Actively managed exchange traded funds are “picking up steam with investors,” with more holding active ETFs in their portfolios now than two years ago, according to Trackinsight’s Global ETF Survey 2022. A report from Pensions & Investments reveals that 37% of survey respondents said that for 2022, they planned to boost the share of actively managed ETFs in their portfolios by at least 5%, up from 25% who said the same in 2020.
Active ETFs retain the benefits of a “cheap, flexible and liquid wrapper” while offering the potential for alpha generation, which should appeal to investors “in irrationally rising markets that many believe are bound to correct when central banks withdraw their support,” the survey said.
“Advisors concerned about inflation as well as rising rates can benefit from an actively managed equity or fixed income strategy that adjusts based on updated guidance from the Federal Reserve and macroeconomic developments,” said Todd Rosenbluth, head of research at VettaFi. “There are active ETFs now offered by many asset managers.”
But despite the increased adoption of active ETFs among investors, there’s still room for growth. Trackinsight’s survey said that active ETFs “remain a minor share in their portfolio with less than 20% for more than two-thirds of our respondents.”
In a sign that markets continue to be volatile, the Wall Street Journal reported that U.S. stocks wobbled in early afternoon trading after Federal Reserve Chairman Jerome Powell said to Congress on Wednesday that a recession is “certainly a possibility.”
“We are not trying to provoke and do not think we will need to provoke a recession, but we do think it’s absolutely essential” to curtail inflation, Powell added.
Last week, the Fed announced its decision to raise its benchmark interest rate by 75 basis points, the central bank’s largest rate hike since 1994. Powell told Congress in prepared testimony that the Fed plans to continue raising interest rates until it sees compelling evidence that inflation is slowing to its 2% target.
T. Rowe Price offers a suite of actively managed ETFs. 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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