Core Insights - T. Rowe Price is utilizing its extensive private equity experience to provide active ETF investors with access to key companies in artificial intelligence, such as OpenAI, Anthropic, and Databricks [1][2] Active ETF Strategy - The T. Rowe Price Technology ETF (TTEQ) may uniquely hold both Databricks and Anthropic, showcasing the firm's capability to participate in late-stage funding rounds, which differentiates its active management approach in the ETF market [2] - The firm combines private companies with public semiconductor manufacturers like Nvidia Corp. (NVDA) and Taiwan Semiconductor Manufacturing Co. (TSM), as well as cloud providers like Amazon.com, Inc. (AMZN) and international firms like Alibaba Group Holding (BABA) and Shopify Inc. (SHOP) [3] Differentiation in Active Management - Access to private companies like OpenAI highlights how active strategies can provide exposure that passive index funds cannot replicate, which is increasingly valuable as active ETFs become integral to advisor portfolios [4] - T. Rowe Price has partnered with Goldman Sachs to create multi-manager, risk-based model portfolios on Morgan Stanley's unified managed account platform, addressing advisor demand for a diversified approach [5] Advisor Support and Cost Reduction - The firm is facilitating the adoption of active strategies by eliminating cost barriers, offering the T. Rowe Price Active Core U.S. Equity ETF (TACU) and the T. Rowe Price Active Core International Equity ETF (TACN) with 0% expense ratios for the first 13 months until January 30, 2027 [7] Income Generation Strategies - T. Rowe Price is responding to income demand with the T. Rowe Price Capital Appreciation Premium Income ETF (TCAL), which writes covered calls on low-volatility stocks, aiming to generate high income while maintaining portfolio stability [8] - In fixed income, the firm critiques the Bloomberg U.S. Aggregate Bond Index for concentrating risk inefficiently, noting that 75% of credit risk is derived from just 25% of the index [9] Performance Insights - Better returns have been observed in sectors outside the aggregate index over the past three to five years, with the T. Rowe Price Total Return ETF (TOTR) and the T. Rowe Price Multi-Sector Income ETF (TMSF) targeting these stronger-performing sectors [10]

Core Insights - Income ETFs have gained significant popularity due to their ability to provide current income and meet specific client goals, especially during periods of volatility like the U.S.-Iran situation [1] Group 1: T. Rowe Price Multi-Sector Income ETF (TMSF) - TMSF offers exposure to a wide range of fixed income sectors, including U.S. and foreign high yield, investment-grade corporates, asset-backed securities, and emerging market debt [1] - The ETF charges a fee of 37 basis points and has a 30-day SEC standardized waivered yield of 5.52% as of February 28th [1] Group 2: T. Rowe Price Intermediate Municipal Income ETF (TAXE) - TAXE focuses on U.S. municipal bonds to provide a high level of tax-exempt income, charging a fee of 24 basis points [1] - The fund actively assesses issuers and analyzes bonds for credit quality, yielding a 30-day SEC standardized yield of 3.02% as of February 28th [1] Group 3: T. Rowe Price Capital Appreciation Premium Income ETF (TCAL) - TCAL employs an equity call option strategy to generate income, combining a conservative equity portfolio with regular distributions from dividends and options premiums [1] - The ETF has a distribution rate of 9.14% as of February 28th and has provided a return of 2.5% over the last three months [1] Group 4: Market Context - The rise of active management in income ETFs offers flexibility in navigating complex monetary policy and geopolitical landscapes, making funds like TMSF, TAXE, and TCAL appealing in turbulent global markets [1]

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].

Core Insights - T. Rowe Price has launched two new active transparent equity ETFs: Capital Appreciation Premium Income ETF (TCAL) and Hedged Equity ETF (THEQ), expanding its total active ETF offerings to 19 [1][4]. Group 1: ETF Details - The T. Rowe Price Hedged Equity ETF (THEQ) aims for long-term capital growth, investing at least 80% of its net assets in equities, and employs a derivatives hedging strategy to reduce portfolio volatility [2]. - The T. Rowe Price Capital Appreciation Premium Income ETF (TCAL) focuses on a low volatility portfolio of high-quality stocks and covered calls, with an expense ratio of 0.34% [3]. - THEQ has an expense ratio of 0.46% and is managed by Sean McWilliams, who has 15 years of investment experience [2]. Group 2: Management and Strategy - TCAL is co-managed by six investment professionals, including David Giroux, who has a record of outperforming his peer group for 17 consecutive years [4][9]. - The new ETFs leverage T. Rowe Price's established investment strategies, combining fundamental and quantitative approaches to optimize performance [3][5]. Group 3: Company Overview - T. Rowe Price, founded in 1937, manages USD $1.63 trillion in assets as of February 28, 2025, and is recognized for its investment excellence and retirement leadership [6]. - The firm aims to provide innovative investment solutions that align with long-term investor goals, reflecting its commitment to active management [5].