Bonds: Total Market

Amid a turbulent market and new U.S. tariff regime, actively managed ETFs like the T. Rowe Price Small-Mid Cap ETF (TMSL) are gaining appeal for their flexibility, research depth, and outperformance potential. TMSL, which has outperformed the Russell 2500 Index by 170 basis points year-to-date, exemplifies how active strategies can navigate uncertainty and respond to evolving risks and opportunities. 

 

The new 10% blanket U.S. tariffs—unseen since 1946—have contributed to earnings downgrades and increased economic unpredictability, making adaptability a critical asset. Active managers can curate portfolios based on bottom-up analysis, selecting strong companies while avoiding those likely to underperform. 

 

TMSL’s focus on small- and midcap firms adds sector diversification to tech-heavy portfolios, with leading exposures in industrials, financials, and healthcare. 


Finsum: Its key to consider how fees play a role in active funds but many deliver well above depending on the economic environment. 

After years of prioritizing safety, retirement savers are once again embracing market risk, as sales of variable annuities tied to investment fund performance surged in late 2024. According to Wink’s latest data, traditional variable annuity sales climbed 53% year over year to $18 billion, outpacing every other annuity category tracked. 

 

Interest also rose in registered index-linked annuities, which mirror stock index performance, with sales growing 38% to $35 billion, while fixed indexed annuities grew by 22% to $32 billion. In contrast, demand dropped sharply for multi-year guaranteed annuities — down 45% to $29 billion — as fewer consumers sought fixed returns. 

 

This rebound in market-linked products reflects renewed investor optimism but also hints at insurer caution, with some reallocating capital toward products that require less financial backing. 


Finsum: Expiring surrender periods on older annuities may be freeing up funds for reinvestment, fueling the uptick in new variable annuity contracts.

In today’s market, financial advisors can show real value by building actively managed, customized portfolios using low-cost passive ETFs instead of pricier active funds. A core-and-satellite approach — with an S&P 500 ETF at the center and defensive sectors, bonds, and gold ETFs as satellites — has proven particularly effective in 2025, outperforming the broader market. 

 

Strategic rebalancing between the outperforming satellites and a weakening core has been key to managing risk and enhancing returns. Defensive ETFs like XLP, XLU, and XLV, along with bond funds like AGG and SGOV and the gold-focused GLDM, have offered strong, risk-adjusted performance this year. 

 

This flexible framework allows advisors to adjust portfolios to market conditions, client goals, or macroeconomic shifts while keeping costs low and transparency high. 


Finsum: Ultimately, it strengthens the advisor’s role as an active, thoughtful manager of client wealth without relying on expensive fund managers.

 

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