Looking for ETF options for the rest of 2024? The midpoint of the year presents investors with the opportunity to reset and think about their portfolios. It also lets investors revisit the broader landscape — particularly the big narrative this year: the Fed and interest rates. While the big rate-cut party failed to materialize, an active small/midcap ETF like TMSL could be positioned as a post-hype sleeper move later this year.
See more: Active SMID Cap ETF TMSL Surpasses $100 Million in AUM
Why is that? Well, while rate cuts didn’t arrive in the first half of the year, even one cut later on could offer a big boost. That’s because the smaller firms can frequently take on significant debt compared to larger firms. Those higher debt-servicing costs can put a big drag on firms’ ability to grow and perform.
One rate cut could inspire markets to see those small and midcap firms differently, boosting their outlooks. What’s more, that one cut would potentially signal the beginning of additional cuts, adding further boons to smaller firms.
That’s where the T. Rowe Price Small-Mid Cap ETF (TMSL) and its active approach can particularly benefit. The active ETF can assess firms with greater scrutiny than passive, index-tracking strategies often do. That owes to its managers’ research capabilities and experience in the space.
According to VettaFi’s ETF Database, the strategy holds about an even 50/50 split of small and mid-sized companies. Charging only 55 basis points, the ETF has already returned 26% since inception less than a year ago. It seeks out small- and midcap stocks across a blend of both growth and value styles.
Small-caps have long provided well-known potential for dynamic growth opportunities. Whereas, midcaps may provide a particular set of benefits, combining smaller firms’ upside and larger firms’ overall health. Assessing individual stocks based on relative valuations, stability, and profitability, TMSL may present one intriguing option for the rest of the year.