Potential December Rate Cut to Kick-Start Active Investing Into 2025
Will the Fed make one more rate cut to end 2024? One more cut would top off what has been a very positive fall for rate cut hopefuls considering how long the Fed waited. As those cuts continue to reverberate throughout the market and further out into the broader economy, investors will want to seek out the best opportunities. Active investing can potentially outperform simple, passive funds in doing so entering 2025 with its adaptability and use of fundamental research.
While a passive investing approach can appeal for its simplicity and tendency toward inertia, expecting steady growth, markets don’t always work that way. Indeed, when looking for upside, or for the flexibility needed when events occur that undercut widely held assumptions, active investing can step up.
For example, as yet another rate cut arrives, investors will expect a broad positive response. The speed of that response across the market may well vary, however. Does tech have significantly more runway for growth in the new year? What subsectors might benefit from rate cuts more than others? What do rate cuts mean for fixed income? Does all of this qualify for a soft landing scenario that gives investors permission to take more risks?
