Active Transparency in Global Markets: T. Rowe Price's New ETFs Redefine International Exposure

In an era where passive investing has become synonymous with low-cost simplicity, active managers face an existential challenge: prove their value in a crowded field. T. Rowe Price, one of the world's most respected active asset managers, has doubled down on this ambition with its June 2025 launch of two new international equity ETFs—the T. Rowe Price Global Equity ETF (TGLB) and the T. Rowe Price International Equity Research ETF (TIER). These funds exemplify a strategic pivot: combining the structural advantages of ETFs with the conviction of active management to deliver superior risk-adjusted returns. For investors seeking to navigate global markets with precision, these vehicles offer a compelling alternative to passive benchmarks.

The Case for Active Transparency

The ETF market's growth has been fueled by its democratization of access to passive strategies. Yet passive funds, by definition, cannot outperform their benchmarks—they are the benchmarks. Active managers, by contrast, aim to add value through security selection and dynamic risk management. T. Rowe Price's new ETFs leverage its 80-year track record of research-driven investing while embracing the cost efficiency and liquidity of the ETF structure. This hybrid model addresses a critical investor need: cost-effective access to active management without sacrificing the transparency and tradability of ETFs.

TGLB: Concentrated Conviction in Developed Markets
The Global Equity ETF (TGLB) targets developed markets through a concentrated portfolio of 45–60 securities. Managed by Peter Bates, a veteran portfolio manager with 21 years at T. Rowe, the strategy seeks to mirror the geographic exposures of the MSCI World Index but with a high-conviction tilt. This approach contrasts sharply with the broad diversification of passive indexes, which often include low-conviction holdings.

Data here would reveal whether Bates' active management has historically outperformed the benchmark during volatile periods—a critical test for active strategies. The fund's focus on sector diversification within a concentrated portfolio aims to balance risk while maximizing the impact of its best ideas. For investors wary of overdiversification, TGLB represents a focused play on developed markets with the potential to outpace passive peers.

TIER: Diversification at Scale with Regional Expertise
The International Equity Research ETF (TIER) takes a broader approach, holding 300–500 securities across developed and emerging markets outside the U.S. Its co-managed structure—led by six regional experts including Sridhar Nishtala (Asia Pacific) and Kamran Baig (EMEA/Latin America)—ensures granular, on-the-ground insights. This decentralized decision-making contrasts with the top-down approach of many passive funds, which rely on algorithmic rebalancing.

While TIER's 0.25% expense ratio is slightly higher than some passive alternatives, it is competitive with active peers and reflects the cost of T. Rowe's global research infrastructure. The fund's mandate to outperform its benchmark (the MSCI ACWI ex USA Index) hinges on its ability to identify undervalued regions and sectors—something passive strategies, constrained by index weights, cannot do. For example, during periods of emerging market volatility, TIER's regional teams could underweight riskier areas or overweight overlooked opportunities in places like Southeast Asia or Eastern Europe.

Why Active Management Matters in Global Markets

The allure of passive investing lies in its simplicity, but its limitations become stark during structural shifts. Consider the 2022 energy crisis or the 2023 AI boom—both scenarios where active managers with sector expertise could have navigated risks and opportunities more effectively than passive funds tied to rigid index allocations. T. Rowe's new ETFs are designed to exploit such dislocations: their concentrated portfolios and regional specialization allow managers to overweight winners and underweight losers in real time.

Furthermore, tax efficiency—a hallmark of ETF structures—enhances after-tax returns for taxable accounts. Combined with intraday liquidity, these features position TGLB and TIER as versatile tools for both long-term investors and tactical allocators.

Risks and Considerations

No active strategy is immune to underperformance. T. Rowe's success depends on its managers' ability to consistently identify mispriced securities and navigate macro risks like geopolitical instability or interest rate shifts. Investors should scrutinize the historical track records of Bates and his team, as well as the turnover rates of these portfolios—high turnover could erode returns and increase costs. Additionally, while TIER's broader mandate reduces idiosyncratic risk, its exposure to emerging markets introduces volatility that passive U.S.-centric portfolios avoid.

Investment Advice: A Place for Both Active and Passive

For investors seeking international exposure, these ETFs offer a compelling complement to passive core holdings. TGLB is suitable for those prioritizing developed-market exposure with a tilt toward active conviction, while TIER provides a more comprehensive global mandate with emerging market flexibility. Both are particularly attractive for retirement accounts, where tax efficiency matters most.

However, investors should avoid overconcentration in active strategies. Pairing one or both of these ETFs with lower-cost passive vehicles (e.g., Vanguard's VEU for broad international exposure) could create a balanced portfolio that leverages active management's upside while maintaining cost discipline.

Conclusion: Active Management's New Frontier

T. Rowe Price's ETFs are a testament to the evolving landscape of active management. By marrying the cost and liquidity advantages of ETFs with its deep research expertise, the firm is redefining how investors access global markets. In an era where passive funds dominate headlines, these new tools offer a disciplined pathway to outperformance—a reminder that active management, when done well, still has its place. For investors willing to pay a modest premium for conviction, TGLB and TIER are worth serious consideration.

Monitoring trading volume will signal investor confidence in these products, a key indicator of their long-term viability. As T. Rowe continues to expand its ETF lineup, the world's investors now have more options to blend active insight with the efficiency of ETFs—a combination that may well define the next chapter of global investing.