In a sea of active ETF launches and active strategies, T. Rowe Price’s ETF suite continues to prove popular with investors. The combination of affordable offerings with active management’s deep research capabilities make funds like the T. Rowe Price U.S. Equity Research ETF (TSPA ) and the T. Rowe Price International Equity Research ETF (TIER ) worth consideration this year.
The actively managed TSPA seeks to provide similar characteristics to the S&P 500 Index while potentially generating better returns. It offers the familiar profile of the benchmark index, with active management benefits. Meanwhile, the recently launched TIER offers similar characteristics to the MSCI ACWI ex USA Index. The Index tracks developed (excluding the U.S.) and emerging market equities worldwide. It includes large- and midcap stocks ranging across sectors as well as style segments. TIER retains fairly similar country, sector, and industry weights as the Index, but may differ due to individual stock weights. Both portfolios also have the ability to introduce some additional holdings from outside their respective benchmarks.
Fine-Tuning Benchmark Exposures With Active Research
The portfolios of the two ETFs are constructed using fundamental, expert research while still retaining the overall characteristics of the benchmarks they seek to outperform. This benchmark-aware approach to active management make both strategies notable complements to existing passive equity exposures.
In both strategies, individual company weights are determined using research from dedicated T. Rowe Price equity analysts. Each analyst oversees specific stocks within the industry of their expertise. These analysts select the stocks and their weights from within each industry. The portfolio managers and oversight team then determine the overall portfolio composition. TSPA and TIER seek to be sector neutral compared to their respective benchmarks, offering familiar risk and return profiles.
Since its inception in 2021 through the end of May, after fees and expenses, TSPA has netted an annualized average return of 11.13%. It outperforms the benchmark S&P 500’s 10.44% over the same period, according to the T. Rowe Price website. With a low tracking error, TSPA offers an active alternative to traditional benchmark investing.
By investing in TSPA or TIER, investors can benefit from the fundamental research of an active manager and their team. TSPA carries an expense ratio of 0.34%, while TIER maintains an expense ratio of 0.38%. Both offer affordable entries into actively managed strategies, providing global coverage when combined in a single portfolio.
For more news, information, and analysis, visit our Active ETF Content Hub.
