Let This One ETF Do All the Fundamental Analysis for You

Inflation and geopolitical tensions continue to throw curveballs at investors, confounding the current market environment. However, when the going gets rough, it’s necessary to stick with the fundamentals.

In the meantime, inflation fears remain top of mind for investors in the current market environment. The U.S. Federal Reserve is also set to unwind its balance sheet as it looks to offload assets it purchased, particularly during the apex of the pandemic.

With inflation up, bond yields are also rising. The yield curve has also been inverting, which is causing even more investors angst—the bond market condition is typically a reliable recession alarm. At this rate uncertainty has had an obvious impact on equity market volatility as well.

“What’s happening with yields directly impacts stocks at this stage of the game because it’s just one more of so many other negative data points, or bearish data points, that investors have to deal with,” Adam Sarhan says, founder and CEO at 50 Park Investments.

^SPX Chart

^SPX data by YCharts

All The Fundamental Research in One ETF

One of the ways to navigate volatility is to look at companies with solid fundamentals whenever the market waters appear murky. This can require copious amounts of market research, but fortunately, that’s all available in one exchange-traded fund (ETF).

For exposure similar to the S&P 500, ETF investors can opt for the T. Rowe Price US Equity Research ETF (TSPA). The portfolio managers use an active, research-driven process with a similar risk and sector profile as the S&P 500 Index—but with the added goal of outperformance through fundamental analysis.

TSPA’s investment objective is to seek long-term capital gains greater than the S&P 500 Index over a full market cycle. The ETF closely matches the benchmark index in sector and industry allocations, but differentiates itself through security selection. The proprietary portfolio is comprised of both benchmark and non-benchmark stocks. With a competitive expense ratio of only 0.34%, TSPA offers an actively managed complement to, or even a possible replacement for, the S&P 500.

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