As Stocks Continue to Fall, Active Management Offers Refuge

Despite rallying somewhat in July and the first half of August, the S&P 500 ultimately posed a 5% loss in the second quarter, while the Dow Jones Industrial Average dropped more than 6% during the period, according to S&P Dow Jones Indices. Plus, the Federal Reserve’s continued rate hikes, combined with concerns over geopolitical risk, drove losses across all asset classes. So, with stock markets continuing to be so consistently volatile, long-term investors may want a seasoned active asset manager at the wheel. That’s where active management can help.

While passive strategies lack the flexibility to adapt to changing market environments, active management ETFs can offer the potential to outperform benchmarks and indexes. Plus, active managers, particularly large-cap active managers, are having their best year since 2009. According to S&PDJI, nearly half (49%) of large-cap domestic equity funds outperformed the S&P 500 in the first six months of 2022, while the S&P 500 fell 20% on a total return basis during the same period.

By comparison, in 2009, 52% of funds exceeded their benchmark indexes over the full year. The S&P 500 rose 26% that year.

“Active managers have the flexibility to take advantage of market volatility and add to favored positions when prices become more attractive,” said Todd Rosenbluth, head of research at VettaFi.

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).

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.

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.

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