While the S&P 500 posted a 3.51% gain in March after February’s 2.61% decline, sectors within the index saw a wide range of return dispersion. In his monthly S&P 500 recap, Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, noted that seven out of 11 sectors that SPDJI tracks experienced gains in the month. This is after only one sector saw positive returns in February.
Of the sectors that saw gains, information technology did the best in the index, up 10.87% for the month and up 21.49% year-to-date. On the other end, financials did the worst, dropping 9.74% in March and falling 6.05% YTD.
Breadth for the month improved and became positive, as 263 issues were up (versus 113 last month), with 32 issuers up at least 10% and seven up at least 20%, while 240 declined, with 53 declining at least 10% and 14 down at least 20%. Year-to-date, breadth was positive, with 274 issues up and 229 down (19 down at least 20%).
See more: “The Limits of Passive Fixed Income Investing”
A passive fund that simply replicates the market can’t benefit from differentiation among sectors. But a skillful active manager can add more value when dispersion is high.
While passive strategies lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes. Plus, active managers with greater resources and greater scope benefit from economies of scale, which can often translate to better returns.
“Unlike investors in an ETF that replicates the S&P 500 Index, those using actively managed equity ETFs have the opportunity to benefit from security and sector selection,” 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).
“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.
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