TCAF

Observant1

M* provides a brief analysis for TCAF.

"T. Rowe Price Capital Appreciation Equity ETF TCAF stands out in the competitive large-blend
Morningstar Category, thanks to a proven manager with a disciplined investment approach
and very low fees for an active strategy."

"This ETF is built on the same disciplined approach that made David Giroux’s management
of T. Rowe Price Capital Appreciation a standout through bull and bear markets, growth rallies,
value revivals, and four US presidents.
His record is impeccable, and we’re confident he can replicate that success here over the long term."

https://www.morningstar.com/funds/an-active-etf-with-star-power

masterd

Very unlikely to outperform a very low cost S&P500 index, like VOO, over the long term. Friction costs such as higher expense ratio and bid/ask spread are the primary factors.

davidrmoran

true of all active investing since forever, except when not --- there have been rare persistent winners

msf

. Friction costs such as higher expense ratio and bid/ask spread are the primary factors.

The comparison being made here is between an index ETF and an actively managed ETF. From the retail investor perspective, while ER differences are real, bid/ask may not be. That is, whenever a security is purchased there's a spread. Whether that spread is narrower with one ETF than another depends on many factors, not just style of management.

From the perspective of what goes on under the hood (how a fund manages its portfolio) there may be little difference in trading cost between passively and actively managed. Both acquire and dispose of securities via creation and redemption baskets, respectively. It's the authorized participants (APs), not the funds, doing the buying and selling of underlying securities.

When a fund wants to buy a new holding or liquidate an old one, it can do this by including the security in a custom creation basket or custom redemption basket, respectively.

APs have always managed the creation/redemption process through two types of trading baskets: standard and custom. Standard baskets simply contain a proportional slice of all the securities in the ETF’s index. Custom baskets, by contrast, could include cash or a collection of securities in nonrepresentative amounts.

This creates flexibility for both the AP and the ETF. For example, it means the ETF managers can dispose of securities they no longer want to hold in the fund, or acquire new securities, while still benefiting from the tax-efficient ETF wrapper.

https://www.etf.com/sections/etf-report-features/etf-custom-baskets-game-changer