Is the market regime poised for a shift? Big, growthy tech firms have delivered significant performance for investors in the last few years. However, a new administration and an end to rate cuts may indicate a changing of the guard. Perhaps even more significantly, the arrival of the Chinese AI platform DeepSeek has thrown major U.S. AI players for a whirl. Those factors together may speak to the merit of looking elsewhere from just growthy info tech. Active value investing, for example, can intrigue.
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For starters, it’s important to note that DeepSeek’s arrival, with lower-cost AI computing capabilities, marks an important step forward for AI adoption in the broader economy. AI is not going away, and its impact on not only the tech sector but also many other areas remains a key macro trend. What DeepSeek’s new capabilities may mean, however, is that the major U.S. AI innovators suddenly need to up their game to compete. That could put pressure on their outlooks in the short to medium term.
Add stubbornly high debt costs and an uncertain tariff outlook, and the time may be ripe to add other investment strategies. Active value investing can provide one solid menu of options, especially via ETFs.
The T. Rowe Price Value ETF (TVAL ) presents one option, of course, focusing on seemingly undervalued stocks rather than big tech names trading at a premium. Charging only 33 basis points, TVAL looks for large-cap firms meeting value-style standards. Leaning on T. Rowe Price’s fundamental research capabilities, the active value investing ETF applies a bottom-up approach to portfolio construction. Its approach currently results in a significant weight to the health and financial sectors. Those two sectors can, intriguingly, benefit from increased AI computing power.
Together, that approach has helped TVAL return 14.5% over the last one-year period as of December 31, per T. Rowe Price data. For those looking to add some value exposure with a tax-efficient, flexible approach, the active TVAL may provide a compelling opportunity.
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