Displaying items by tag: ETFs

In a market rattled by volatility in both stocks and bonds, dividend ETFs are drawing attention as a middle ground between growth and income strategies. While passive giants like Vanguard’s VIG and Schwab’s SCHD dominate with low fees and broad exposure, a growing number of active ETFs—like T. Rowe Price’s TDVG—are betting they can outperform by handpicking high-quality dividend payers. 

TDVG blends income with potential capital appreciation and holds familiar names like Apple and Microsoft, offering tech exposure without overconcentration. Active managers argue their flexibility allows them to adapt to changing market conditions in ways passive index funds cannot, especially when navigating risks like dividend cuts or sector shifts. 

Although passive dividend ETFs still attract more investor flows due to cost advantages, actively managed funds are slowly gaining traction, particularly among investors seeking income stability amid rising macroeconomic uncertainty. 

Finsum: For those dependent on income—like retirees—dividend strategies remain appealing, but experts caution that yield alone shouldn’t drive decisions.

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. 

As ETFs continue to evolve, new “enhanced” or actively structured ETFs are emerging as thoughtful alternatives to traditional passive strategies, especially in today’s volatile market. 

Fidelity leaders emphasized how these hybrid ETFs aim to maintain core market exposure while improving on passive models through modest, research-driven security selection. Amid rising concerns like U.S. tariffs and potential recession risks, investors were advised to stay cautious but open to market rebounds following short-term shocks.

Fidelity’s Craig Ebeling noted that passive index tracking can lead to unintended exposures, while enhanced ETFs allow for greater alignment with investor goals by avoiding certain stocks. The Fidelity Enhanced Large Cap Core ETF (FELC), for instance, leverages a quantitative system to actively select large-cap equities and has returned 9.78% since inception. 

Finsum: Investors remain optimistic about long-term opportunities, particularly with enhanced ETFs designed to improve benchmark outcomes.

As market volatility rattles investors, many are turning to buffer ETFs—funds that limit downside losses in exchange for capped upside gains. These products, offered by firms like Innovator, BlackRock, and Allianz, use options strategies to provide partial protection during market downturns, making them especially appealing during recent selloffs.

In the first months of the year, buffer ETFs attracted nearly $5 billion in inflows, with a sharp pickup in demand during periods of steep market declines, such as the S&P 500’s worst day in 2024. 

While financial advisors increasingly recommend buffer ETFs to nervous clients seeking equity exposure with built-in protection, critics point to their higher fees and reduced potential for gains in strong bull markets. The upside cap investors receive often shrinks in volatile environments, making the cost of protection steeper just when it feels most necessary. 

Finsum: For those prioritizing risk management over maximum returns, buffer ETFs offer a middle ground—at a price.

Once seen as a slow-moving defensive play, the utilities sector has surged in 2024, outperforming all other S&P 500 sectors thanks to its unexpected ties to artificial intelligence. With companies like Constellation Energy and Vistra powering AI data centers through nuclear energy, utilities are benefiting from tech-fueled demand growth typically reserved for Silicon Valley. 

This shift has pushed the sector up nearly 26% year-to-date and attracted strong inflows, even outperforming on both market-cap and equal-weighted bases. Traditionally valued for their consistent demand, pricing power, and dividends, utility stocks are now getting a second look from growth-focused investors. 

Actively managed funds like the Virtus Reaves Utilities ETF (UTES) have capitalized on this shift, delivering over 40% returns by overweighting AI-aligned holdings. Meanwhile, traditional utility ETFs such as XLU, VPU, and IDU remain popular options.

Finsum: AI could continue to reshape what investors expect from the utility sector.