Earnings season is here once again, and for those eyeing each firm’s name in the earnings calendar closely, the name of the game is parsing a lot of information efficiently. Earnings data can indicate quite a bit more than one company’s past revenue and performance. Should key sector leaders struggle, for example, that could indicate headwinds for those segments ahead. With concentration risk looming large, too, struggles for those megacaps could spook markets. Even this early in 2025’s earnings calendar, then, it could be worth considering how active ETFs can help.
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Active ETFs offer the adaptability needed to adjust as circumstances require. Even before considering value or growth styles, active managers can adjust weights for a firm if its outlook changes. While not solely dependent on one earnings call, earnings data often plays a significant role in fundamental research.
That can compare well to passive funds which may have to tightly track strict index rules. Such funds may have to, for example, keep certain holdings just to meet weighting requirements. Active ETFs often simply follow fundamental research to craft allocations.
Add in a value or growth view, too, and then active ETFs can intrigue even more during earnings. A value fund, for example, could pick up on firms going under the radar with solid numbers during earnings season. An active growth ETF, by contrast, will be on the hunt for those firms displaying high levels of earnings growth and other key data points.
What kind of signals will investors be looking for amid earnings? Many will be watching whether earnings can continue to deliver amid high valuations. Were expensive stocks to not pay, a broadly expensive market might feel the fear. At the same time, a potential broadening of earnings growth could be the product of rate cuts still filtering through the system.
At this stage of the earnings calendar, then, so early in the year, active funds could provide an intriguing set of options. As markets settle in for a new administration at the same time, adaptability for upside and potential policy-related shifts may help portfolios. Together, those factors speak to the case for using earnings as an active ETF springboard.
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