The ETF world is continuing to grow at a staggering pace, and T. Rowe Price is the latest firm to add to the pile. On Wednesday, the firm launched its first active tax-free bond ETF, the T. Rowe Price Immediate Municipal Income ETF (TAXE). The move comes as the firm recently saw its ETF roster surpass $5 billion in AUM. With fixed income increasingly a popular area for ETFs, a strategy like TAXE may be worth a closer look.
See more: Record ETF Launch Pace Driven by Active ETF Popularity
The fund looks at investment-grade intermediate-term muni bonds. Per the firm’s press release, it will aim for an average effective maturity of four to 12 years. A new strategy, it is the first fixed income ETF from the firm to be distinct from its mutual fund options.
“For four years, we’ve continued to expand our ETF offerings to offer key strategies that meet the evolving needs and interests of our clients,” said Tim Coyne, the firm’s global head of ETFs. “With the launch of the Intermediate Municipal Income ETF, it was important for us to establish an offering in the federally tax-free category.”
“We remain dedicated to delivering attractive ETFs that pair our long history of active management expertise and investment insights with the benefits of the ETF vehicle,” he added.
Active Tax-Free Bond ETF: TAXE
The issuer has seen recent success with other ETF launches, including the T. Rowe Price Capital Appreciation Equity ETF (TCAF). This fund launched a little over a year ago and has almost reached $2 billion in AUM in that time.
TAXE aims to provide federally tax-free income to investors amid growing market demand. The ETF may appeal to those nearing retirement or anyone who seeks solid income via a tax-free fixed-income allocation. Although actively managed, it will only charge 24 basis points for its services.
“T. Rowe Price has become a strong provider of actively managed ETFs with equities and taxable bonds,” said VettaFi’s Head of Research Todd Rosenbluth. “The addition of a tax-free ETF with the flexibility to have some high yield exposure makes it unique in the marketplace.”
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