The T. Rowe Price Capital Appreciation ETF (TCAF) has garnered significant interest in the year following its launch.
The fund provides access to the U.S. large-cap equity market, aiming to outperform the benchmark S&P 500. It offers the potential for higher returns through active management.
TCAF takes a core approach to stock selection, which means it offers exposure to growth and value styles of investing. Furthermore, the fund employs a bottom-up approach, focusing more heavily on evaluations of individual stocks. Conversely, a top-down approach would focus more heavily on overall economic trends and market cycles.
The ETF looks for firms with one or more of the following characteristics: attractive valuations, strong or improving market position, appealing risk-adjusted return potential, and experienced management, according to regulatory documents.
TCAF is growing quickly, having garnered $1.7 billion in assets under management since its launch in June 2023.
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T. Rowe Price’s Capital Appreciation ETF Benefits From Experienced Management
The fund’s quality and experienced approach to active management sets it apart from its peers.
David Giroux is a portfolio manager for T. Rowe Price’s capital appreciation strategies, including the all-equity TCAF, as well as a popular multi-asset mutual fund with $61 billion in assets under management.
Giroux, head of investment strategy and CIO for T. Rowe Price Investment Management, notably won Morningstar U.S. Allocation Manager of the Year awards in 2012 and 2017.
Active management enables TCAF to shift exposures as needed to capitalize on the current opportunity set. T. Rowe Price’s Capital Appreciation Equity ETF typically holds about 100 names. The fund’s top holdings as of June 25 include Microsoft, Nvidia, Apple, Alphabet, and Amazon. Giroux and team are also known for making contrarian choices by including names that are less likely to be featured in today’s headlines but still meet their investment thesis.
As modest rate cuts are anticipated in the near future, there may be more divergence in returns as investors sort through the implications for sectors and individual securities, according to T. Rowe Price. Active portfolio management, with a focus on fundamental analysis and relative value, would be vital in this environment, the firm said.
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