Are the economic data turning on the “soft landing” narrative? U.S. stocks dropped on Tuesday following markets’ downcast response to disappointing market data. Specifically, U.S. markets at least dropped in response to a drop in factory orders. Factory order numbers had previously been a source of positivity for the U.S. economy. The tough turn for the economy should remind investors of active ETFs’ ability to respond to a market downturn.
The U.S. economy saw its second-quarter GDP growth revised lower within the last week. However, the U.S. isn’t the only major part of the global economy seeing some bad news. China, of course, has so far looked unlikely to hit its GDP growth targets this year. Consumers are still saving en masse, denying the Chinese economy a consumption-based stimulus. Meanwhile, Eurozone output is dropping faster than it has in years, while Saudi Arabian oil production will hold its one million barrels a day cut.
The picture, then, appears to be growing ever more cloudy. The debate between a dividend and value rotation versus continuing on a tech-focused path continues, in turn. One response to tough news for U.S. stocks may be to add exposure to active ETFs, thanks to their inherent advantages.
Active ETFs can respond more quickly to economic news than indexed strategies that require committee meetings first. Active strategies also, of course, lean on experienced, specialist managers who can bring close scrutiny to possible investments. With a downturn possibly in the cards for U.S. stocks, that kind of approach and responsiveness could prove a powerful asset. Active investing has already picked up significant investor interest this year from institutional and retail crowds.
T. Rowe Price has a suite of actively-managed strategies that can appeal to investors amid uncertainty. That suite includes fixed income and equities-focused strategies as well as a total return offering, the T. Rowe Price Total Return ETF (TOTR ).
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