This Active Small-Cap ETF Is Sending a Buy Signal to End 2025

Core Insights - The ETF ecosystem is rapidly expanding, with particular attention on the T. Rowe Price Small-Mid Cap ETF (TMSL), which has recently sent a buy signal and may carry momentum into the new year [1][2] Performance Metrics - TMSL has seen its price rise above both its 50 and 200-day simple moving averages, indicating a traditional buy signal [2] - The ETF has returned 12.7% year-to-date (YTD) in 2025, outperforming the category average of 7% [3] - Over the last three years, TMSL has delivered a return of 45.2% [3] Market Context - Small-cap stocks have generally underperformed recently, but TMSL may be positioned for a positive year in 2026, potentially benefiting from anticipated rate cuts by the Federal Reserve [4] - Investing in small-caps like TMSL offers diversification away from the concentration risk associated with large-cap tech stocks [5] Investment Strategy - TMSL employs an active SMIDcap approach, leveraging T. Rowe Price's fundamental research to identify firms with strong earnings quality, effective management capital allocation, high return on equity, and near-term appreciation potential [6]