Most Active U.S. Stock Funds Beat Benchmarks in 2022 | ETF Trends

After a volatile year, active management proved its value — especially when it came to active U.S. stock funds. Roughly half of all active funds topped their benchmark indexes in 2022, as noted by Morningstar’s Jeffrey Ptak.

In particular, active U.S. stock funds fared well with a beat rate of about 62%. Meanwhile, taxable bond funds had a beat rate of roughly 48% in 2022.

Regarding active U.S. stock funds, Ptak wrote: “It was an especially good year for active small value and blend funds, 80%+ of which topped their indexes (Russell 2000 Value, Russell 2000, respectively).” He added in a follow-up tweet that “a 62% beat rate for active US stock funds represents a nice rebound from prior years.”

As markets became more volatile, and as investors became more comfortable using the ETF wrapper, a growing number of issuers launched more actively managed funds. In turn, more investors turned to active funds, with actively managed ETFs bringing in more than $73 billion of capital last year, representing an organic growth rate of 25% for active ETFs, according to Morningstar. This means that this segment grew more than three times faster than ETFs overall.

“In 2022, advisors saw the benefits of actively managed U.S. equity strategies, including the ability to shift exposure based on market fundamentals, or even raise cash for a better opportunity,” said Todd Rosenbluth, head of research at VettaFi. “But unlike in the past, there are many ETFs that offer these same attributes with the added bonus of likely better tax efficiency and liquidity.”

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.

As part of its lineup of active exchange traded funds, 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 U.S. Equity Research ETF (TSPA).

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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