T. Rowe Price is capitalizing on the unprecedented rise in actively managed exchange-traded funds (ETFs).
Tim Coyne, the director of ETFs at the firm, indicates that T. Rowe Price is experiencing notable expansion in this sector, highlighting two well-known strategies: the T. Rowe Price Capital Appreciation Equity ETF (TCAF) and the T. Rowe Price U.S. Equity Research ETF (TSPA) as responses to investor needs.
“Having a professionally managed portfolio greatly benefits clients,” Coyne shared in a recent discussion with CNBC’s “ETF Edge.” “We’re observing heightened volatility and uncertainty in the equity and fixed income markets.”
Coyne suggests that the T. Rowe Price Capital Appreciation Equity ETF is tailored for investors seeking sustained growth.
“This fund aims to outperform the S&P 500, offering lower volatility and enhanced tax efficiency,” he explained. “It typically maintains a concentrated portfolio with about a hundred holdings.”
As of April 24, the fund’s leading investments include Microsoft, Amazon, and Apple, according to the T. Rowe Price site. However, it’s not exclusively focused on big tech; the ETF also holds smaller stakes in companies like Becton Dickinson and Roper Technologies.
Currently, the T. Rowe Price Capital Appreciation Equity ETF has declined about 5% this year, while the S&P 500 is down approximately 7%. However, over the past year, the ETF has gained nearly 8%, performing similarly to the S&P 500.
Coyne mentions that the T. Rowe Price U.S. Equity Research ETF follows a related strategy but has a stronger emphasis on leading tech stocks.
“This fund leans more towards large-cap growth,” he noted. “It incorporates both passive and active management traits. Our North American research directors manage this fund, ensuring robust fundamental analysis in stock selection.”
Both the T. Rowe Price U.S. Equity Research ETF and the S&P 500 have dropped about 7% since the year’s start. However, the fund has seen an almost 9% increase over the last year, slightly outperforming the S&P 500.
T. Rowe Price U.S. Equity Research ETF vs. S&P 500
‘Some form of bear market’
Todd Sohn from Strategas Securities anticipates strong demand for active managers will persist.
“In this type of environment, active management can truly excel,” said Sohn, the firm’s senior ETF and technical strategist. “We are experiencing some version of a bear market, making this an ideal time for active managers to demonstrate their worth.”
