Active ETFs have continued their rise over the last year and a half, with new launches helping drive ETFs to a record launch pace. What’s more, active ETFs have picked up significant flows relative to their smaller AUM. Flows are arriving into the funds in large part from their active mutual fund counterparts. Perhaps no rising active ETF has stood out as much, however, as the T. Rowe Price Capital Appreciation Equity ETF (TCAF ).
See more: Active ETFs to Hit $4 Trillion AUM by 2030? What You Need to Know
TCAF, which launched just over a year ago, charges a competitive 31 basis point (bps) fee. It has gathered assets at a blistering clip since its launch. In just over a year, the strategy has organically raised considerable AUM trough sales flows and significant investor adoption, crossing over $2 billion just this month per YCharts. Per ETF Database data, the rising active ETF has shown strong performance, but those returns haven’t falsely amplified the growth. Its AUM growth has truly been driven by investor demand.
Why, then, has the strategy been able to gather those assets so rapidly? Managed by David Giroux, the fund leans on T. Rowe Price’s fundamental research capabilities. The rising active ETF looks at stocks based on attributes like capable management, potential for risk-adjusted returns, and a track record of attractive valuations. It typically focuses on large-cap firms, with a broader goal of long-term capital appreciation.
That being said, its research capabilities and focus alone don’t speak to its flows. Its active approach, at the end of the day, provides significant flexibility. Whether that means overweighting a given firm or eschewing a popular stock because of fundamental concerns, the ability to lean in or out could help it perform. The rising active ETF has returned 24.75% since inception. For those looking for a core equity ETF as a complement or replacement of the highly concentrated S&P 500, ETF option, TCAF could appeal.
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