Record inflation is pushing the Federal Reserve to raise rates higher and faster than expected, which is leading bonds to serve not as a stabilizer to investors’ portfolios but instead as a contributor of volatility. Recent polling data compiled by ETF Trends suggests that financial advisors focus on finding the right fixed income sectors to position their clients for higher volatility and expected long-term inflation.
Active management is being increasingly regarded as the best option to navigate challenging bond markets. However, advisors not yet using ETFs say they aren’t because the strategy they’re looking for isn’t yet packaged in an actively managed ETF.
“Many advisors that prefer active management for the fixed income portion of their portfolio use mutual funds, as there are more products to consider,” says ETF Trends’ head of research, Todd Rosenbluth. “However, we are seeing established asset managers bring some of their best strategies in the ETF universe to meet advisors where they are.”
In 2022, advisors have gravitated toward less interest rate-sensitive ETFs amid expected rate hikes. T. Rowe Price offers a suite of actively managed ETFs, including three actively managed fixed income ETFs launched in September: the T. Rowe Price Total Return ETF (TOTR), the T. Rowe Price Ultra Short-Term Bond ETF (TBUX), and the T. Rowe Price QM U.S. Bond ETF (TAGG).
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.
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