Core Viewpoint - The Federal Reserve's recent interest rate cut of 25 basis points is expected to positively impact investor portfolios and market outlooks, emphasizing the importance of active investing strategies to navigate the resulting economic shifts [1]. Group 1: Impact on Equities - The Fed's rate cut is likely to benefit small-cap tech and biotech firms that rely on borrowing for future growth, as lower borrowing costs can enhance their equity performance [1]. - Active investing strategies are positioned to identify and capitalize on these opportunities more effectively than passive funds, which may lack the adaptability and fundamental research focus [1]. Group 2: Impact on Fixed Income - In the fixed income sector, active investing is highlighted as having a significant advantage over passive strategies, particularly in maintaining bond allocations amid changing market conditions [2]. - Active managers can utilize fundamental research to pinpoint standout bonds as the yield curve shifts, allowing for better performance in a rate-cut environment [2]. Group 3: Active ETFs - Active ETFs, such as the T. Rowe Price Capital Appreciation Equity ETF (TCAF) and the T. Rowe Price QM U.S. Bond ETF (TAGG), provide tax-efficient and transparent investment vehicles for those seeking active management solutions [3]. - The recent Fed rate cut presents opportunities for active investing, reinforcing the value of these investment tools [3].

ETF Market Trends & Innovation - ETFs are providing access to strategies previously unavailable to common investors, such as covered call and option premium strategies [2] - Explosive growth is seen in specific market segments like precious metals (gold) and cryptocurrencies (Bitcoin) [4] - Alternative assets, including precious metals and crypto, are increasingly being adopted into mainstream investment portfolios to diversify and find uncorrelated assets [6] - Product innovation is driven by new demand, with a focus on active ETFs and derivative strategies [8][9][12] - The industry has shifted towards active ETFs, with new entrants differentiating themselves through innovative product offerings [10][11][12] Fees & Performance - While passive ETFs have seen fee compression, active ETFs can support higher fees due to the increased workload [14][15] - Higher fees for active management put pressure on managers to deliver performance [15][16] - The ETF fees should be compared to other industries like structured notes or hedge funds, where similar profiles or payoffs may come at a higher cost (e g, 2 and 20 in hedge fund wrapper) [17] - There's increased tolerance for fee elasticity, especially if end-users can access high-octane active management [17] Due Diligence & Risk - Due diligence conversations have increased due to the complexity of new ETF products using options, leverage, and swaps [18] - Clients are interested in how these new alternative-based ETF products function within their overall portfolio and their risk-return profile [18] - Investors are seeking to understand the potential systemic risks associated with the rapid pace of ETF innovation and launches [19][20]