Looking back on the big 2024 ETF stories, it’s hard to avoid the rise of active ETFs. Actively managed strategies in the ETF wrapper have gathered significant assets and performed well amid some pretty considerable volatility. Perhaps no fund has embodied the rise of active ETFs this year as much as the T. Rowe Price Capital Appreciation Equity ETF (TCAF ). The rising active ETF had just over half a billion in AUM this time last year and, some twelve months later, now sits at just under $3 billion, per YCharts.
See more: Top Active ETF TCAF Sees $2 Billion in 1-Year Flows
With that kind of momentum, investors may want to take a closer look at the stocks the fund and its manager, David Giroux, are targeting. TCAF uses fundamental analysis, constructing its portfolio with a “bottom-up” stock selection approach. This all-stock portfolio managed by the award-winning manager has garnered a lot of investor demand as a core equity holding.
Rising Active ETF TCAF and Its Holdings
The fund applies its “growth at a reasonable price” (GARP) investing style in an effort to pick securities with one or more key characteristics. Those include return potential, attractive valuations, leading market position or proprietary advantages, and management quality. Since its launch last year, the strategy has returned 34.37%, per T. Rowe Price data, charging just a 31-basis-point fee.
What kind of stocks, then, does the rising active ETF identify and seek out? For example, TCAF includes Roper Technologies, Inc. (ROP) in its top holdings among key mega-cap tech names. According to YCharts, ROP is a software company operating a decentralized model that acquires and boosts smaller cash-generative businesses. As of December 9, the firm offered a 30.1 forward price-to-earnings (PE) ratio, reporting 12.87% quarterly, year-over-year revenue growth.
Outside of tech, the rising active ETF also holds other non-“Magnificent Seven” tech names worth watching like PTC, Inc. (PTC). PTC has returned 66.4% over the last three years, per YCharts, with a 33.88 forward PE ratio. PTC operates in software, working on areas like the Internet of Things and “product lifecycle management.”
Together, the pair of securities helps illustrate the rising active ETF’s focus on firms with appealing fundamentals. While not solely focused on tech, TCAF’s lean therein could make it an appealing active ETF to consider should further rate cuts arrive.
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