Few ETFs have epitomized active investing’s explosion in popularity over the past few years as much as TCAF. Launched less than a year ago, the T. Rowe Price Capital Appreciation ETF (TCAF ), has crossed $1.5 billion AUM. Operated by award-winning and highly recognized portfolio manager David Giroux, who also runs the T. Rowe Price Capital Appreciation Fund, (PRWCX), TCAF has planted its flag in the ETF landscape.
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What, then, is driving such significant interest, and how should investors understand the strategy? It may be worth taking a closer look. The active ETF takes a core approach to stocks. It applies growth and value heuristics as needed, normally focusing on large U.S. firms.
That’s a broad remit, of course, but Giroux and the ETF’s management then take a bottom-up approach to constructing the portfolio. Per its prospectus, TCAF looks for firms with one or more of the following characteristics: attractive valuations, strong or improving market position, appealing risk-adjusted return potential, and experienced management.
TCAF's Active ETF Approach
While that leads to the strategy holding names like Nvidia (NVDA), it also looks outside the well-reported names. For example, it holds biotech firm Revvity (RVTY) among its top firms, which offers some appealing financials and valuations per YCharts. RVTY works on services like cell and gene therapies and offers diagnostics services.
Among the largest, lower-fee active strategies, in this case, those with more than $1 billion in assets that charge less than 35 basis points (bps), TCAF’s performance ranks it in the top ten YTD. Per ETF Database, its top three sectors include tech services, electronics, and health tech. For investors looking for a core active ETF on which to build an active equity allocation, TCAF stands out as one key option.
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