As active investing continues to grow in the ETF landscape, some strategies have broken through the noise. The T. Rowe Price Capital Appreciation Equity ETF (TCAF) stands out in that category. With just about 18 months under its belt, halfway to its three-year ETF milestone, it has passed $2.5 billion in AUM. That speaks to its continued case as a core active ETF that could offer a solid entry for those interested in active equity ETFs.
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TCAF, run by award-winning portfolio manager David Giroux, launched last June. Charging only 31 basis points, the fund actively invests in higher-quality stocks of U.S. large-cap firms. The strategy leans on T. Rowe Price’s fundamental research capabilities to do so. The leading active ETF measures firms based on their potential for risk-adjusted returns, experienced management, and a track record of strong valuations. The strategy holds about 100 stocks. It uses mix of both growth and value approaches in the stock selection process, sometimes referred to as growth at a reasonable price (GARP).
What role could a fund like TCAF play, then? For investors in in cash or highly concentrated indexes, it could provide a starting point for exploring active equity ETFs. At the same time, for those in mutual funds, it could be worth moving into ETFs. With taxes looming, ETFs’ tax efficiency could particularly appeal. Where mutual funds see taxable events when shares are sold, ETFs see fewer taxable events thanks to their creation/redemption mechanism.
The strategy has reached its significant AUM marker thanks to $1.9 billion in net inflows this year driven by investor interest. TCAF has returned 34.4% over the last year, per T. Rowe Price data. That has beaten both its ETF Database Category and FactSet Segment averages. According to ETF Database data, those segment numbers came in at only 9.1% and 17.8% over one year. Taken together with this new milestone, TCAF displays strong momentum that could appeal to investors.
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