Stocks have rallied this year as fears of a severe recession ease and investors expect the Federal Reserve to ease up on its tightening. That doesn’t mean markets are out of the woods yet. Recent data – lowering inflation, rising GDP growth, and a resilient jobs market – is indicating that the economy is holding steady and staying strong. With the Fed announcing a 25-basis-point rise in interest rates on Wednesday, that does suggest that the U.S. central bank is lifting its foot off the gas.
At least, that’s how investors appear to be reading the situation. After stumbling during morning trading, the S&P 500 gained 1.05% after the Fed announced its decision, continuing a monthlong rally for the S&P 500 (the index rose 6% in January). In particular, large tech companies are making a comeback after a disastrous 2022.
Of course, we’re still in uncertain times. Markets continue to be whipsawed, inflation is still nowhere near the Fed’s target rate of 2%, multiple large companies are announcing massive layoffs, and it’s still very likely that the U.S. economy will enter a recession (Morningstar puts the likelihood at 50%).
With so much still up in the air going into 2023, investors may want a steady hand guiding some of their investments. That’s where active management can come into play.
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.
“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 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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