Active strategies have had a big year, and that’s extended to new launches like the T. Rowe Price Capital Appreciation Equity ETF (TCAF ). The strategy already hit a notable AUM milestone earlier this year, having just launched in June. Since hitting that milestone just last month, it’s continued to see strong flows and AUM momentum that merits a closer look at the strategy and its role in a portfolio.
Surveyed investors have expressed interest in adding to their existing active allocations, including institutional investors. So, what has driven that new attention? Active ETFs have performed well this year relative to their passive rivals while also seeing strong flows for their AUM relative to the broader asset management industry.
What’s more, active strategies can also adapt to the uncertainty markets have seen this year. Markets entered 2023 fearing a recession that hasn’t materialized and inflation that won’t go away. Active strategies’ ability to adapt quickly may appeal in such circumstances.
See more: Active ETFs Outperformed Passive Funds in 1H 2023
That brings us to a capital appreciation ETF like TCAF. The fund reached $260 million in AUM per VettaFi just a matter of weeks after passing $200 million. TCAF is managed by award-winning manager David Giroux, well-known for running the popular T. Rowe Price Capital Appreciation Fund (PRWCX). Where the mutual fund run by Giroux is composed of both stocks and bonds, the new TCAF ETF brings an all-equity portfolio to the ETF ecosystem.
Capital Appreciation ETF TCAF Nearing $300 Million
TCAF charges a 31 basis point (bps) fee to actively invest in higher-quality stocks of U.S. large-cap firms, analyzing firms with fundamental analysis. The strategy looks for firms with experienced management, high potential for risk-adjusted returns, and a track record of attractive valuations. The strategy tends to hold about 100 firms in its overall portfolio. For investors looking for an active strategy, TCAF’s flows and AUM momentum may appeal.
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