Active ETFs have had a strong turn of the cards in 2023 as all kinds of investors take new interest in the active universe. From more tactical strategies to total return ETFs, active ETFs come in all shapes and sizes. Some investors may want to look for an active strategy focusing on long term, active capital appreciation, however. That may draw investors to get to know the approach and stocks held in the T. Rowe Price Capital Appreciation Equity ETF (TCAF).
TCAF recently launched and shares much of its approach with the equity portion of the long-running multi-asset mutual fund T. Rowe Price Capital Appreciation Fund (PRWCX). Both strategies are managed by David R. Giroux, with PRWCX operating since 1986. PRWCX has also returned 10.9% over the last five years.
The Fund is an all-equity portfolio, whereas the popular PRWCX holds a more conservative mix of stocks and bonds. In essence, TCAF gives the two-time Morningstar portfolio manager of the year the ability to go head-to-head versus the S&P 500.
The T. Rowe Price Capital Appreciation Equity ETF employs Giroux’s active management strategy of identifying stocks based on fundamentals. The active capital appreciation ETF eyes firms with capable, experienced management, high potential for risk-adjusted returns, and a track record of attractive valuations. So, what kind of stocks does TCAF hold? While it holds some of the bigger tech names that have driven the S&P 500 forward this year, it also holds some other intriguing names that really differentiate the portfolio..
For example, as of September 1st, the ETF holds the Danaher Corporation (DHR). Danaher, a holding company and conglomerate, holds diagnostics, life sciences, and medical devices companies. DHR has risen more than 8% over the last six months. It has also recently expanded its life sciences unit. The firm has put up 15% revenue growth over the last five years with a respectable 29.9 forward p/e ratio.
TCAF also holds Thermo Fisher Scientific (TMO). TMO sells scientific and laboratory equipment, with its overall business across four different segments. TMO has grown 3.5% over the last six months, with a 24.9 forward p/e ratio per YCharts. It has also seen 16.5% year-over-year (YoY) revenue growth over the last five years.
Finally, the active capital appreciation ETF also holds Linde PLC (LIN). LIN, the world’s largest industrial gas company by market share and revenue, has grown 11.5% over the last six months. The firm has operations in over 100 countries, producing atmospheric and process-oriented gases. It’s produced 24% YoY revenue growth over the last five years with a 27.9 forward p/e ratio.
Taken together, that’s helped TCAF already return 1.7% since it recently launched in mid-June. The strategy only charges 31 basis points (bps), which is low for a fully active portfolio, and may be worth watching for those looking for a longer-term active option.
For more news, information, and analysis, visit the Active ETF Channel.