whole picture.
Finally, when investors want to move quickly between stocks using active ETFs, they should consider trading spreads. Rather than incurring trading costs on individual stocks, investors can use active ETFs to do so. Combining that with the top-level performances from active ETFs can help mitigate the cost differences between actives and passives, too.
T. Rowe Price offers a roster of active ETFs with a variety of exposures and approaches. The firm’s stable of active strategies includes the T. Rowe Price Blue Chip Growth ETF (TCHP) and the T. Rowe Price Growth Stock ETF (TGRW) among other active investing options. For those looking for active strategies in a successful year for actives, they could be worth watching in the months to come.
For more news, information, and analysis, visit the Active ETF Channel.