Touchstone Sands Capital US Select Growth ETF (TSEL)

The Touchstone Sands Capital US Select Growth ETF is built on conviction. Instead of following a predetermined index, Sands Capital Management selects individual stocks it believes have genuine growth runways ahead. The fund sits in the overlap of mid-cap and large-cap U.S. equities, looking for companies where earnings are expanding at rates that justify upside moves, where management execution is reliable, where balance sheets are not fragile.

Index funds that track growth have mechanical rules: if a company’s price-to-earnings ratio is low or if its earnings-to-price is high, it gets weighted differently. TSEL inverts that logic. The portfolio manager builds a conviction list, picks names based on deep research into business momentum and competitive position, and ignores mechanical sorting rules. This discretion is the draw—and the risk. A disciplined stock picker who reads the market environment well can outrun the index. A poor picker adds expenses without adding value.

The portfolio itself is likely a middle ground in terms of concentration. Not 500 stocks like a total market index, probably not five either. Somewhere in the range of 30 to 80 holdings, suggesting a belief that you need enough diversification to manage idiosyncratic risk but that owning too many stocks diffuses the conviction advantage. A manager with a strong idea about a company’s growth usually backs it with more weight than an indexing rule would allow.

Growth as a factor has cyclical personality. It outperforms reliably when interest rates are falling, when corporate earnings are accelerating, when investors have appetite for higher valuations in exchange for higher future growth. It underperforms when rates rise, when growth slows relative to value, when recession fears mount. A fund betting on growth without the hedge of value exposure is taking a directional bet on the macro environment. In boom times—2010 to 2021, with a few interruptions—growth ETFs and growth funds often crushed value. In 2022 and again in episodes of rate uncertainty, growth suffered. Any assessment of TSEL must acknowledge that.

Sands Capital is the steward here, so what matters is their track record. Have the stocks they picked actually grown earnings as expected? Has the fund beaten a comparable passive growth index net of fees over a full market cycle—not just the quarters when growth was in favour? In active management, past performance is not a guarantee, but it is one of the only signals available. A manager with a decade of outperformance or one with five years of underperformance tell very different stories.

The expense ratio is the tax on the whole strategy. If Sands Capital charges 0.70% annually and beats the Russell 1000 Growth Index by 0.50%, the investor has gained net—barely. If they charge 0.70% and underperform by 0.30%, the investor has lost 1% annually, a drag that compounds. The prospectus and fact sheet provide the actual ratio; compare it to passive growth ETF alternatives before deciding.

Trading is liquid during market hours. The fund can be entered and exited at market prices, bought or sold through any brokerage. Investors should examine TSEL through its prospectus, annual reports, and fact sheet, comparing holdings and sector bets against broad-market growth indexes. Look at what Sands Capital actually owns—are the concentrated positions in real growth businesses or in crowded names that have already run up? How is the portfolio positioned across sectors? Is the cash position high (suggesting caution in the manager’s outlook) or fully deployed? These details shape the fund’s risk profile and return potential far more than the prospectus marketing language.