T. Rowe Price has launched a brand new active tech ETF to compete in the ever-critical tech space. The T. Rowe Price Technology ETF (TTEQ) joins a burgeoning active ETF ecosystem. That includes strategies like the firm’s T. Rowe Price Capital Appreciation Equity Fund (TCAF ). That active fund has gathered more than $2 billion in AUM since its launch just over a year ago. TTEQ joins the fray, looking to set itself apart in a competitive tech investing landscape and potentially match TCAF’s explosive debut.
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According to its prospectus, the new active tech ETF will charge a 63 basis point (bps) fee. The strategy looks for large tech firms with established track records and small firms offering new technologies. Although the portfolio is expected hold exposure to industry leading U.S. tech companies, TTEQ can also invest in firms outside the U.S., including in emerging markets, per the prospectus. The broader remit allows the actively managed portfolio more latitude to find additional, and perhaps new lesser-known, sources of potential return.
T. Rowe Price Leaders Talk New Active Tech ETF
T. Rowe Price vice president and portfolio manager Dom Rizzo discussed the strategy and how it plans to set itself apart in a teach-heavy ETF landscape. Rizzo contrasted TTEQ’s approach versus other ETFs that solely offer significant exposure to the biggest tech names.
“When I look around the world and say, what expanded technology strategies are out there in the world that have the ability to be global and make decisions on a framework-based decision-making process…I don’t actually see many,” Rizzo said.
Rizzo underlined four key factors behind the fund’s approach. He explained that TTEQ’s tech firm targets should focus on lynchpin technologies, lean into secular growth markets like AI, emphasize improving fundamentals over the next 18 to 24 months, and offer reasonable valuations. AI, he noted, presents an intriguing use case for that framework.
“AI is the biggest productivity-enhancing technology for the global economy since electricity,” Rizzo said. “If you study all other productivity-enhancing technologies, they come with speculative bubbles.”
“What active allows you to do is to try to navigate those difficult markets responsibly, and the way you do that is through your investment framework,” he added.
T. Rowe Price vice president and portfolio specialist Jennifer Martin emphasized that that framework can also empower the fund when investing abroad.
“The one differentiation of this portfolio, vis a vis others in the space that we’ll be competing against, is that … we will have amazing mission critical linchpin technologies domiciled outside the US that we’ll be able to capture through our research team,” she said. “It’s concentrated but diversified.”
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