The Case for Active Management Within Fixed Income | ETF Trends

Active management remains an area that advisors and investors can be fairly critical of, but if you dig into the flows for last year, active really should be divided into two different camps with two different performances. Investment News recently took a look at active management performance, and some interesting findings surfaced.

“Last year active management pretty much treaded water, losing about $50 billion worth of net flows, but if you deconstruct that, it’s a tale of two asset classes,” according to Eric Balchunas, senior ETF analyst at Bloomberg Intelligence.

Performance was drastically different when dividing active funds into two different categories: active equity funds and active bond funds. According to the data from Bloomberg, active equity funds lost nearly $400 billion last year in flows, while active bond flows took in nearly $350 billion. It’s a reflection of the pivoting of the market and also investor confidence in active managers within the bond space.

“The active exodus is really out of stock pickers,” Balchunas said.

Fixed income is where active ETFs and active managers really shine, consistently outperforming benchmarks and enjoying inflows into their funds as more investors allocate. In increasingly volatile and uncertain markets, the ability of active managers to position their funds optimally is a huge boon, particularly within the struggling bond market.

Active management firm T. Rowe Price offers several ETF options within the bond space, including the T. Rowe Price Total Return ETF (TOTR), the T. Rowe Price QM U.S. Bond ETF (TAGG), and the T. Rowe Price Ultra Short-Term Bond ETF (TBUX).

The firm brings a bevy of experience and research to its products, with portfolio managers averaging over 20 years in investing each, as well as over 400 investment professionals dedicated to researching companies within ETFs.

For more news, information, and strategy, visit the Active ETF Channel.