The value of an investment manager’s active stock-picking abilities tends to be made clear during choppy or down markets. With markets down last year, 2022 was a year in which active managers — particularly active domestic equities managers — had the chance to prove their mettle. And according to the S&P Dow Jones Indices, many did.
The SPIVA U.S. Year-End 2022 Scorecard identified several fund categories in which a majority of active managers outperformed. Among the domestic equity categories, active U.S. small-cap core funds performed the best, with 60% demonstrating outperformance. In the largest and most closely watched category, U.S. large-cap equities, nearly half of actively managed fund outperformed. This was the lowest underperformance rate since 2009 and the fourth best across more than two decades of SPDJI’s annual SPIVA Scorecards.
“After a long string of underperformance, actively managed large cap equity funds performed relatively well in 2022,” said Todd Rosenbluth, head of research at VettaFi. “While for decades advisors only had mutual funds to benefit from experienced stock pickers, there are now many active large cap ETFs worthy of attention.”
Market conditions were uncommonly challenging in 2022, with most benchmarks for the fund categories in the SPIVA report finishing the year with double-digit total return loss. This offered active managers material opportunities to generate relative outperformance.
“In addition to a material potential for generating relative returns by switching between styles and segments… the prospects for skilled stock-pickers in large-cap U.S. equities were above average and the tailwinds for even unskilled managers were unusually favorable,” according to SPDJI.
As part of its lineup of active ETFs, 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).
“Active ETFs are really starting to grow and become a more prominent part of the market,” said Tim Coyne, head of ETFs at T. Rowe Price. “There’s a lot of demand for quality active strategies, but there wasn’t necessarily the supply of active strategies that were delivered through ETFs.” However, this has “really changed in the last couple of years,” and more advisors are using ETFs to construct the active portions of their portfolios.
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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