In yet another indication of active ETFs’ big 2023, capital appreciation ETF TCAF has once again passed an AUM threshold. The strategy, which only launched in June, has already gathered more than $500 million in AUM. Now, with the year drawing to a close, it looks set to end its AUM push for 2023 with something above $600 million. What, then, are its prospects looking ahead to next year?
The T. Rowe Price Capital Appreciation Equity ETF (TCAF) actively invests in higher-quality stocks from U.S. large-cap companies. The fund shares much of its approach with the T. Rowe Price Capital Appreciation Fund (PRWCX), though it’s not a clone. It also shares management, with the experienced David Giroux managing both, and the latter for more than 15 years.
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TCAF has added $155 million over the last month alone in flows. Over the course of operation, fund flows have contributed to the vast majority of TCAF’s AUM. However, it has also started to see a pickup in AUM growth via price appreciation.
That ties into the capital appreciation ETF’s approach. By emphasizing firms with a high potential for risk-adjusted returns, experienced management, and a track record of valuations, it may identify firms with upside-oriented stocks. Further price appreciation for the strategy could boost its AUM even more.
Not only that, but potential rate cuts next year could further boost TCAF’s holdings. Its active approach and emphasis on fundamentals means it may be able to find already strong firms that could really see robust growth.
For a 31 basis point fee, TCAF has already returned 6.5% over the last three months. That has outperformed both its ETF Database Category and FactSet Segment averages. Taken together, the capital appreciation ETF could be set for another strong year in 2024 as it moves ever closer to $1 billion in total AUM.
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