Debt Ceiling Fight Could Capsize Markets

It’s often been said that active management can help weather the storm when things go sideways. With the U.S. government set to run out of money unless Congress raises the debt ceiling, things may go sideways sooner than expected.

Congress has until June to agree to raising its borrowing limit. Should it fail to do so, the results would be dire. “An actual breach of the U.S. debt ceiling would likely cause severe damage to the U.S. economy,” said a statement issued by the White House, adding that a default “would likely lead to severe damage to the economy.”

The White House added that “even getting close to a breach of the U.S. debt ceiling could cause significant disruptions to financial markets that would damage the economic conditions faced by households and businesses.”

President Joseph R. Biden and congressional leaders plan to meet Tuesday to open negotiations to prevent a default crisis. However, media outlets are reporting that neither side is optimistic that much progress will get made at today’s meeting.

See more: “Debt Ceiling Deadline Looms – Expect Volatility in Risk Markets

A Steady Hand at the Wheel

Active ETFs can be a valuable tool for investors during prolonged periods of market volatility or protracted economic downturns. If passive funds are putting a car on autopilot, then active management is a steady hand guiding the wheel when the road is rocky.

However, only a handful of active managers can provide alpha, regardless of market conditions. Active managers with greater resources and greater scope benefit from economies of scale, which can often translate to better returns.

As part of its lineup of active ETFs, T. Rowe Price offers a suite of actively managed equity ETFs. These include 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).

“There remains a lot of macroeconomic uncertainty, which could cause shares of companies with strong fundamentals to trade at unwarranted discounts,” said VettaFi’s head of research Todd Rosenbluth. “One of the benefits of using active ETFs is to tap into management’s expertise to take advantage of opportunities to add to favored names when they sell off.”

T. Rowe Price has been in the investing business for over 85 years. The firm conducts field research firsthand with companies, utilizing risk management and employing a team of experienced portfolio managers carrying an average of 16 years of experience.

For more news, information, and analysis, visit the Active ETF Channel.