ETF Spotlight: T. Rowe Price Capital Appreciation ETF [TCAF]
By: Ted Black, CFP©
Summer 2023 (Vol. 41, No. 2)
What is an Exchange Traded Fund (ETF)? Mutual funds and exchange-traded funds (ETFs) have much in common. Both mutual funds and ETFs are offered in many different varieties (stock funds, bond funds, sector funds, etc.) and are popular vehicles investors can use to diversify their investment holdings.
While mutual funds and ETFs are similar in many respects, there are some differences between the two options. Perhaps the most notable difference between the two is that ETFs can be traded intra-day like stocks, while mutual funds can only be purchased at the end of each trading day based on a calculated price known as the net asset value (NAV).
Mutual funds have been around for almost 100 years, with the first mutual fund coming on line in 1924. ETFs are relatively new. The first ETF, an index fund tracking the S&P500® Index, launched in 1993.
The T. Rowe Price Capital Appreciation ETF is essentially brand new, going live just a couple of months ago. However, its sibling the T. Rowe Price Capital Appreciation Fund was launched in 1986 and has been a consistently outstanding performer in its category. An important distinction between the two is that the mutual fund is a balanced fund, investing in both the stock and bond markets, while the ETF is strictly a stock fund.
The fund is managed by David R. Giroux, CFA. Mr. Giroux has been with T. Rowe since 1998 and is head of Investment Strategy and chief investment officer for T. Rowe Price Investment Management. David is a six-time nominee and two-time winner of Morningstar’s Fund Manager of the Year award. David’s fund also has won 18 Best Fund awards from Lipper.
The fund’s stated objective is to invest primarily in large U.S. companies of both growth and value styles. Using a “bottom up” approach, the fund holds approximately 100 securities of companies displaying favorable traits such as experienced and capable management, strong risk-adjusted return potential, leading or improving market position or proprietary advantages, and/or attractive relative market valuations. Amongst its top holdings are familiar names such as Apple, Microsoft, Amazon and UnitedHealth Group.
We’re excited about this offering because due to its outstanding performance, the T. Rowe Price Capital Appreciation Fund has been closed to new investors for quite some time. Now with the advent of the ETF offering, new investors have the opportunity to climb aboard. But please remember, this is a stock fund, not a balanced fund like its mutual fund sibling.
It’s not typically our policy to profile new offerings as we prefer to allow a track record to be established over a multi-year timeframe. However, given that this is an offshoot of a fund lead by a manager with an enviable long- term performance history, we’ve made an exception to our approach.
The gross annual expense ratio is 0.31%. Due to the fact that this is a brand-new offering, there’s no historic performance data to detail. From its inception on June 14, 2023 through end of day July 27, 2023 the fund was up 4.28%.
If you’re interested in this fund, or would like a portfolio review to determine if this fund might be an appropriate addition to your portfolio, please call Ted Black, CFP© at 888-878-0001, extension 3.
Statistics and information provided by Morningstar and T. Rowe Price. Please visit the T. Rowe Price website at www.troweprice.com for the most recent performance information. The principal value and investment return will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns shown, unless otherwise indicated, are total returns, including any capital gains or losses and all dividend and capital gains distributions. The performance data quoted represents past performance and in no way guarantees future results. Mutual funds and ETFs are not FDIC insured.
Mutual funds and ETFs are sold by prospectus. An investor should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. Please contact our office at 888-878-0001 to obtain a prospectus. Please read the prospectus carefully before you invest or send money.
Advisory services offered through Royal Palm Investment Advisors, Inc., a Registered Investment Advisor.