Active management enjoying a winning streak

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Active managers are on a winning streak so far this year, with nearly 70% of the 2,850 actively managed U.S. mutual funds beating the S&P 500 Index. By comparison, only 15% of U.S. stock pickers at large caps beat the market last year, according to S&P’s latest SPIVA report. On average, about 35% of managers have topped the S&P 500 in a calendar year, based on annual results dating back to 2007.

Bloomberg’s Nir Kaissar writes that this year’s results are not surprising. After all, most active fund managers tend to invest in a wide range of stocks in the market, from tech companies to banks and manufacturers.

Until recently, tech stocks were the best performers for years, which has seen their value relative to other stocks soar, giving them a bigger slice of indices like the S&P 500 which weight stocks by size. . When technology was in vogue, it was impossible for a well-balanced portfolio to keep up. Today, the opposite is true: with tech stocks in decline, broadly diversified portfolios have the advantage.

“Active managers have the opportunity to sift through the broader universe to spot lesser-known companies outside of technology, but can also use recent market volatility to their advantage,” said Todd Rosenbluth, head of research at VettaFi.

Traditional mutual fund managers like JPMorgan Asset Management, Fidelity, and Capital Group looking to enter the exchange-traded fund space are realizing that to compete with BlackRock, Vanguard, and State Street Global Advisors, they’re going to have to offer active strategies.

“While diversified stock selection was historically primarily available to advisors through mutual funds, in recent years many asset managers have launched active ETFs to provide choice to advisors,” Rosenbluth added. .

T. Rowe Price offers a suite of actively managed ETFs. 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 multitude of experienced portfolio managers averaging 22 years of experience .

For more news, insights and strategy, visit the Active ETF channel.


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