Eye Active Investing as Market Leaders Diverge

Remember the Magnificent Seven? Per the Wall Street Journal, they’re really now just a “Fab Four.” Like the Beatles shedding original members, the likes of Nvidia (NVDA) and Meta (META) have taken leading roles as Tesla (TSLA) and Apple (AAPL) have drifted away. That changing of the guard should remind investors of the merits of active investing.

See more: 3 Active ETFs Sending Buy Signals

With active investing, investors can lean on strategies that and nimbly shift as markets do. Indexed strategies lack the same speed in adapting their holdings. Perhaps more crucially, however, while the S&P 500 (SPX) adapts over time to the changing fortunes of its holdings, strategies that track it passively lack the freedom to weight or overweight holdings.

So, while a passive ETF tracking an index reflects a market’s changing leadership, its managers can’t act on trends. Active investing can combine fundamental research to assess individual firms. At the same time, it can look at lessons from news like the above change to the Magnificent Seven and adapt.