Baltimore-headquartered investment giant T. Rowe Price has launched four actively managed equity ETFs on NYSE Arca.
Investment giant T. Rowe Price has made its ETF debut with the launch of four actively managed equity ETFs.
The launch comprises a pair of ETFs focused on growth stocks and a pair targeting dividend payers.
They are the $1.2 trillion asset manager’s first ETFs.
The ETFs are modelled on existing mutual funds that hold many tens of billions of dollars in assets and are managed by the same portfolio managers.
The listings enable investors to access a series of long-established active equity strategies while capturing key attributes typically associated with ETFs, such as continuous daily trading, real-time market-determined pricing, and tax efficiency.
To conceal the asset allocation intentions of the funds’ portfolio managers, the ETFs incorporate a proprietary portfolio disclosure process that allows T. Rowe Price to withhold the full composition of the funds’ portfolios whilst ensuring that market makers have sufficient information to quote continuous, real-time prices.
This semi-transparent disclosure process has been made possible by the SEC’s relaxation of regulations governing how issuers conduct the creation/redemption mechanism that underlies the functioning of the ETF vehicle, enabling issuers to use their own discretionary custom baskets.
Tim Coyne, Head of ETFs at T. Rowe Price, said, “For the first time, T. Rowe Price is extending its time-tested strategic investing expertise to the ETF industry…We are excited to be able to serve investors and financial advisors who are interested in tapping into the firm’s investing capabilities through this innovative active ETF model.”
The asset manager says it has plans to roll out additional ETFs across different asset classes.
The funds
T. Rowe Price Blue Chip Growth ETF (TCHP US)
The fund aims to provide long-term capital growth by investing in a portfolio of typically between 100-150 stocks of large and medium-sized blue-chip companies that have the potential for above-average earnings growth and are well established in their respective industries. The fund focuses on companies with leading market positions, seasoned management, and strong financial fundamentals.
It is managed by Larry Puglia, who maintains a 26-year tenure as portfolio manager of the T. Rowe Price Blue Chip Growth Fund. Puglia has 30 years of total investment experience, 29 of which have been with T. Rowe Price.
The fund comes with an expense ratio of 0.57%.
T. Rowe Price Dividend Growth ETF (TDVG US)
The fund seeks dividend income and long-term capital growth by investing in between 100 and 125 stocks, with an emphasis on companies that have a strong track record of paying dividends or that are expected to increase their dividends over time. The strategy is predicated on the belief that a track record of dividend increases is an excellent indicator of financial health and growth prospects, and that over the long term, income can contribute significantly to total return. When appropriate, the portfolio manager may attempt to buy stocks when they are temporarily out of favour or undervalued by the market.
It is managed by Thomas Huber, who has 25 years of experience at T. Rowe Price and has been portfolio manager of T. Rowe Price Dividend Growth Fund since 2000.
The fund comes with an expense ratio of 0.50%.
T. Rowe Price Equity Income ETF (TEQI US)
The fund seeks a high level of dividend income and long-term capital growth by investing in between 100 and 125 common stocks with an emphasis on large-capitalization stocks that have a strong track record of paying dividends or that are believed to be undervalued. The fund’s in-house research team seeks companies that appear to be undervalued by various measures and may be temporarily out of favour but have good prospects for capital appreciation and dividend growth.
It is managed by John Linehan, who has served as portfolio manager of T. Rowe Price Equity Income Fund for four years. Linehan has 30 years of investment experience, 21 at T. Rowe Price, and is the former head of the firm’s U.S. Equity division.
The fund comes with an expense ratio of 0.54%.
T. Rowe Price Growth Stock ETF (TGRW US)
The fund seeks long-term capital growth by investing in a diversified portfolio of 80 to 120 stocks of growth companies. While it may invest in companies of any market capitalization, the fund generally seeks investments in stocks of large-capitalization companies with one or more of the following characteristics: strong cash flow and an above-average rate of earnings growth; the ability to sustain earnings momentum during economic downturns; and occupation of a lucrative niche in the economy and the ability to expand even during times of slow economic growth.
It is managed by Joseph Fath, who has 19 years of investment experience, 17 at T. Rowe Price. Fath has been portfolio manager of T. Rowe Price Growth Stock Fund for six years.
The fund comes with an expense ratio of 0.52%.