While the broader market has struggled to find its footing in 2025, with the S&P 500 hovering near flat territory, a select group of actively managed exchange-traded funds has managed to deliver meaningful outperformance. These funds demonstrate that skilled active management can still add significant value, particularly in market environments characterized by heightened volatility and sector rotation.

Three standout performers have caught the attention of institutional and retail investors alike: the TCW Compounders ETF (GRW), an unnamed active small- and mid-cap ETF that has attracted substantial inflows, and the T. Rowe Price Small/Mid-Cap ETF (TMSL). Each of these funds represents a different approach to active management, yet all share common characteristics that have enabled them to navigate challenging market conditions successfully.

The performance divergence between these active strategies and passive benchmarks highlights a fundamental shift occurring in today’s investment landscape. As markets become increasingly complex and traditional correlations break down, the ability of experienced portfolio managers to identify undervalued opportunities and avoid potential pitfalls becomes more pronounced. This environment has created fertile ground for active managers who possess deep research capabilities and the flexibility to adapt their strategies in real-time.