It’s been a choppy month for markets so far, and it remains to be seen if the volatility is transitory or indicative of changing tides for what’s been a bullish market for years. Investors looking for risk management strategies should consider actively managed funds in times of volatility.
Many major financial institutions reported positive earnings this morning, which had markets somewhat recovering from recent declines, but the environment remains fraught with broader inflation concerns and rising interest rate fears. The 10-year Treasury was 1.866% on Tuesday, the highest it has been since January of 2020, reports the Wall Street Journal, which is just one more indicator of changing sentiments.
The volatility seen at the end of last year and carrying over into this year is “really all about inflation and how aggressive central banks are going to be to counteract it,” said Brian O’Reilly, head of market strategy at Mediolanum Asset Management. “Certainly, the market is nervous at the moment.”
Investors have begun pivoting away from growth stocks, which means that tech, one of the main drivers of high growth stocks in recent years, has experienced a decline. The Nasdaq Composite was down about 10% from its highs as of Tuesday. Investors are turning more to value stocks, inflationary hedges, and risk management-focused funds.
Active fund managers are able to respond to changing market conditions, helping to manage the risk and exposures of the fund, positioning securities in a way that aligns with the fund strategy while still maximizing performance or minimizing risk. Active funds often can leverage broader exposures to mitigate risk than their passive peers can.
Active management firm T. Rowe Price offers eight actively managed ETFs with a variety of strategies for investors to align their risk exposures and investment goals. The firm brings a bevy of experience and research to its products, with portfolio managers averaging over 20 years in investing each, as well as over 400 investment professionals dedicated to researching companies within ETFs.
For more news, information, and strategy, visit the Active ETF Channel.