With a bear market in both stocks and bonds last year, life has been difficult for money managers. The combination of market depreciation and customer redemptions can take a toll on assets under management (AUM).

But T Rowe Price (Nasdaq: TROW) has weathered countless storms before, always emerging stronger.

I doubt this time will be any different.

After sliding to $1.27 trillion at the end of 2022, AUM bounced back to $1.4 trillion through June. Meanwhile, the traditional mutual fund giant is also expanding its presence in the ETF space. It only entered this field about three years ago but has already attracted over $1 billion in ETF assets – despite gusty market headwinds.

For example, the T. Rowe Price Blue-Chip Growth ETF (Nasdaq: TCHP) has been one of the firm’s strongest net inflows. Incidentally, it has delivered a market-crushing 40% year-to-date return. With that in mind, management recently filed paperwork with the SEC to launch even more actively-managed equity funds.

A New Breed Of ETF

To understand why this is a big deal (and why we should care as investors), let’s consider another new fund, the T Rowe Price Capital Appreciation Equity (Nasdaq: TCAF) ETF.

TCAF officially made its market debut on June 14, making it just over a month old now. This is not your run-of-the-mill index hugger. It’s a new breed of active ETF. This hybrid vehicle packages the hands-on management of a mutual fund with the low costs and tax efficiency of an ETF.

TCAF hones in on companies with improving market positions, trustworthy management, attractive relative valuations, and strong risk-adjusted return potential – some of the same criteria we use in these pages.

But in this case, dividends take a backseat to growth.

Top holdings include entrenched leaders such as Apple, Nvidia, and Visa. The fund carries a cheap price tag of just 0.31% and provides daily portfolio transparency.

It has already attracted about $70 million in assets. But that’s not what caught my eye. I’m more interested in the fact that it’s being skippered by David Giroux, one of T Rowe’s most seasoned veterans (as well as its Chief Investment Officer).

Giroux is the long-time T Rowe Price Capital Appreciation Fund (PRWCX) manager, having been in that post since 2006. This five-star large-cap growth fund — a mainstay inside many 401(K) programs — is one of the industry’s heavyweights with $50 billion in assets.

Why This Matters

Giroux has consistently racked up top-decile returns at PRWCX and is currently outrunning about 90% of his category peers thus far in 2023. Is there a chance that utilizing his talents in the ETF space could cannibalize some of his mutual fund assets?

Possibly. But at least those assets stay in the family. It’s no secret that mountains of cash continue to bleed away from mutual funds in favor of exchange-traded funds. ETFs received $600 billion in net inflows last year, while mutual funds saw $1 billion in outflows.

But this is not a black-and-white matter of passive versus active investing philosophies. In fact, actively-managed funds are the fastest-growing subset of ETFs, capturing nearly 20 cents of every dollar. They may well be the future of the asset management business.

One of my newest recommendations over at High-Yield Investing is the poster child, attracting $28 billion in assets thus far. It has been flooded with $10 billion in inflows just since the beginning of the year. Not a bad haul for six months.

That’s why T Rowe Price is handing one of its best and brightest in this new role. For the record, Pimco, Franklin Templeton, and other old-school investment houses are doing the same thing, putting star mutual fund managers in charge of new copycat ETFs.

Action To Take

As a leading custodian of retirement plans, T. Rowe Price’s assets tend to be stickier than some. Of course, top-tier relative performance doesn’t hurt either.

Through both up and down markets, T Rowe’s assets under management have been expanding at a compound annual growth rate (CAGR) of 12% over the past decade. And remember, every single one of those dollars earns recurring advisory fees. Day after day. Quarter after quarter. Year after year.

That explains the firm’s stellar track record. Shareholders were recently treated to a 37th consecutive annual increase, upping the annual distribution to $4.88. That puts the yield at about 4% right now. And remember, since 1992, earnings per share have been advancing at a healthy 17% annual pace. And dividends have climbed in lockstep, rising 16% per year.

The point is, T Rowe Price knows how to navigate changing market (and industry) conditions. You don’t gather over a trillion dollars by accident.

This is one of the most reliable dividend payers you’ll find, with a pristine debt-free balance sheet and steadily rising distributions even in recessions.

I view it as an attractive buy at this level.

P.S. What if I told you that instead of only getting paid four times a year from a stock… you could get 12 dividend checks a year?

It’s possible… you just have to know where to look. Over at High-Yield Investing, we own about a dozen — that’s 144 monthly payments a year!

For the first time ever, we’ve compiled the full list into a report. Go here now for details.