An Excellent Alternative to Passive ETFs

I am a huge proponent of exchange traded funds (ETFs) for the passive investor, for a number of reasons. Key to the ETF investing philosophy is the idea that simplicity and low fees will add up to greater returns over time, a philosophy I wholeheartedly agree with, specifically for investors with reasonably long time horizons.

That being said, some active funds do an excellent job of replicating the low-fee structure and simplicity of many ETFs, factoring in additional trading mechanisms to allow for specific attributes which may be attractive to particular investors.

One such actively managed fund with a Management Expense Ratio (MER) of less than 1% is the T. Rowe Price Dividend Growth Fund. This fund has been around for nearly 20 years and focuses on dividend growth for investors seeking income in retirement.

I believe this fund in general does a better job of rebalancing holdings to allow for higher dividend growth over time than most ETFs (though there are a few out there that look pretty good), providing retirees and others with income needs with peace of mind that someone is managing their underlying dividend-yielding securities.

I should note that this fund is not set up to offer high yield to investors, with many companies in the fund having relatively low yields, but rather dividend income that will grow over time, a fact many investors in their late 50's and early 60's will be happy to hear.

Invest wisely, my friends.