What’s next following rate cuts? It’s hard to predict what the landscape will look like moving forward. Whether one sector or another benefits remains unclear. Perhaps most significant, however, is whether rate cuts can actually ensure a soft landing.
That was the goal, at least, but it may be some time before the picture clears up. Rather than sitting on one’s hands and waiting for yet another cut, it could be worth reassessing one’s overall investing approach.
See more: Active Fixed Income ETFs Have Seen Flows Jump in 2024
Yes, that may sound like a big switch, but there’s no time like the present. Perhaps even more significant, the end of the year is approaching. Investors may be preparing to get into tax-loss harvesting. Already, then, some investors might be making some fairly big shifts in allocations. Flows into ETFs, for example, have largely come at the expense of mutual funds. That owes in large part, one could argue, to ETFs offering better tax advantages.
Whatever the reason, the end of the year already sees many investors making moves in their portfolios. It could be time, then, for a wholesale shift into actively managed ETFs. That’s because even as rate cuts have arrived, and the impact is yet to be fully understood, active ETFs can still perform. In a soft landing, they can look for outperformance and lean into sectors best-positioned to stand out. In a slow-burn recession, active investing can provide flexibility and, in some cases, income to bolster a portfolio.
The end of the year offers an opportunity for long-term thinking. Rate cuts had loomed over the market narrative for more than a calendar year. Now that they’ve arrived, it’s not clear where markets are set to go next. That’s where active investing can step in.
The T. Rowe Price Capital Appreciation Equity ETF (TCAF) presents one intriguing option therein. Having reached more than $2 billion in AUM in just over a year, charging just a 31 basis point fee, its approach, managed by David Giroux, could make it a place to start for those rejiggering their portfolios.
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