Oct. 31, 2024 |
| T. Rowe Price QM U.S. Bond ETF
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| QM U.S.
Bond ETF
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Investment Objective(s)
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The fund seeks to provide
a total return that exceeds the performance of the U.S. investment-grade bond market.
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| Fees and
Expenses
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This
table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the fund.
You may also incur brokerage commissions and other charges when buying or selling shares of the fund,
which are not reflected in the table or example below.
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| Annual
fund operating expenses (expenses that you pay each
year as a percentage of the value of your investment)
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| Example
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| This example is intended
to help you compare the cost of investing in the fund with the cost of investing in other funds. The
example assumes that you invest $10,000 in the fund for the time periods indicated and then sell all
of your shares at the end of those periods, that your investment has a 5% return each year, and that
the fund’s fees and expenses remain the same. Although your actual costs may be higher or lower, based
on these assumptions your costs would be:
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| Portfolio Turnover
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Portfolio Turnover The
fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result
in higher taxes when the fund’s shares are held in a taxable account. These costs, which are not reflected
in annual fund operating expenses or in the example, affect the fund’s performance. During the most
recent fiscal year, the fund’s portfolio turnover rate was 131.2% of the average value of its portfolio.
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| Principal Investment Strategies
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Under normal conditions,
the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in U.S.
bonds. Any derivatives that provide exposure to the investment focus suggested by the fund’s name,
or to one or more market risk factors associated with the
investment
focus suggested by the fund’s name, are counted (as applicable) toward compliance with the fund’s
80% investment policy. The fund’s overall investment strategy is to provide total returns (after all
of the fund’s expenses have been deducted) that exceed the total returns of its benchmark index, the
Bloomberg U.S. Aggregate Bond Index (Index). The Index is a broadly diversified index that typically
consists of investment-grade, fixed income instruments with intermediate- to long-term maturities. Consistent
with the Index, the fund’s holdings will normally include U.S. government and agency obligations, mortgage-
and asset-backed securities, corporate bonds, municipal securities, and U.S. dollar-denominated securities
of foreign issuers. The adviser generally invests in a wide range of bonds represented in the Index.
While the fund’s portfolio is structured to have a similar overall risk profile and other characteristics
to the Index, the adviser does not attempt to fully replicate the Index. The portfolio manager may adjust
certain holdings in relation to their weighting in the Index and rely on quantitative models and fundamental
research in an attempt to exceed the return on the Index net of fees. These quantitative models are designed
to help replicate the overall risk factors and other characteristics of the Index in a more efficient
manner and inform portfolio construction. In conjunction with the quantitative models, the portfolio
manager uses fundamental research to evaluate and select specific bonds for the portfolio. This could
result in the fund being underweight or overweight in certain sectors versus the Index or having a duration
that differs from that of the Index. The fund may use a variety of derivatives, such as futures,
forwards, and swaps for a number of purposes, such as for exposure or hedging. Specifically, the fund
buys and sells interest rate futures, including U.S. Treasury futures, and mortgage-backed securities
on a delayed delivery or forward commitment basis through the “to-be-announced” (TBA) market as a
means of adjusting the fund’s duration and gaining exposure to investment-grade bonds. Interest rate
futures are futures contracts based on underlying financial instruments that pay interest, such as U.S.
Treasury securities. The price of an interest rate future moves inversely to a change in interest rates.
With TBA transactions, the particular mortgage-backed securities to be delivered are not identified at
the trade date, but the delivered securities must meet specified terms and standards. In an effort to
obtain underlying mortgage-backed securities on more preferable terms or to enhance returns, the fund
may extend the settlement by entering into “dollar roll” transactions in which the fund sells mortgage-backed
securities and simultaneously agrees to purchase substantially similar securities on a future date. The
fund also invests in credit default swap indexes (CDX). A CDX is a swap on an index of credit default
swaps. CDXs are used by the fund as a means to manage credit risk or take a position on a basket of credit
entities (such as credit default swaps or a reference index) rather than transacting in a single-name
credit default swap.
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| Principal Risks
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Risk Table - T. Rowe Price QM U.S. Bond ETF
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Risk [Text Block] |
| Risk Lose Money [Member] |
The fund’s share price fluctuates, which means you could lose
money by investing in the fund.
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| Risk Money Market Fund May Not Preserve Dollar [Member] |
Although the fund seeks to exceed the performance of its benchmark index, holdings are not reallocated
based on changes in market conditions or outlook for a specific security, industry, or market sector
in the same manner as other actively managed funds, under normal circumstances.
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| Fixed income markets |
Fixed
income markets: Economic and other market developments can adversely affect the fixed income securities
markets. At times, participants in these markets may develop concerns about the ability
of certain issuers of debt instruments to make timely principal and interest payments, or they may develop
concerns about the ability of financial institutions that make markets in certain debt instruments to
facilitate an orderly market. Those concerns could cause increased volatility and reduced liquidity in
particular securities or in the overall fixed income markets and the related derivatives markets. A lack
of liquidity or other adverse credit market conditions may hamper the fund’s ability to sell the debt
instruments in which it invests or to find and purchase suitable debt instruments.
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| Index-related investing |
Index-related investing:
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| Interest rates |
Interest rates:
A
rise in interest rates typically causes the price of a fixed rate debt instrument to fall and its yield
to rise. Conversely, a decline in interest rates typically causes the price of a fixed rate debt instrument
to rise and the yield to fall. The prices and yields of inflation-linked bonds are directly impacted
by the rate of inflation as well as changes in interest rates. Generally, funds with longer weighted
average maturities and durations carry greater interest rate risk. Changes in monetary policy made by
central banks and/or governments are likely to affect the interest rates or yields of the securities
in which the fund invests.
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| Prepayments and extensions |
Prepayments and extensions: The fund is subject to prepayment risks
because the principal on mortgage-backed securities, asset-backed securities, or any debt instrument
with an embedded call option may be prepaid at any time, which could reduce the security’s yield and
market value. The rate of prepayments tends to increase as interest rates fall, which could cause the
average maturity of the portfolio to shorten. Extension risk may result from a rise in interest rates,
which tends to make mortgage-backed securities, asset-backed securities, and other callable debt instruments
more volatile.
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| Credit quality |
Credit quality: An issuer of a debt instrument could suffer an adverse change
in financial condition that results in a payment default (failure to make scheduled interest or principal
payments), rating downgrade, or inability to meet a financial obligation. Securities that are rated below
investment grade carry greater risk of default and should be considered speculative.
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| Liquidity |
Liquidity:
The fund may not be able to meet requests to redeem shares issued by the fund without significant dilution
of the remaining shareholders’ interests in the fund. In addition, the fund may not be able to sell
a holding in a timely manner at a desired price. Reduced liquidity in the bond markets can result from
a number of events, such as limited trading activity, reductions in bond inventory, and rapid or unexpected
changes in interest rates. Markets with lower overall liquidity could lead to greater price volatility
and limit the fund’s ability to sell a holding at a suitable price.
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| TBAs and dollar rolls |
TBAs and dollar rolls:
Although the securities that are delivered in TBA transactions must meet certain standards, there is
a risk that the actual securities received by the fund may be less favorable than what was anticipated
when entering into the transaction. TBA transactions are collateralized but they still involve the risk
that a counterparty will fail to deliver the security, exposing the fund to potential losses. Whether
or not the fund takes delivery of the securities at the termination date of a TBA transaction, it will
nonetheless be exposed to changes in the value of the underlying investments during the term of the agreement.
Forward settling securities, such as TBAs, involve leverage which may magnify investment risks and can
cause losses to be realized more quickly. In addition, the fund’s portfolio turnover rate and transaction
costs are increased when the fund enters into dollar roll transactions.
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| Market conditions |
Market conditions:
The value of the fund’s investments may decrease, sometimes rapidly or unexpectedly, due to factors
affecting an issuer held by the fund, particular industries, or the overall securities markets. A variety
of factors can increase the volatility of the fund’s holdings and markets generally, including economic,
political, or regulatory developments, recessions, inflation, rapid interest rate changes, war, military
conflict, acts of terrorism, natural disasters, and outbreaks of infectious illnesses or other widespread
public health issues (such as the coronavirus pandemic) and related governmental and public responses
(including sanctions). Certain events may cause instability across global markets, including reduced
liquidity and disruptions in trading markets, while some events may affect certain geographic regions,
countries, sectors, and industries more significantly than others. Government intervention in markets
may impact interest rates, market volatility, and security pricing. These adverse developments may cause
broad declines in market value due to short-term market movements or for significantly longer periods
during more prolonged market downturns.
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| Portfolio turnover |
Portfolio turnover: High portfolio turnover may adversely
affect the fund’s performance and increase transaction costs, which could increase the fund’s expenses.
High portfolio turnover may also result in the distribution of higher capital gains when compared with
a fund with less active trading policies, which could have an adverse tax impact if the fund’s shares
are held in a taxable account.
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| Derivatives |
Derivatives: The use of derivatives exposes the fund
to additional volatility and potential losses. A derivative involves risks different from, and possibly
greater than, the risks associated with investing directly in the assets on which the derivative is based,
including liquidity risk, valuation risk, correlation risk, market risk, interest rate risk, leverage
risk, counterparty and credit risk, operational risk, management risk, legal risk, and regulatory risk.
Derivatives can be highly volatile, illiquid, and difficult to value, and changes in the value of a derivative
may not properly correlate
with changes in the value of the underlying asset, reference rate, or index. The fund could be exposed
to significant losses if it is unable to close a derivatives position due to the lack of a liquid secondary
trading market. The prices of derivatives may move in unexpected ways, especially in abnormal market
conditions. Certain derivatives are also subject to counterparty risk, which is the risk that the derivative
counterparty will not fulfill its contractual obligations. The use of derivatives includes the risk of
potential operational issues, such as settlement issues. Derivatives are exposed to legal risks, such
as the legality or enforceability of a contract. The adviser may not be able to accurately predict the
direction of prices, economic factors, or other associated risks which could cause loss in value or impair
the fund’s efforts to reduce overall volatility. New regulations may make derivatives more costly,
limit availability, or otherwise affect their value or performance.
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| Authorized Participant |
Authorized Participant: Only an Authorized
Participant may engage in creation or redemption transactions directly with the fund. The fund has a
limited number of intermediaries that act as Authorized Participants, and none of these Authorized Participants
are or will be obligated to engage in creation or redemption transactions. To the extent that Authorized
Participants exit the business or are unable to proceed with creation or redemption orders with respect
to the fund and no other Authorized Participant is able to step forward to create or redeem, (i) the
market price of the fund’s shares may trade at a premium or discount to its net asset value (NAV),
(ii) an active trading market for the fund may not develop or be maintained, and (iii) there is no
assurance that the requirements of the exchange necessary to maintain the listing of the fund will continue
to be met or remain unchanged.
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| Active management |
Active management: The fund’s overall
investment program and holdings selected by the fund’s investment adviser may underperform the broad
markets, relevant indices, or other funds with similar objectives and investment strategies.
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| Cybersecurity breaches |
Cybersecurity
breaches: The fund could be harmed by intentional cyberattacks and other cybersecurity
breaches, including unauthorized access to the fund’s assets, confidential information, or other proprietary
information. In addition, a cybersecurity breach could cause one of the fund’s service providers or
financial intermediaries to suffer unauthorized data access, data corruption, or loss of operational
functionality.
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| Performance
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The following performance information provides
some indication of the risks of investing in the fund. The fund’s performance information represents
only past performance (before and after taxes) and is not necessarily an indication of future results. The
following bar chart illustrates how much returns can differ from year to year by showing calendar year
returns and the best and worst calendar quarter returns during those years for the fund.
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| Calendar
Year Returns
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The
fund’s return for the nine months ended 9/30/24 was 4.78%.
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| | | | | | | | | | | | | Quarter
Ended | Total Return | | | Quarter
Ended | Total Return | | | | Best Quarter | 12/31/23 | 6.72% | | Worst Quarter | 3/31/22 | -5.87% | |
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| Average Annual Total Returns Periods
ended December 31, 2023
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The following table shows the average annual
total returns for the fund. The fund’s performance information included in the table is compared with
a regulatory required index that represents an overall securities market (Regulatory Benchmark). In addition,
the table may also include one or more indexes that more closely aligns to the fund’s investment strategy
(Strategy Benchmark(s)). In addition, the table shows hypothetical after-tax returns to demonstrate how
taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical
highest individual federal marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred
arrangements, such as a 401(k) account or an IRA.
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| Updated performance information
is available through troweprice.com.
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