ETFs have all kinds of powerful advantages. As flexible, transparent, easily tradable investment vehicles, they offer investors the opportunity to craft bespoke portfolios with targeted, granular allocations. Walling off funds by sector, however, can sometimes limit their ability to provide returns for investors. In tech, particularly, what the market considers a “tech stock” and what many index ETFs consider as “tech stocks” can differ. That can make earnings results data sometimes hard to take advantage of.
See more: You Probably Still Have Too Much Concentration Risk: Active Investing Can Help
Enter active ETFs. Because active ETFs have the freedom to invest across index and sector limits, they can embrace a truer “tech ETF” view. The T. Rowe Price Tech ETF (TTEQ) invests in tech companies including those that fall into other categories like communications or even consumer discretionary.
Charging a 63 basis point fee, the fund holds the key tech names investors want in one fund for earnings results. As of January 26, the strategy held names like Alphabet (GOOGL) and Meta (META) that are otherwise categorized as communications companies. META will report earnings this week, as will as other so-called “Magnificent Seven” names like Microsoft (MSFT) and Apple (AAPL). TTEQ holds all three as of writing.
How, then, does the fund invest? Managed by T. Rowe Price Global Technology Equity Strategy portfolio manager and vice president Dom Rizzo, TTEQ invests in a blend of innovative companies and critical tech infrastructure firms. The active tech ETF selects investments based on fundamental research, stock valuation, and share price growth potential.
Its managers have the freedom to invest in both large-cap tech firms and companies that have just recently IPO’d. The fund also recently completed a private investment in OpenAI.
Together, that approach has helped TTEQ return 20.8% over the last one year per ETF Database data. That return outperformed the fund’s ETF Database Category average for that period. Looking ahead, the fund doesn’t just offer a handy mix of tech firms for earnings results; it also can appeal as a long term hold for those investing in tech across all sector categories.
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