Outperformance Was Elusive For Active Managers in 2025Almost [1,000 active ETFs] launched in 2025, but did their performance substantiate the demand? Across the universe of funds, active managers for ETFs and mutual funds found that outperformance was elusive compared to their passive peers based on the latest [Morningstar US Active/Passive Barometer report].Only 38% of actively managed ETFs as well as mutual funds survived and outperformed their passive counterparts in 2025. This represented a 4% drop in p ...

Core Insights - Global yields are expected to rise in 2026 due to various market challenges and a competition for capital [1] - Active investing strategies can help investors navigate the changing yield landscape and enhance fixed income allocations [1] Group 1: Factors Driving Yields - A global competition for capital is contributing to higher yields this year [1] - Continued government debt sales to finance deficit spending are steepening the yield curve [1] - The influx of artificial intelligence-related debt supply is leading to an increase in new bond issuance, which is higher than previously anticipated [1] Group 2: Investment Opportunities - A healthy growth environment presents notable credit opportunities for investors [1] - Emerging markets debt may also offer potential investment opportunities [1] - Active managers can provide better scrutiny of individual debt issuers, which is crucial for identifying durable issuers in the credit market [1] Group 3: Active Investing Strategies - Active investing can adapt to the shifting yield curve and key market events [1] - Funds like the T. Rowe Price U.S. High Yield ETF (THYF) provide targeted, active bond exposure in high yield [1] - Flexibility in portfolios is essential for adapting to a changing yield curve, making active strategies appealing [1]

Active Bond ETFs Rising: This Fund up Quarter Billion YTDActive ETFs are one of the most exciting investment areas in recent years, driving much of overall ETF product launches. Part of that growth owes to increased use and demand for active bond ETFs, bringing active management to fixed income. 2026 has proven no exception, with active bond ETFs like TAGG seeing some serious inflows.See more: [Stars are Aligning for Energy Stocks: How Active Can Help]That may be due to continued uncertainty in the bond mar ...

Core Viewpoint - Energy stocks are experiencing a strong start to 2026 due to various factors such as increased data center energy demand and deregulation, making them appealing for investment [1] Group 1: Performance of Active ETFs - The T. Rowe Price Natural Resources ETF (TURF) has achieved a 13% return in early 2026 and a 23.2% return over the last three months, indicating strong performance [1] - TURF employs a fundamental research strategy to identify and invest in stocks related to natural resources, despite being a relatively new ETF launched in June of the previous year [1] Group 2: Investment Strategy - TURF actively invests in companies involved in the upstream extraction of minerals, agriculture, and energy products, focusing primarily on firms within the MSCI GICS natural resources sector [1] - The ETF's bottom-up approach allows for investment in companies of any market cap based on growth or value perspectives, adhering to expected sector and fundamental standards [1] Group 3: Market Risks - Geopolitical factors, particularly the U.S. attack on Venezuela, pose risks to energy prices and may introduce volatility in the market, although they could also unlock future potential for the sector [1] - Active management in TURF may provide an advantage over passive rivals in navigating these geopolitical events [1]

Core Insights - The active tech ETF TTEQ is signaling a buy as it concludes a strong year, making it an attractive option for investors looking to refresh their tech holdings for 2026 [1] - TTEQ has achieved a 21% return over the past year and crossed the $100 million AUM mark recently, indicating strong performance and investor interest [1] Performance Metrics - As of December 26th, TTEQ's price was $32.89, above its 50 and 200-day Simple Moving Averages (SMAs), suggesting positive momentum [1] - The fund's Relative Strength Index (RSI) indicates it is not in "Overbought" territory, providing a favorable entry point for investors [1] Investment Strategy - TTEQ employs a bottom-up portfolio construction approach, focusing on innovative firms that are expected to disrupt their sectors and are essential to global technology infrastructure [1] - Unlike passive index funds that may carry concentration risk, TTEQ offers fundamentals-driven exposure to emerging tech companies [1] Unique Features - The fund has the flexibility to invest in AI technologies, exemplified by its recent investment in OpenAI, and can adjust its strategy based on market conditions [1] - TTEQ is positioned as a long-term satellite strategy, making it a compelling addition for investors in the crowded tech space [1]

Core Insights - Active bond ETFs are positioned to address the challenges posed by global financial uncertainty and geopolitical conflicts, providing a flexible investment option for investors [1] - The T. Rowe Price QM U.S. Bond ETF (TAGG) has seen significant net inflows, totaling over $250 million in the last month, indicating strong investor interest [1] - TAGG aims to outperform the Bloomberg U.S. Aggregate Bond Index while maintaining similar exposure and portfolio characteristics, utilizing both fundamental analysis and quantitative research [1] Active Bond ETFs - Active bond ETFs have gained popularity since the ETF rule changes in 2019, offering advantages over passive index-based ETFs and mutual funds [1] - These ETFs provide tax efficiency, adaptability, and the ability to quickly replace bonds that are called early or face default, unlike passive funds [1] - TAGG has grown to over $1.7 billion in assets under management (AUM) and has outperformed its category average over the past year [1]

Core Insights - The market in 2025 is facing significant concentration risk, with nearly half of the performance in 2024 attributed to the "Magnificent Seven" tech companies. By the end of the previous month, only 2% of S&P 500 constituents accounted for almost 40% of the index's total performance [1][2]. Group 1: Concentration Risk - Concentration risk remains a major issue as investors seek diversification, primarily due to the dominance of megacap tech companies expected to yield substantial returns [2]. - Active investing strategies are suggested as a solution to mitigate concentration risk, contrasting with passive strategies that replicate market indexes [2][3]. Group 2: Active vs. Passive Strategies - Active ETFs utilize bottom-up portfolio construction based on fundamental research, which can lead to outperformance and diversification away from excessive market exposure [3]. - Active management allows for adaptability in response to challenges faced by large firms, providing a significant advantage over passive funds that must adhere to index tracking [4]. Group 3: Investment Opportunities - Funds like the T. Rowe Price Capital Appreciation Equity ETF (TCAF) are highlighted for their active approach aimed at capital appreciation, suggesting that active funds are worth considering for portfolio refreshment [5].

Group 1 - The Federal Reserve is facing significant changes and challenges in 2026, including a new chairperson succeeding Jerome Powell, which raises questions about the bank's independence from political influence [2][3] - The Fed's dual mandate of achieving high employment and low inflation is complicated by persistent inflation data and uneven economic growth, making it difficult to fulfill its objectives [3][4] - Active investing strategies are highlighted as beneficial in navigating the complexities of the market, particularly in the context of potential Fed rate cuts and the challenges posed by political pressures [4][5] Group 2 - Active management offers advantages over passive index-tracking strategies, particularly in responding to early bond calls or defaults, allowing for quicker adjustments in portfolios [4][5] - As uncertainty surrounding the Fed increases, active funds can leverage their expertise and fundamental research to create more resilient portfolios, making them a favorable option for investors looking ahead to 2026 [5]

Market Overview - Global investors are expected to seek opportunities in undervalued financial markets as concerns over an AI bubble grow, leading traders to look beyond high-valued technology stocks [1] - The upward momentum in the market is anticipated to continue into 2026, with analysts suggesting that investors should be selective in their asset choices [2] Small Cap Stocks - U.S. small cap stocks are projected to return to prominence as earnings prospects improve and borrowing costs decrease, marking a significant change from previous years [3] - Analysts expect the Russell 2000 index, which tracks small cap stocks, to rise to 2,825 points by the end of 2026, representing a nearly 14% increase from 2025 [4] Gold - Gold experienced its best performance in 2025 since the 1979 oil crisis, with forecasts from J.P. Morgan and Bank of America predicting prices could reach $5,000 per ounce in 2026, up from $4,314.12 in 2025 [5] - Analysts at Wells Fargo Investment Institute expect favorable conditions for gold to persist, although gains may occur at a more measured pace [5] Healthcare and Financials - The healthcare sector is expected to thrive due to policy boosts, particularly with the increasing popularity of weight-loss drugs [6] - Financials, especially banks, are anticipated to outperform as mergers and acquisitions (M&A) activity increases and loan growth rebounds [6]

Core Insights - Foreign equities have shown significant performance amidst challenges like tariff issues and a declining dollar, providing diversification and substantial returns for investors [1] - The T. Rowe Price International Equity Research ETF (TIER) launched in June with a focus on differentiating itself from other foreign equities ETFs through an active investment strategy [2] Fund Performance and Strategy - TIER charges a competitive fee of 38 basis points and has achieved a return of 11.7% since its inception according to YCharts data [3] - The ETF's portfolio mirrors the geographical and sector exposures of the MSCI ACWI (ex USA) Index, but utilizes T. Rowe Price's fundamental research to enhance its allocations and aims to outperform the index through rigorous security analysis [4] Active Management Advantages - The active management approach of TIER allows it to adapt to macro trends and events, which is particularly beneficial in foreign markets where information access may be limited [5] - The unique bottom-up process of TIER positions it well for future opportunities in foreign markets, especially as the landscape may require more detailed analysis to identify potential investments [6]