Tired of the election discourse? Don’t worry; one way or another, we’re getting close to the end. Market watchers can instead turn the page and think about longer-term concerns. While rate cuts dominated market narratives for much of this year, the September cuts took some wind out of the sails. That may have been premature, with rates potentially set for further cuts this year. Election uncertainty may have clouded the picture for Fed watchers and those at the Fed. Once the election ends, investors may want to revisit their portfolios for a potential second set of cuts.
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Election volatility may or may not be severe this year. Regardless, it dominates narratives. Both in traditional media and finance media outlets, the election is inescapable. That story and its accompanying volatility, however, may be distorting the bigger picture.
Either way, a further rate cut could assuage some particularly important investor concerns. AI, for example, has been responsible for significant market performance this year. Cheaper debt could give tech firms more time to generate revenue from those advances. At the same time, lower debt costs could reinvigorate smaller tech and biotech firms, boosting the sector’s other quarters.
Active investing could provide a powerful tool to not only play those rate cuts but also prepare for them. Active managers can lean on powerful fundamental research capabilities to outperform less adaptable passive funds. At T. Rowe Price, for example, investors can look to funds like TTEQ, overseen by technology sector portfolio manager Dom Rizzo. The recently launched T. Rowe Price Technology ETF (TTEQ) leans on Rizzo’s unique perspective and T. Rowe Price’s fundamental global research capabilities.
Together, an active approach can help investors get a leg up on the competition overly focused on the election. A further set of rate cuts might surprise markets, with active funds prepared to adapt.
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