T. Rowe Price has a lot to commemorate in the ETF industry. The longtime manager of actively managed mutual funds brought some of its best U.S. equity strategies into the active ETF market nearly four years ago. Since then, the firm has continued to expand its ETF lineup to include an active small- and midcap equity ETF, fixed income products, and more.
At the end of May, T. Rowe Price had nearly $5 billion spread across 15 ETFs. The firm recently helped open the market at the New York Stock Exchange. VettaFi was honored to celebrate with them.
Popular Active ETF Despite Being Under 1 Year Old
The firm’s largest ETF is the T. Rowe Price Capital Appreciation Equity ETF (TCAF), with over $1.5 billion in assets. TCAF will turn one year old in mid-June. The fund is managed by David Giroux. He also runs the $60 billion Morningstar five-star rated multi-asset mutual fund with a very similar name. Unlike the multi-asset T Rowe Price Capital Appreciation Fund (PRWCX), TCAF does not own any bonds.
While TCAF owned some of the widely held, mega-cap growth stocks like Apple, Microsoft, and Nvidia as of late May, they were all less than 9% of assets. Investors can find others in the top 10. For example, Canadian Natural Resources, Danaher, and Revvity provided diversification.
An ETF Version of Well-Known Mutual Fund
The T. Rowe Price Blue Chip Growth ETF (TCHP) manages $600 million and was part of the firm’s first wave of ETFs in 2020. TCHP is an ETF version of the $57 billion, three-star-rated T. Rowe Price Blue Chip Growth mutual fund. This ETF is semitransparent and displays its full holdings as of the first quarter’s end.
Relative to TCAF, TCHP was more concentrated in a handful of stocks. For example, Microsoft (14%) and Nvidia (9.9%) are hefty positions. The ETF had smaller stakes in Intuitive Surgical and ServiceNow outside of the mega-cap space.
Growing Universe of Active ETFs
In addition, T. Rowe Price had nine other actively managed ETFs with over $100 million in assets. One such fund also about to hit its one-year anniversary is the T. Rowe Price Small-Mid Cap ETF (TMSL).
Managed by Jodi Love, as of late May, TMSL owned Celsius Holdings, Corpray, MKS Instruments, Stanley Black & Decker, and Textron. She spoke about the fund’s investment approach at a VettaFi virtual event in March.
“Ultimately, we value companies with really good growth prospects that have a pathway to profitability even if they’re not profitable now,” Love explained.
Fixed Income Expertise Brought Into ETF World
The T. Rowe Price Ultra Short Term Bond ETF (TBUX) is another popular active fund. It launched in September 2021 and was part of the firm’s expansion into fixed income ETFs. The fund seeks a high level of income by targeting an effective duration of 1.5 years or less. It looks for mortgage-backed securities, municipal bonds, bank obligations, and more while overweighting short-duration offerings. Manager Alex Obaza spoke about the merits of active management at a VettaFi virtual event in April.
“It’s really hard to do passive in fixed income the way you do in equity,” he said. “Bond indices are larger, have inferior liquidity, and sometimes, honestly, it’s just hard to buy all the bonds that are in an index.”
T. Rowe Price brings tremendous active management expertise to the ETF market to meet advisor objectives. We are happy to celebrate their success.
For more news, information, and analysis, visit VettaFi | ETF Trends.