T. Rowe Price Hedged Equity ETF (THEQ US) – Portfolio Construction Methodology

The investment strategy underlying the actively managed T. Rowe Price Hedged Equity ETF combines a long equity allocation with a derivatives overlay to seek long-term capital growth with reduced volatility. The fund normally invests at least 80% of net assets (plus any borrowings) in equities, implemented primarily through T. Rowe Price and third-party ETFs, with a core exposure to the firm’s U.S. Structured Research Equity approach via T. Rowe Price U.S. Equity Research ETF, and may hold modest fixed income and cash positions for collateral and liquidity. The equity sleeve targets a diversified basket of U.S. large-cap stocks while keeping sector and factor exposures broadly aligned with the wider market, so active risk is driven largely by stock selection. The overlay uses options and related derivatives to hedge against broad equity drawdowns, with hedge size and structure adjusted as markets move and as portfolio risk concentrations evolve.

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