Two recent studies suggest that active management will continue to thrive in the current uncertain environment and outperform passive management.
Before the onset of a global pandemic, conventional wisdom was that active management struggled to hit its benchmarks, and inflated expense ratios made active funds too expensive. But active managers have proven to be more adept at navigating pandemic markets upside down, and as uncertainty around COVID-19 continues to abound, they could have an advantage for years to come, especially over emerging markets.
“We are seeing an upward trend in positive net flows in actively managed mutual funds and ETFs after March 2020, which may indicate that investors are moving more assets into assets,” said Stuart Parker, CEO of PGIM Investments, in an email to Financial Advisor.
Activate T. Rowe’s active experience for exceptional times
T. Rowe Price manages five active funds that are well positioned to navigate the miasma of global uncertainty that has plagued the world since March 2020. Their expense ratios are modest, ranging from 0.34% for the recently launched T. Rowe Price US Equity Research ETF (TSPA) at 0.57% for the T. Rowe Price Blue Chip Growth ETF (TCHP). TSPA just celebrated its third month on the market and is up 6.3%, outperforming its category average of 0.85%.
While passive management has its place, active managers can make all the difference in climates of uncertainty, and can even turn situations of volatility into opportunities to prosper. Volatility remains the number one concern for many advisers, but a thug’s gallery of possible woes is on everyone’s mind; inflation, stagflation, economic downturns, other COVID-related deviations, political unrest, climate-related disasters, supply shortages, rising commodity prices, supply chain disruptions , etc.
T. Rowe Price’s portfolio managers each have an average of 20 years of investment experience. These are the kind of firm hands on the bar that investors will want in these unprecedented times.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.