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T Rowe Price's U.S. Equity Research ETF in registration
In looking at the presumed fund that serves as the inspiration for the new ETF (PRCOX), it's remarkable how similar the PRCOX fund is to an S&P 500 Index fund. (But that's what it is designed to be- see Fact sheet, below.)
Yet, given a low (but non-trivial) fund expense ratio, the fund has managed to more than hold-its-own, while still paying for the (relatively) expensive costs associated with th emutual fund 'wrapper'.
See the performance in the fund fact sheet, below.
The 'killer', of course, are the fund's tax costs, which can be seen at the M* page in link below. Depending on the period, PRCOX tax costs range from a) about the same as those for an S&P 500 index fund/ETF such as VFIAX; to b) about 50 bps or so more per year.
Rollout as an ETF, with lower ER than the fund, and an ETF's tax efficiency, makes sense.
In looking at the presumed fund that serves as the inspiration for the new ETF (PRCOX), it's remarkable how similar the PRCOX fund is to an S&P 500 Index fund. (But that's what it is designed to be- see Fact sheet, below.
Sounds similar to the original Fidelity Disciplined Equity Fund (FDEQX) under Brad Lewis. Though that was a hybrid of quant and fundamental approaches:
Using a highly disciplined approach to help identify these instruments and focusing on domestic companies with market capitalization of $100 million or more, FMR hopes to generate more capital growth than that of the S&P 500 while maintaining similar industry diversification.
The disciplined approach involves computer-aided, quantitative analysis supported by fundamental research. ... The fund spreads investment risk by limiting its holdings in any one company or industry.
Finding the old marketing literature for the fund would take effort than it's worth, but as I recall it sounded even more similar to the TRP fund. It was supposed to be a fund that outperformed the S&P 500 by tweaking holdings while keeping roughly the same sector weightings. For example, it might substitute Coke for Pepsi. In comparison, Fidelity Stock Selector was supposed to have more flexibility in altering the weightings of different sectors.
Comments
This would be the ETF 'equivalent' of this [PRCOX]? [*]
https://www.troweprice.com/personal-investing/tools/fund-research/PCCOX#content-summary
[*] With a 34 bp ER, rather than the 37 bp ER of the "I Class" ($1 MM minimum), or the 50 bp ER of the "Investor Class" ($2,500 minimum).
Yet, given a low (but non-trivial) fund expense ratio, the fund has managed to more than hold-its-own, while still paying for the (relatively) expensive costs associated with th emutual fund 'wrapper'.
See the performance in the fund fact sheet, below.
PRCOX Fact Sheet
https://www.troweprice.com/literature/public/country/us/language/en/literature-type/quarterly-factsheet/sub-type/mf-single-class?productCode=COF¤cy=USD
The 'killer', of course, are the fund's tax costs, which can be seen at the M* page in link below. Depending on the period, PRCOX tax costs range from a) about the same as those for an S&P 500 index fund/ETF such as VFIAX; to b) about 50 bps or so more per year.
Rollout as an ETF, with lower ER than the fund, and an ETF's tax efficiency, makes sense.
M* Tax Costs
http://performance.morningstar.com/fund/tax-analysis.action?t=PRCOX®ion=usa&culture=en-US
https://www.sec.gov/Archives/edgar/data/275309/0000275309-94-000013.txt
Finding the old marketing literature for the fund would take effort than it's worth, but as I recall it sounded even more similar to the TRP fund. It was supposed to be a fund that outperformed the S&P 500 by tweaking holdings while keeping roughly the same sector weightings. For example, it might substitute Coke for Pepsi. In comparison, Fidelity Stock Selector was supposed to have more flexibility in altering the weightings of different sectors.
https://www.sec.gov/ix?doc=/Archives/edgar/data/1795351/000174177321000800/c485bpos.htm