On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research, Todd Rosenbluth, discussed the T. Rowe Price Value ETF (TVAL) with Chuck Jaffe of Money Life. The pair discussed several topics related to the ETF, in order to give investors a deeper understanding of it.

Chuck Jaffe: One fund on point for today. The expert to talk about it. This is the ETF of the Week!

Welcome to the ETF of the Week, where we get the latest take from Todd Rosenbluth, the head of research at VettaFi. And at VettaFi.com, you’ll find all the tools you need to be a savvier, smarter ETF investor, and to get more details on the new, newsworthy, trending, and timely ETFs that we discuss here.

Todd Rosenbluth, great to chat with you again!

Todd Rosenbluth: It’s great to be back, Chuck.

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The T. Rowe Price Value ETF. TVAL, T-V-A-L.

Chuck Jaffe: TVAL. T-V-A-L, the T. Rowe Price Value ETF, a fund that’s part of T. Rowe Price’s expansion into ETFs.

You know, last week we were featuring a fund that was about to have its third anniversary. This one is, too!

And this fund, thus far this year, the best performance it’s ever had. So is it the anniversary or the recent performance? What makes this the ETF of the Week?

Todd Rosenbluth: So those two things caught my eye. You’re right. This fund just turned three years old. It is about to get its Morningstar rating. Its three-year track record is strong, also in the large-cap value category. So I would assume that it’s going to be a favorable rating — at the risk of a projection there. It’s been a good year.

We’ve seen value strategies return to favor. And we at VettaFi recently did a survey of financial advisors, and we asked them how they were getting exposure to value. And we asked them about index-based products, fundamentally index-based products, or actively managed strategies. And they were leaning towards actively managed strategies. So we wanted to shine a spotlight on this active value ETF from T. Rowe Price.

Chuck Jaffe: This fund in the last year — not calendar year, but rolling year — is up about 30%. That’s not what anybody really expects to see from a value fund. They’ve hit a sweet spot. Is that ‘the market has been particularly kind to value, like that kind to value?’ Because nobody really expects that to continue for too long.

Todd Rosenbluth: Right. So, the benefit of this fund as an actively managed fund is you have a team of analysts covering those individual stocks. You have a portfolio management team that is assessing the run-up in certain stocks to understand if the fundamentals remain strong. You’re right. It’s been a good year. As I look at the holdings, I’ll see some stocks in there that have performed quite well.

Micron Technology in particular is a top-ten holding and roughly 2% of the portfolio. But you’ll see a mixture, not just of tech stocks. There are energy stocks like Exxon and Bank of America in the financial sector. So you’re going to get the benefit of diversification as management sorts through what still looks attractive.

Chuck Jaffe: When you see a stock like Micron in a value portfolio, does that ever concern you? I mean, do you ever look at this and go, ‘Okay, how exactly are you defining value?’ Because to a lot of value managers, a stock that’s been as hot as Micron, seeing the kind of momentum it’s had, would not pass the sniff test.

Todd Rosenbluth: So I don’t know enough about the individual security selection that’s going on for this company at T. Rowe Price. What I would note is that Micron is in value index-based products at a larger weighting because it’s an index-based approach.

It doesn’t have the same paring-back mentality from an index-based approach versus an active approach.

So, seeing it in the portfolio doesn’t shock me. If it were a larger weighting, that would be a bigger concern. I have confidence, and I think investors, if you’re going to choose an active ETF, have to have confidence in the T. Rowe Price team to assess whether there’s still room for the stock to run.

Chuck Jaffe: In terms of where this fits into a portfolio, there are not many investors out there who are going to go, ‘Yeah, I don’t have any value investments, and large-cap value at that.’ So is this a replacement for things you’ve got? More likely, is this an upgrade possibility, or is this more if you don’t have the coverage, this would go there?

Todd Rosenbluth: So you’re right, people have exposure to value strategies either because you’ll get some value exposure in a product’s diversified approach, or you already have leaned towards value and you feel comfortable in that. I think people have value primarily either from an actively managed mutual fund or an index-based value strategy tied to the S&P 500, the value side, the Russell 1000, the value side, and so forth.

So this fits the middle ground to me. This is an actively managed ETF which does both things. You get the benefit of that active management, and you get the lower cost structure and the tax efficiency from a proven manager like T. Rowe Price. So, I think this can be a complement to existing strategies, or for people who are leaning more and more toward ETFs, that can be the go-to vehicle to get active value exposure

Chuck Jaffe: T. Rowe Price is a company that we haven’t discussed a lot in ETF of the Week. They were a little late to the ETF game, and most of their ETFs have been basically, ‘Here’s the ETF flavor of the traditional fund we have.’

How do you feel they have made the transition? Because, you know, there are companies that we talk about that are pure ETF companies. They never had a traditional mutual fund at all. They came in; this was their business. And then there are companies — T. Rowe Price, Fidelity, et cetera — that kind of resisted the move for a while and are now there and all in.

They had tremendous benches and tremendous talent when they were running traditional mutual funds, they brought that to the ETF space. But the ETF space is pretty picky, pretty hard to deal with. So how do you evaluate a firm like T. Rowe? Is this, ‘Yeah, I love watching the old-line companies get there, and oh, by the way, they still carry a lot of weight’? Or are they still a small player in the ETF space?

Todd Rosenbluth: The short answer is that they are not still a small player. They crossed the $25 billion milestone in assets under management for ETFs a little over a month or two ago. They now, I believe, have closer to $30 billion in assets under management the last time I looked. They’ve been investing in the business and building out their product lineup.

So, you’re correct, and your memory is correct. The first wave of their products were ETF versions of existing mutual funds. This fund, TVAL, is not; it is a standalone ETF. Three years ago, T. Rowe Price started to build out its lineup and has continued to do so with some sector products, some fixed-income products, and some options-based products.

But TVAL is a great example of when they’ve leaned in, it’s worked. It’s outperforming. It’s been gathering assets. This fund is soon to hit $1 billion if it continues with its growth. And that’s just a real strong sign to me of what T. Rowe Price is committed to.

Chuck Jaffe: In the old days of traditional mutual funds, they tried to create a family — not just T. Rowe Price, every fund firm was trying to create a family, and they kind of wanted to be all-inclusive. 

I’m curious for you at this point, because of course you evaluate all funds: Do fund families make sense? Like, you know, other than you might be an investor with a certain firm in your 401(k) where you only pretty much have choices from T. Rowe Price or Fidelity or whatever.

Does fund family investing matter? Is it really important to you that a fund company have a fully developed lineup, or is that what’s good for them and you, as a consumer, don’t care?

Todd Rosenbluth: So I think investors should have choice and they should have the opportunity, if they believe in active management, to have their active capabilities tied to a couple of firms, because it’s just hard to do the due diligence and understanding of the investment process and approach across the lineup. But not all funds are going to be strong performers. Not all funds are going to make sense within a portfolio.

So, we have seen investors and advisors build a strategy of portfolios using active ETFs from one firm or two firms in particular. But I think people should look at TVAL as a standalone ETF, determine if they think it makes sense in their portfolio, understand the investment process, and know there’s a deep bench behind it. 

If they already have an active value ETF that’s working for them from a different firm, that’s okay. Just have this on your radar. Know this is out there. And if your other fund doesn’t do what you want it to do, you know there’s another strong player out there.

Chuck Jaffe: And that player again: TVAL, T-V-A-L, T. Rowe Price Value, the ETF of the Week from Todd Rosenbluth at VettaFi.

Todd, great stuff. We’ll see you again next week!

Todd Rosenbluth: It’s always a pleasure!

Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. And yes, I’m Chuck Jaffe. You can learn all about my hour-long weekday podcast by going to MoneyLifeShow.com. Or you can simply search for it wherever you find your favorite podcasts.

Now, if you’re searching for more information on your favorite ETFs or the ones we talk about here — maybe your next favorite ETFs — go to VettaFi.com and dig into their suite of tools that will help you make better decisions. They’re on X at @Vetta_Fi, and Todd Rosenbluth, their head of research, my guest, he’s on X as well at @ToddRosenbluth.

The ETF of the Week is here for you every Thursday. Please make sure you don’t miss an episode. Just follow us on your favorite podcast app. We’ll be back next week with another ETF for you to consider. Until then, happy investing, everybody!

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Note: This article was created in part through assistance from AI tools. The content has been thoroughly reviewed and edited by the author.