For the past five years, actively managed exchange traded funds have been gaining considerable momentum for some time. While active ETFs are only a relatively small piece of most portfolios, it’s impossible to ignore active management’s increased popularity in terms of strategies launched, assets raised, and investor appetite.
According to the New York Stock Exchange’s mid-year active ETF outlook, assets in the active ETF market have grown to $302 billion as of June 30, while cash flow into actively managed ETFs was $41.9 billion for the first half of 2022.
In an interview with NYSE, Jonathan Spiegel, head of ETF product development at IndexIQ, cited “a number of reasons” why he believed “active management adds value.”
“At the heart of it, active management provides investors an opportunity to outperform a benchmark,” Spiegel said, adding that “active management provides investment managers the flexibility to adjust their approach when things may or may not be working.”
Spiegel explained, “Part of this flexibility is driven by a risk management framework that comes with the active investment approach.”
Another advantage that active management provided, according to Spiegel, is “the ability to allocate more funds towards higher conviction investments.”
“Unlike a traditional market-cap weighted passively managed ETF, actively managed ETFs can choose how much to invest in a particular company,” Spiegel said. “And let’s not forget this is all done within the ETF structure, which can provide tax-efficiency and intra-day liquidity.”
For investors looking to add active management to their portfolios, T. Rowe Price offers a suite of actively managed equity ETFs, including the T. Rowe Price Blue Chip Growth ETF (TCHP ), the T. Rowe Price Dividend Growth ETF (TDVG ), the T. Rowe Price Equity Income ETF (TEQI ), the T. Rowe Price Growth Stock ETF (TGRW ), and the T. Rowe Price U.S. Equity Research ETF (TSPA ). T. Rowe Price has been in the investing business for over 80 years through conducting field research firsthand with companies, utilizing risk management, and employing a bevy of experienced portfolio managers carrying an average of 22 years of experience.
For more news, information, and strategy, visit our Active ETF Channel.