The Fed has cut rates once again, bringing the total number of cuts in the fall to 75 basis points (bps). The cuts arrive as the economy continues to march steadily towards a soft landing. With the election in the rearview, many investors may be looking at different ways to layer equity exposure. Indeed, many are already invested in major market-tracking passive funds. That’s where active value and growth ETFs come in, offering a pair of tools for rate cuts past and future.
See more: Are Elections Overshadowing More Rate Cuts This Year?
The T. Rowe Price Growth ETF (TGRT), for example, may provide a more potent view into broad equity markets. Charging only 38 basis points (bps), TGRT actively invests in U.S. large caps based on fundamental research. Its bottom-up stock selection approach leans on T. Rowe Price’s research capabilities, looking at factors like cash flow, above-average rate of earnings, and more. Since launching about 18 months ago, the strategy has returned 44.1% over one year, per T. Rowe Price data, beating its benchmark by 2%.
The T. Rowe Price Value ETF (TVAL), of course, takes a value view. Actively investing for a competitive 33 bps fee, the fund looks for long-term capital appreciation through value-oriented opportunities. Its managers define value based on factors like undervalued market valuations, dividend yield, and restructuring opportunities. TVAL has returned 29.4% over one year, beating its benchmark by 1.5%.
Both strategies could provide options for investors as further rate cuts loom. A growth ETF could appeal to those expecting possibly rapid swings for large-cap firms. Value, on the other hand, could intrigue those expecting more horizontal movement. The duo’s use of active investing via the tax-efficient ETF vehicle together offers ways to play the growth and value perspectives. With active ETFs on the rise, using active funds to create an overall allocation can help.
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