Wall Street is not optimistic about markets in the year ahead. While inflation is down, it’s still well above the Federal Reserve’s target of roughly 2%, so the U.S. central bank is expected to continue raising interest rates. Many are predicting that the U.S. economy will enter into a recession. In the latest sign of a bearish attitude towards the year, many large investment banks have been instituting significant staff layoffs.
Banks such as Morgan Stanley, Citigroup, and Barclays have made significant staff cuts in recent months. More recently, Bloomberg has reported that Goldman Sachs is laying off as many as 3,200 employees, which is 6.5% of the 49,100 employees the firm had in October. This is after Goldman had already cut several hundred jobs in September.
While 2023 is shaping up to be as volatile as 2022, few would suggest that investors park all their money in cash and wait for the storm to pass. So, it makes sense to have some element of active management in one’s portfolio.
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.
“Actively managed equity funds sort through the broader universe of securities, choosing only the ones the best fit the investment criteria, rather than owning all the companies in the investment style tilted toward the past winners,” said Todd Rosenbluth, head of research at VettaFi.
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 U.S. Equity Research ETF (TSPA).
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.
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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