The added value of active management | Nasdaq


Over the past five years, actively managed exchange-traded funds have been on the rise for quite some time. Although active ETFs are a relatively small part of most portfolios, it is impossible to ignore the growing popularity of active management in terms of strategies launched, assets raised and investor appetite.

According to the New York Stock Exchange active ETF mid-year outlookactive ETF market assets reached $302 billion as of June 30, while actively managed ETF cash flows were $41.9 billion for the first half of 2022.

In an interview with NYSEJonathan Spiegel, head of ETF product development at IndexIQ, cited “a number of reasons” why he believes “active management adds value.”

“At the heart of it, active management offers investors the ability to outperform a benchmark,” Spiegel said, adding that “active management gives investment managers the flexibility to adjust their approach when things may change. or not work”.

Spiegel explained, “Part of this flexibility is driven by a risk management framework that accompanies the active investment approach.”

Another benefit of active management, according to Spiegel, is “the ability to allocate more funds to higher conviction investments.”

“Unlike a traditional market-cap-weighted passively managed ETF, actively managed ETFs can choose how much to invest in a particular company,” Spiegel said. “And let’s not forget that this is all done within the ETF structure, which can provide tax efficiency and intraday liquidity.”

For investors who want to add active management to their portfolios, T. Rowe Price offers a suite of actively managed equity ETFsincluding 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 investment industry for over 80 years conducting hands-on research with companies, utilizing risk management and employing a host of experienced portfolio managers averaging 22 years of experience .

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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.


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