The demise of China’s largest real estate developer and its potential effect on the Chinese economy has added stress to already volatile markets. Previous regulations by the Chinese government across multiple sectors as well as Delta hampering economic recovery in China have created drawbacks already across markets, and now with the addition of Evergrande’s defaulting on billions of dollars in debt, Chinese markets and investments in China are left reeling.
With stocks whipsawing back and forth, it’s a time when active management really shines, as active managers are able to nimbly move out of troubled investments and potentially shift funds into safer securities, while passive funds have to ride the rollercoaster until their next rebalance.
Adviser Investment Management chairman Daniel Wiener, recently appearing on CNBC’s ETF Edge, believes it’s a time that investors “need to work with investment managers, portfolio managers with boots on the ground.”
Active managers are able to respond to the potential unraveling of markets in real time in a way that could save investors a lot of money. Times of volatility are historically when active management really steps to the forefront and outperforms the benchmark and passive peers.
Troubled markets for international investors, as well as pullbacks in U.S. markets, are providing the perfect opportunity for actively managed funds to showcase their strengths.
Long term, DWS Group’s Arne Noack told ETF Edge that he doesn’t believe the Evergrande default is one that will create far-reaching effects on the broader markets.
“Evergrande being one development company that is in trouble obviously is concerning to us, but we do not see this to be of broader systemic risk in China,” Noack said.
T. Rowe Price believes in the difference and benefits to active investing and active management. The firm currently offers five actively managed ETFs for investors that are looking to invest in an environment of record IPOs that benefits stock pickers. The firm brings a bevy of experience and research to its products, with portfolio managers averaging over 20 years in investing each, as well as over 400 investment professionals dedicated to researching companies within ETFs.
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