Active ETFs have had a huge last two years, increasingly reaching the heights initially touted when the ETF rule hit. One such strategy, the active blue chip ETF TCHP, has seen strong returns over the last year and in the previous few months. The ETF’s combination of strong market leaders and active management could make for a worthwhile addition to investors’ portfolios.
See more: How Active ETF TCHP Has Outperformed the S&P 500 YTD
In some ways, blue chips have been the key story for markets over the last twelve months. The biggest firms, especially in tech, have produced outsized returns for the S&P 500, although highly concentrated across only a few names. Identifying other contenders for market leadership, then, could provide a kind of diversification and performance. Leaning on an active approach with a fundamental research background could really help address over-concentration risks of passive indexes.
That’s where active blue chip ETF TCHP comes in. TCHP, the T. Rowe Price Blue Chip Growth ETF, has returned 47% based on its NAV over the last one-year period, according to T. Rowe Price data. That significantly outpaces the returns of its benchmark, which has returned 30% in that time.
Specifically, TCHP looks for firms with leading market positions and seasoned management. The active blue chip ETF also seeks out companies with notable financial fundamentals and dividend growth.
Together, that has helped the strategy achieve significant outperformance. Now, while it currently holds many of the current market leaders, per its most recently reported holdings data, its active approach gives it the flexibility to change when market leaders change. The portfolio also boasts some names outside the high-flying mega-caps.
TCHP charges only 57 basis points (bps) for its approach, which is competitively priced for an active strategy. The strategy has picked up more than $200 million in AUM over the last six months, per VettaFi. Taken together, it presents one notable option for active exposure to market leaders that retains flexibility.
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