Active Domestic Equity Managers Proved Their Value in 1H22

Despite markets slipping into bear country, most active managers specializing in U.S. equities were able to provide value to investors during the first half of 2022, benefitting from volatile markets and mitigating losses.

Morningstar’s chief ratings officer Jeffrey Ptak noted on social media that roughly “63% of active US stock funds had topped their category index for YTD through 6/30/22 (~67% pre-fees).” Ptak added that the success rate among international stocks, however, was “half that.”

Per the Morningstar officer, the “clear majority” of active allocated alternatives funds also topped their benchmarks year-to-date.

“All told, ~51% of all active funds beat their idx,” Ptak wrote.

“Active managers focused on U.S. equities had a good first half of the year, benefitting from the market volatility and limiting losses during the bear market,” said Todd Rosenbluth, head of research at VettaFi. “Even despite charging higher fees than index-based products, they were on average able to add value.”

With inflation the highest it’s been in four decades and interest rates rising, markets are expected to remain volatile. In such a volatile market, passive ETFs may not offer protection against downside risk. They also don’t offer investors a way to seek above-average returns.

With index funds unable to provide strong returns or protect against downside risk, active ETFs are “picking up steam with investors,” with more holding active ETFs in their portfolios now than did two years ago, according to Trackinsight’s Global ETF Survey 2022. Per Pensions & Investments, 37% of survey respondents plan to increase the share of active ETFs in their portfolios by at least 5% this year, up from 25% who said the same in 2020.

T. Rowe Price offers a suite of actively managed ETFs. 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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