20 April 2024

Have Indexes Gained Too Much Weight? Get Active in 2021

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The post-coronavirus market rally has heightened index concentration on mega technology companies and widened the disparity between other segments of the market, elevating risks to traditional indexes that are now heavily weighted with big tech names.  

In the upcoming webcast, Have Indexes Gained Too Much Weight? Get Active in 2021, Larry J. Puglia, Portfolio Manager, T. Rowe Price; and Christopher Dillon, Investment Specialist, Multi-Asset, T. Rowe Price, will discuss the investment outlook for 2021 and highlight how active strategies may be better positioned to manage market concentration risks and capture opportunities in other areas of the market.

T. Rowe Price offers four actively managed ETF strategies, including the T. Rowe Price Blue Chip Growth ETF (TCHP), T. Rowe Price Dividend Growth ETF (TDVG), T. Rowe Price Equity Income ETF (TEQI), and T. Rowe Price Growth Stock ETF (TGRW).

The T. Rowe Price Blue Chip Growth ETF seeks to provide long-term capital growth by investing in common stocks of large and medium-sized blue-chip companies that have the potential for above-average earnings growth.

The T. Rowe Price Dividend Growth ETF seeks dividend income and long-term capital growth by investing the majority of its assets in the common stocks of dividend-paying companies expected to increase their dividends over time.

The T. Rowe Price Equity Income ETF seeks a high level of dividend income and long-term capital growth by investing most of its assets in 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.

Lastly, the T. Rowe Price Growth Stock ETF seeks long-term capital growth and invests in companies that have one or more of the following: superior growth in earnings and cash flow, the ability to sustain earnings momentum even during economic slowdowns, occupation of a lucrative niche in the economy, and the ability to expand even during times of slow economic growth.

Constructed similarly to flagship investment strategies that have served T. Rowe Price clients well for decades, the active ETFs use the same portfolio managers as their corresponding mutual funds, and employ the firm’s long-standing strategic investing approach, characterized by rigorous research, risk awareness, and independent decision making.

T. Rowe Price active ETFs complement the firm’s traditional mutual fund offerings and deliver the key features associated with existing ETFs that some investors may prefer, including continuous daily trading, real-time market determined pricing, and tax efficiency. Over time, T. Rowe Price plans to deliver a robust ETF product lineup covering investments in various asset classes.

All four of T. Rowe Price active ETFs also feature a proprietary portfolio disclosure process that ensures market makers have enough information to quote prices with a high degree of confidence, while simultaneously protecting the intellectual property of the firm’s investment professionals and the interests of its mutual fund shareholders. The proprietary non-transparent actively managed ETF wrapper may also attract more money managers into the ETF space, providing active managers with a way to capture the benefits of the ETF investment structure while protecting their secret sauce from potential frontrunners.

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