T. Rowe Price Equity Income ETF (TEQI US) – Portfolio Construction Methodology

The investment process driving the actively managed T. Rowe Price Equity Income ETF normally keeps at least 80% of net assets in U.S.-listed common stocks, emphasizing large-capitalization issuers with established operating histories that either pay attractive, sustainable dividends or trade at discounts to assessed intrinsic value. An in-house research team applies a value discipline that screens for above-market dividend yields, lower price-to-earnings, price-to-book and price-to-cash-flow metrics, and balance-sheet strength, then undertakes fundamental analysis of cash-flow durability, capital allocation and restructuring catalysts. The portfolio invests primarily in exchange-traded securities, with selective use of depositary receipts, and may take meaningful sector tilts, particularly in income-rich areas such as financials, while remaining broadly diversified across issuers. Position sizing reflects dividend and downside risk characteristics as well as valuation upside. Rebalancing and sells are driven by deteriorating fundamentals, diminished income appeal, valuation compression or better risk-adjusted ideas.

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