Counter Market Volatility With an Active Management Strategy

The CBOE Volatility Index (VIX) is up over 90% year-to-date as of Thursday’s trading session, and volatility may not let up through the end of 2022. As such, investors should consider an active management strategy in order to counter market volatility.

Of course, interest rates have a lot to do with the market fluctuations. A healthy dose of uncertainty is being injected into the capital markets as the U.S. Federal Reserve appears to be unwavering with respect to its hawkish stance on interest rate policy.

While the Fed is doing what it can in order to stamp out the fire of inflation, it could do so to the detriment of economic growth. This, in turn, is breeding a fear of a recession while technical indicators like inverting yield curves in the bond market are only confirming these notions.

“The market has been in freefall since the hotter-than-expected August Consumer Price Index report on Sept. 13. Interest rates have been steadily rising, the Fed remains unwaveringly hawkish and worries about a slowing economy have been growing,” a Real Money article explained.

With a plethora of options in order to mute volatility, one way is to consider an active management strategy. Rather than implementing a set-it-and-forget-it mentality when it comes to managing a portfolio with passive funds, an active management strategy essentially puts holdings in the hands of seasoned portfolio managers.

One cost-effective way to get this level of active exposure is through active exchange traded funds (ETFs) where portfolio managers can adjust the level of exposure to a fund’s holdings when market conditions warrant a change. Offering active management through a dynamic investment vehicle like an ETF also gives investors their own flexibility to get in and out of shares when necessary.

Options From T. Rowe Price

As part of its lineup of active ETFs, 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).

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.

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