Exchange traded fund issuers are launching more actively managed funds as more investors accept the benefits of the ETF wrapper. Plus, amidst a high volume of market volatility and record-high inflation, investors are also seeking active management to guide their investments.
While passive strategies lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes. Plus, active managers with greater resources and greater scope benefit from economies of scale, which can often translate to better returns.
Neil E. Kays, senior product marketing manager at T. Rowe Price, explained that if passive management is like “putting your car on autopilot,” then active management is giving the manager “the ability to grab the wheel.”
“In the current market environment, having an active manager that can pivot is key,” Kays added.
In a recent episode of Nasdaq TradeTalks, Barrow Hanley managing director & portfolio manager Mark Giambrone explained to host Jill Malandrino that now is the time for active management, and that he expects it to continue at least through 2023.
Over the past decade, the largest names were becoming a bigger portion of the benchmark. And since they were doing better than the average stock, these larger stocks were driving the index. But according to Giambrone, that’s changing.
“In the environment we’re going into, in my opinion, the average stock will now be in a position to do much better than the largest stocks,” Giambrone said. “And therefore active, meaning when you go in and pick individual stock names, is going to do better than just the indices, which are now dominated by just a few very large names.”
“So, it seems to me as though this is an excellent period for active,” Giambrone added.
As part of its lineup of active exchange traded funds, 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 US 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.
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