Understanding Active Capital Appreciation Investing

With 2023 more than halfway done, the time has come to revisit advisors’ portfolios. Markets entered 2023 with a narrative defined by doom and gloom, but much of that trouble has failed to materialize. Instead, markets are left with some notable uncertainty that invites investors and advisors to consider the power of active management. At T. Rowe Price, one of the most notable active ideas focuses on identifying active capital appreciation.

The firm’s T. Rowe Price Capital Appreciation Fund (PRWCX) represents a great example of that approach. Managed by T. Rowe Price’s award-winning portfolio manager CIO David Giroux, the fund often contends with the S&P 500 despite only investing about 60% of its assets in stocks. PRWCX splits its stocks into long-term core holdings with prices lower than their assets and earnings might suggest, and into shorter-term, more opportunistic buys.

PRWCX has closed to most investors, but Giroux also manages the T. Rowe Price Capital Appreciation Equity ETF (TCAF). TCAF does not represent a clone strategy of the similarly named multi-asset mutual fund but instead is an all-equity ETF strategy. TCAF will invest in U.S. stocks with a broad style approach to security selection, according to VettaFi’s head of ETF research, Todd Rosenbluth.

In a year when active investing has become more popular, TCAF may be worth digging into. Recently launched in June, TCAF has already reached $72 million in AUM, charging only 31 basis points for its approach. The strategy uses fundamental analysis to choose about 100 U.S. names that meet its quality metrics with the goal of delivering a core equity portfolio that goes beyond the indexes.

See more: “Is 2023 the Year of the Active ETF Advisor?

Giroux will join T. Rowe Price senior ETF specialist Chris Murphy and VettaFi’s editor-in-chief Lara Crigger for a webcast on active capital appreciation this month. The webcast, “Finding Capital Appreciation Opportunities in Today’s Markets,” will take place on July 17. Topics include finding the right moments for a contrarian view and balancing growth and value. For those investors looking to learn about active capital appreciation investing, it may be worth checking out.

For more news, information, and analysis, visit the Active ETF Channel.