With heavy volatility hitting the capital markets lately, investors need some stability to help mute the ups and downs. A confluence of inflation, rising interest rates, and geopolitical concerns warrant a move towards large-cap equities, especially those that provide a strong track record of dividends.
All that is available in the convenience of an ETF wrapper with the T. Rowe Price Equity Income ETF (TEQI). The fund will normally invest at least 80% of its assets in common stocks listed in the United States, with an emphasis on large-capitalization stocks that have a strong track record of paying dividends or that are believed to be undervalued (or futures that have similar economic characteristics).
TEQI typically employs a “value” approach in selecting investments. The fund’s in-house research team seeks companies that appear to be undervalued by various measures and may be temporarily out of favor but have good prospects for capital appreciation and dividend growth.
Some of the benefits of TEQI per the product website:
- Focus on above-average yielding value stocks
- Seeks to provide a relatively steady source of return
- Can enhance return potential over time through reinvesting and compounding
- Dividends have historically helped to reduce fund volatility
The approach to seeking out equities that appear to be undervalued is paying via price appreciation over the past year. The fund is up over 40% despite the ongoing challenges in the market recovery.
Under the Hood of TEQI
The fund, as of January 31, holds a mix of various sectors, including financial, utilities, technology, energy, and more. Furthermore, the fund isn’t heavy in one name, as evidenced by Wells Fargo being the top holding and only comprising just 4% of the fund’s assets, so it isn’t over-concentrated.
Given the heavy market volatility in big tech, investors won’t see the likes of Apple, Microsoft, or Amazon in the top 10 holdings. As mentioned, the focus is on pulling out names that can provide value and stability during heavy market movements.
For more news, information, and strategy, visit the Active ETF Channel.
