T. Rowe Price Small-Mid Cap ETF (TMSL US) – Portfolio Construction Methodology

The investment process underpinning the actively managed T. Rowe Price Small-Mid Cap ETF allocates primarily to U.S. small- and mid-capitalization USD equities, maintaining at least 80% of net assets in issuers whose market capitalizations fall within representative small- and mid-cap index ranges. The strategy is fundamentally driven and bottom-up, selecting stocks with growth or value characteristics based on metrics such as returns on equity, capital investment, earnings and cash-flow growth, valuation ratios, and indicators of earnings quality and capital-allocation discipline. Portfolio construction emphasizes diversified exposure across the small- and mid-cap universe while allowing meaningful single-name and sector tilts that arise from stock selection rather than top-down views. Sector allocations are therefore an output of security selection, and the fund can hold sizable weights in a given economic segment when fundamentals are favorable. Sell discipline reflects reassessment of fundamentals, relative valuation, and portfolio-level risk and liquidity considerations.

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