Fed Expects “Mild Recession” This Year | ETF Trends

Stocks fell at the end of trading on Wednesday after recently released FOMC meeting minutes revealed that staffers at the U.S. Federal Reserve expect the U.S. economy to fall into a recession later this year. While Michael Barr, Vice Chair for Supervision, described the banking sector as “sound and resilient,” FOMC staff said they believe that a “mild recession” is on the horizon.

“Given their assessment of the potential economic effects of the recent banking-sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years,” the minutes stated.

The minutes added that “market-based measures of policy expectations suggested that the federal funds rate would reach a peak in May 2023 and that the target range would then move lower.”

After the minutes were released, the S&P 500 closed down 0.5%, while the Dow Jones Industrial Average dropped 83 points or 0.2%, and the Nasdaq Composite declined by 0.8%.

With a recession likely, investors need to be proactive in finding alpha. That’s where active management can come into play.

See more: “Economy Slows Amid Fed Rate Hikes

Active management has the ability to pivot to where the alpha is when things go sideways. Plus, active managers with greater resources and greater scope benefit from economies of scale, which can often translate to better returns.

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

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).

“Active ETFs are really starting to grow and become a more prominent part of the market,” said Tim Coyne, head of ETFs at T. Rowe Price.

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.

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