“Uncertain Markets Make Active Investing More Appealing” | Active in the News
June 27, 2025
Active management can play a critical role in helping investors navigate periods of volatility, conclude two recent reports from asset managers Natixis and T. Rowe Price.
The 2025 Natixis Global Survey of Individual Investors finds that “investors appear to understand that volatility is part of investing, and 62% say it creates an opportunity to grow wealth.” But investors’ appreciation of volatility may be more intellectual than emotional, the survey suggests, since fully 25% of the investors surveyed defined investment risk as “exposing assets to market volatility.” In contrast, only 11% defined risk as “not meeting financial goals” or “missing out on potential investment returns.”
Even so, in the current environment, two-thirds of investors “don’t want to be locked in to only what the market returns,” with almost half worring about the potential negative impact of a downturn in the Magnificent Seven mega-cap tech stocks.
In other words, the survey concludes, “uncertain markets make active investing more appealing” to investors.
In a related finding, the survey notes that, over the past 10 years of surveys, investors understand the basics of index funds: market exposure at a lower fee. But investors also have some misconceptions about these funds; they “assume benefits that passive can’t deliver, telling us passive is less risky, protects them on the downside, and gives them access to the best opportunities.”
In its 2025 Midyear Market Outlook: Investing in a post-globalisation world, T. Rowe Price also makes the case that changes in the market environment are favoring active management.
Josh Nelson and Scott Berg of the global equity portfolio team note that market leadership has recently begun to broaden and will likely continue to do so. Many overseas stock markets have been outperforming the U.S. markets recently, while the dominance of the Magnificent Seven could be ending, as the gap between their earnings growth and that of the S&P 500 narrows. Higher levels of inflation should also be a positive for value sectors, which have historically outperformed in inflationary periods.
With more sectors and regions doing well, Nelson and Berg conclude, investors will need greater diversification, and active managers will have more of an opportunity to shine.