Income ETF investing has taken off in recent years, with investors increasingly looking for ways to bolster portfolios. The ETF industry has responded, with T. Rowe Price the latest to make an addition. The firm launched the T. Rowe Price Capital Appreciation Premium Income ETF (TCAL) on March 26. The strategy represents a new option for those looking to boost the income in their portfolios with the added benefit of active adaptability that goes beyond the rate-sensitive bond market.
See more: 3 Reasons to Consider Active ETF TOUS in Tariff Sell-Off
TCAL charges only a 34 basis point fee for its approach. The strategy actively invests with covered call options on U.S. stocks. In doing so, its managers look to offer regular distributions through equity dividends, options premiums, and help investors preserve capital through a conservative equity portfolio. The active income ETF leans on a bottom-up approach, identifying firms with strong potential for risk-adjusted returns. The ETF considers those firms without market cap limits or specifications.
TCAL's Active Income ETF Approach
TCAL’s management includes T. Rowe Price Capital Appreciation Equity ETF (TCAF ) manager David Giroux. He is joined by six other comanagers. This team looks to combine quantitative and fundamental research capabilities.
The fund follows growing interest in covered call option strategies in recent years. For investors, those funds can help provide current income, which not only benefits investors at or near retirement, but also potentially younger investors looking for ways to offset some market volatility. That may also track with a tendency for younger investors to favor active investing.
Tariff-related sell-offs in recent weeks could see investors and advisor clients dive into a new premium income ETF. It remains unclear what form tariffs may take for the rest of this year and, indeed, this U.S. administration. TCAL could provide a notable option in the core or satellite space of many investor portfolios.
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