Stocks dipped on Wednesday after the Federal Reserve announced its third consecutive interest rate hike of 0.75% and signaled that more large increases were likely in the future. After being up most of the day, the S&P 500 dropped 0.3% Wednesday, while the Dow Jones Industrial Average fell 0.4%, and the Nasdaq Composite dipped 0.2%.
The Fed raised its policy interest rate by three-quarters of a percentage point, increasing it to a range of 3% to 3.25%. This is the third consecutive rate hike of 0.75%. Fed Chairman Jerome Powell said in a prepared statement that the U.S. central bank also “anticipates that ongoing increases in the target range will be appropriate.”
The Fed’s decision and the market’s subsequent response suggest that market volatility, record-high inflation, and monetary tightening aren’t going away anytime soon. So, for investors who have a long-term investment horizon and want to have an expert at the wheel, active management may be a good fit.
While passive strategies often lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes.
“Active managers have the flexibility to take advantage of market volatility and add to favored positions when prices become more attractive,” said Todd Rosenbluth, head of research at VettaFi.
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 US Equity Research ETF (TSPA).
Neil E. Kays, senior product marketing manager at T. Rowe Price, explained that if passive management is like “putting your car on autopilot,” then active management is giving the manager “the ability to grab the wheel.”
“In the current market environment, having an active manager that can pivot is key,” Kays added.
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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