Despite a weaker end to the month, the equity market “melt-up” successfully navigated what has historically been a tricky month for equities, as represented by the S&P 500 in September (average returns -0.61%), closing out the month (as of September 29) with a handsome gain of over 3%. As we move toward October, this month has been far from spooky, leaning more “treat” than “trick” for equity investors. Since 1950, October has posted positive returns nearly 60% of the time, and an average gain of 0.89%, though past performance does not guarantee future results.

Seasonality Trends Supportive

We believe that carefully selected active Exchange-Traded Funds (ETFs) may provide benefits to investor portfolios. Actively-managed ETFs have proliferated in recent years and appear to be in demand by investors. Here we discuss three common reasons investors favor ETFs, including tax efficiency, relatively low expense, and intraday trading on an exchange. While we generally agree active ETFs may provide these potential benefits, we also believe these features warrant further discussions and careful consideration.

Tax Efficiency

The Backstory. The touted tax efficiency of ETFs compared to mutual funds stems from the way in w

The Federal Reserve (Fed) delivered a highly anticipated 0.25% interest rate cut during its September 16-17 Federal Open Market Committee (FOMC) meeting. Fed Chair Powell said the move should be viewed as a “risk-management cut” in response to signs of a weakening labor market. Powell attributed most of the slowdown in payroll growth to lower immigration and lower labor force participation, but further added, “Labor demand has softened, and the recent pace of job creation appears to be running below the ‘breakeven’ rate needed to hold the unemployment rate constant.” Policymakers also penciled in two additi

As expected, the Federal Reserve (Fed) cut interest rates last week to take the fed funds rate down to 4.25% (upper bound). Moreover, through the release of the updated dot-plot, the Committee signaled that two more interest rate cuts could be appropriate this year, which would take the fed funds rate down to 3.75% (upper bound). The cut was the first rate reduction since last December and the continuation of the rate-cutting campaign that began last September, which has so far seen an unusual reaction out of the Treasury market.

When the Fed delivered its first 50 basis point rate cut last September, bond markets responded in a