Advisors can enhance client portfolios by pairing growth with value investments.
The T. Rowe Price Growth ETF (TGRT) and the T. Rowe Price Value ETF (TVAL) can be used together in a portfolio to capture returns over different points in the market cycle.
Under the Hood of TGRT and TVAL
Both TGRT and TVAL are actively managed to go beyond the limitations of their respective index benchmarks. For investors looking to break out of index-only exposure, either ETF could be a good solution in its respective segment of growth or value.
TGRT invests in companies with an above-average rate of earnings, cash flow growth, and a lucrative niche in the economy that allows them to sustain earnings momentum even during times of slow economic growth. Furthermore, securities included in the ETF are evaluated on quality factors that could benefit from market disruption or innovation.
The growth ETF primarily invests in large-cap companies. TGRT’s portfolio is typically constructed bottom-up, which means the fund focuses more on evaluating individual stocks than on overall economic trends and market cycles.
Conversely, TVAL offers a value-focused perspective on large-cap equities. The fund invests in undervalued companies with durable business models and promising long-term options. TVAL’s long-term perspective can provide attractive returns for patient investors
Both TGRT and TVAL are actively managed transparent ETFs. The two funds were launched last June and have amassed considerable assets in the one-year period since. According to the ETF Database, TGRT has $321 million in assets under management, while TVAL has $74 million.
See more: “Efficiently Navigate the U.S. Agg With Active Management”
Pairing Growth and Value: Performance
Since their inception last year, both of these active ETFs are outpacing their passive benchmarks. TGRT is outpacing the benchmark Russell 1000 Growth Index while TVAL is outperforming the Russell 1000, highlighting the potential advantage of actively managed ETFs.
Additionally, TGRT is handily outpacing broader markets, as measured by the S&P 500, over a one-year period. Meanwhile, TVAL is actually only modestly trailing the broader index, despite value stocks being out of favor — and poised to rally even more if growth stocks falter.
In the one-year period trailing June 21, TGRT has climbed 39.6% while the growth benchmark has gained only 20.49%, each on a total. During the same period, TVAL increased by 22.0%, and the value benchmark rose by only 6.85%, each, according to YCharts.
Competitively priced for active strategies, TGRT charges 38 basis points, while TVAL charges 33 basis points. When combined equally, they make a compelling blend of core equity exposure by out pacing many broad market benchmarks.
For more news, information, and strategy, visit the Active ETF Channel.
