Active Management Benefits in Exchange-Traded Funds

This guide discusses the benefits of active management within exchange-traded funds (ETFs), highlighting the shift from passive to active strategies in the ETF market. It notes that a significant portion of the investments in ETFs is still held in passive strategies, but the number of actively managed ETFs is increasing, particularly following regulatory changes by the U.S. Securities and Exchange Commission in 2019. The document explains the operational similarities and differences between active ETFs and actively managed mutual funds, emphasizing the professional management of pooled assets in both cases. It outlines how active ETFs can adapt to changing market conditions, potentially outperforming benchmarks, and discusses the structural advantages of ETFs, such as lower expense ratios and tax efficiency. The guide concludes by emphasizing T. Rowe Price's commitment to delivering active strategies through ETFs, aiming to provide investors with competitive alternatives to traditional mutual funds.