Core Viewpoint - The article initiates coverage of the T. Rowe Price Capital Appreciation Equity ETF (TCAF), highlighting its active management and selection of 88 U.S. securities based on a bottom-up fundamentals approach since its inception in June [1] Group 1: Fund Overview - TCAF is an actively managed large-cap fund consisting of 88 U.S. securities [1] - The fund employs a bottom-up fundamentals-based approach for security selection [1] Group 2: Analyst Background - The Sunday Investor, who covers U.S. Equity ETFs, has a strong analytical background and holds a Certificate of Advanced Investment Advice from the Canadian Securities Institute [1] - The Sunday Investor has completed all educational requirements for the Chartered Investment Manager designation [1] Group 3: ETF Rankings System - The Sunday Investor has developed a proprietary ETF Rankings system that evaluates nearly 1,000 ETFs based on various factors including costs, liquidity, risk, size, value, dividends, growth, quality, momentum, and sentiment [1] - The rankings provide an easy-to-understand composite score from 1-10 for each ETF [1] Group 4: Engagement and Communication - The Sunday Investor is active in the comments section of articles and encourages readers to engage through comments or by visiting etf-rankings.com [1]

Core Insights - T. Rowe Price Investment Management's active ETF asset base has nearly doubled in the past year, indicating a shift towards funds focused on stock and bond selection rather than passive index tracking [1][4]. Group 1: Market Trends - The ETF market is experiencing a division between "sharp objects," which are risky single-stock and leveraged products, and strategic active funds managed by experienced portfolio managers [2]. - Active ETFs now account for approximately 11% to 12% of total ETF assets, a significant increase from lower levels three to five years ago, with projections suggesting growth to the "higher teens" percentage within five years [4]. Group 2: Fund Performance - The T. Rowe Price Capital Appreciation Equity ETF (TCAF), launched in June 2023, has grown to over $6.3 billion in assets by employing fundamental research to construct a portfolio of around 100 companies [5]. - TCAF focuses on capital allocation quality and long-term potential, contrasting with the volatility associated with leveraged products [5]. Group 3: Investment Strategies - Advisors utilize active ETFs in various ways, with some employing options-based strategies for income, while strategic stock-picking funds like TCAF aim to outperform through security selection rather than leverage [6].

Core Insights - The market in 2025 is facing significant concentration risk, with nearly half of the performance in 2024 attributed to the "Magnificent Seven" tech companies. By the end of the previous month, only 2% of S&P 500 constituents accounted for almost 40% of the index's total performance [1][2]. Group 1: Concentration Risk - Concentration risk remains a major issue as investors seek diversification, primarily due to the dominance of megacap tech companies expected to yield substantial returns [2]. - Active investing strategies are suggested as a solution to mitigate concentration risk, contrasting with passive strategies that replicate market indexes [2][3]. Group 2: Active vs. Passive Strategies - Active ETFs utilize bottom-up portfolio construction based on fundamental research, which can lead to outperformance and diversification away from excessive market exposure [3]. - Active management allows for adaptability in response to challenges faced by large firms, providing a significant advantage over passive funds that must adhere to index tracking [4]. Group 3: Investment Opportunities - Funds like the T. Rowe Price Capital Appreciation Equity ETF (TCAF) are highlighted for their active approach aimed at capital appreciation, suggesting that active funds are worth considering for portfolio refreshment [5].

Core Insights - The active ETF market experienced a split in strategy in 2025, with discretionary equity funds gaining 3.3% market share while systematic equity funds lost 1.1% [1] - Discretionary equity saw significant organic asset growth of 68.8%, contributing to the overall active ETF market reaching $476 billion across 953 launches in 2025 [3] Discretionary Equity Performance - The T. Rowe Price Capital Appreciation Equity ETF (TCAF) attracted $2.59 billion in one-year flows and achieved a 14.3% return, underscoring the appeal of discretionary equity [2] - TCAF focuses on high-quality U.S. large-cap companies with above-average growth potential and has a competitive expense ratio of 0.31%, managing $6.34 billion since its launch in June 2023 [2] Discretionary Fixed Income Performance - Discretionary fixed income led all categories with $136.9 billion in trailing 12-month flows through December 31 [4] - The T. Rowe Price QM U.S. Bond ETF (TAGG) captured $1.42 billion of those flows while delivering a 7.57% return and managing $1.54 billion in assets, with an expense ratio of only 0.08% [4] New ETF Launches - In response to the decline in systematic equity's market share, T. Rowe Price launched two active ETFs in early December that blend discretionary research with systematic implementation [5] - The T. Rowe Price Active Core U.S. Equity ETF (TACU) and the T. Rowe Price Active Core International Equity ETF (TACN) are waiving fees through January 30, 2027, resulting in net expense ratios of zero during this period [5] Investment Strategy - TACU holds 550–650 U.S. large-cap stocks with a 0.14% expense ratio, while TACN holds 400–500 international stocks with a 0.20% expense ratio after the fee waivers expire [6] - Both new equity ETFs aim to maintain low index tracking error while utilizing a blend of fundamental and quantitative research, targeting cost-conscious investors [7]

Core Insights - T. Rowe Price has launched two new ETFs: the T. Rowe Price Active Core U.S. Equity ETF (TACU) and the T. Rowe Price Active Core International Equity ETF (TACN), which aim to blend passive indexing with active management strategies [1][3] - Both ETFs will waive fees for the first 13 months, with TACU and TACN charging 0.14% and 0.20% respectively after the waiver period [5] ETF Details - TACU focuses on U.S. large-cap stocks with approximately 550-650 holdings, while TACN targets international stocks with a portfolio of about 400-500 holdings [2][6] - The launch of these ETFs expands T. Rowe Price's ETF suite to 30, including 20 equity ETFs and 10 fixed income ETFs [6] Management Strategy - The Active Core ETFs leverage T. Rowe Price's active management expertise and quantitative research to provide investors with potential for benchmark outperformance while maintaining disciplined risk controls [4][7] - The combination of low-cost, low-tracking-error portfolios aims to enhance core equity holdings for investors [7]

Core Viewpoint - The markets are approaching the end of 2025 with a mix of hope and uncertainty, influenced by various factors including geopolitics, AI valuations, and the Federal Reserve's outlook, presenting an opportunity for active equity ETF strategies like TCAL to provide additional income and navigate market volatility [1]. Group 1: TCAL Overview - The T. Rowe Price Capital Appreciation Premium Income ETF (TCAL) was launched earlier this year and has accumulated nearly $200 million in assets under management (AUM) [2]. - TCAL is managed by the same team as T. Rowe Price's largest ETF, TCAF, and charges a fee of 34 basis points [2]. Group 2: Investment Strategy - TCAL actively invests in a portfolio of conservative U.S. stocks, focusing on a "bottom-up" portfolio construction process that leverages T. Rowe Price's fundamental research [3]. - The fund aims to evaluate companies based on their individual merits rather than being overly influenced by economic cycles, which can help identify firms with strong prospects amid market volatility [3]. Group 3: Income Generation - TCAL employs a covered call strategy to generate monthly distributions for shareholders, combining dividends with covered call premiums to provide income during turbulent market periods [3]. - As of October 31, TCAL has achieved a year-to-date return of 3.3% and a robust distribution rate of 14.8%, making it an attractive option for investors seeking income [3].

Group 1 - The T. Rowe Price Capital Appreciation Equity ETF (TCAF) is an active ETF that does not have specific style preferences, allowing it to adapt between value and growth strategies to achieve its core objective of capital appreciation [1] - The ETF is managed by a team with over 20 years of experience in quantitative research, financial modeling, and risk management, focusing on equity valuation, market trends, and portfolio optimization [1] - The management team emphasizes a combination of rigorous risk management and a long-term perspective on value creation, with a particular interest in macroeconomic trends, corporate earnings, and financial statement analysis [1]

Core Viewpoint - The Federal Reserve's recent interest rate cut of 25 basis points is expected to positively impact investor portfolios and market outlooks, emphasizing the importance of active investing strategies to navigate the resulting economic shifts [1]. Group 1: Impact on Equities - The Fed's rate cut is likely to benefit small-cap tech and biotech firms that rely on borrowing for future growth, as lower borrowing costs can enhance their equity performance [1]. - Active investing strategies are positioned to identify and capitalize on these opportunities more effectively than passive funds, which may lack the adaptability and fundamental research focus [1]. Group 2: Impact on Fixed Income - In the fixed income sector, active investing is highlighted as having a significant advantage over passive strategies, particularly in maintaining bond allocations amid changing market conditions [2]. - Active managers can utilize fundamental research to pinpoint standout bonds as the yield curve shifts, allowing for better performance in a rate-cut environment [2]. Group 3: Active ETFs - Active ETFs, such as the T. Rowe Price Capital Appreciation Equity ETF (TCAF) and the T. Rowe Price QM U.S. Bond ETF (TAGG), provide tax-efficient and transparent investment vehicles for those seeking active management solutions [3]. - The recent Fed rate cut presents opportunities for active investing, reinforcing the value of these investment tools [3].

Core Insights - Active ETFs are experiencing significant inflows as investors recognize their potential for outperformance in both equities and fixed income segments [1][2] - The T. Rowe Price Capital Appreciation Equity ETF (TCAF) has seen inflows exceeding $2.5 billion since the start of the year, with current assets under management (AUM) reaching $6.2 billion [1][2] - TCAF has outperformed its category averages, returning 14.1% over the past year compared to 6.1% and 8.9% for its averages [2] Fund Performance and Strategy - TCAF charges a competitive fee of 31 basis points and targets higher quality U.S. large cap stocks [3] - The fund relies on T. Rowe Price's fundamental research to identify companies with above-average growth potential, focusing on management quality, valuation, and market position [3] Market Position and Outlook - TCAF represents a growing interest in active ETFs and could be a compelling option for investors looking to refresh their equity portfolios [4]

Core Insights - The approaching end of the year signals the start of tax loss harvesting season, which can significantly benefit portfolios in a complex year like 2025 [1][2] - Tax loss harvesting allows investors to sell underperforming assets to lower their overall tax bill, provided they avoid the wash sale rule by reinvesting in substantially different assets [2][3] Group 1: Tax Loss Harvesting - Tax loss harvesting is a strategy that can help investors manage their tax liabilities by selling assets at a loss [2] - The wash sale rule necessitates that investors reinvest in different assets to avoid tax complications, creating opportunities for active investment strategies [2][3] Group 2: Active ETFs - Active ETFs are gaining popularity as they offer a tax-efficient wrapper and the flexibility of active management, making them suitable for tax loss harvesting [3][4] - The creation and redemption mechanism of ETFs results in fewer taxable events compared to mutual funds, enhancing their appeal for investors [4] Group 3: Example Fund - The T. Rowe Price Capital Appreciation Equity ETF (TCAF) is highlighted as a potential option for investors looking to refresh their portfolios, managed by David Giroux with a focus on fundamental research [5]