March 2020 / POLICY INSIGHTS
T. Rowe Price's Strategic Investing Approach
Discipline that has brought long-term rewards.
Investors experienced periods of high volatility during the past 20 years, with two strong U.S. bull markets giving way to two of the most brutal bear markets in recent memory: the collapse of the dot‑com bubble in 2000 and the global financial crisis that began in 2007.
Throughout, T. Rowe Price remained committed to a disciplined strategic investing approach. Our research shows that our long‑term U.S. equity clients have been rewarded.
T. Rowe Price success rates over 20 years
Analysis of 18 T. Rowe Price institutional diversified active U.S. equity strategies over 20 years or their lifetime
Rolling periods December 31, 1999, through December 31, 2019
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Note that past performance data throughout this material are not a reliable indicator of future performance. The returns and strategy performance data above were sourced from the study “T. Rowe Price’s Strategic Investing Approach Has Benefited Our Results,” February 2020.
Past performance is not a reliable indicator of future performance.
Performance Remained Strong Over Time
A rigorous study by T. Rowe Price shows that we were able to deliver performance through the many market environments of the past two decades. Of the 18 institutional diversified active U.S. equity strategies included in the study, 94% outperformed their benchmarks over a majority of three-year rolling periods, while 94% also outperformed over a majority of rolling five-year periods and 100% outperformed over rolling 10-year periods.1
Moreover, our performance tended to remain strong over time. Seventeen of the 18 strategies had positive active success rates over rolling three- and five‑year periods, while all 18 strategies were ahead over rolling 10‑year intervals.2 A notable 94% generated positive average excess returns over rolling 3‑, 5‑, and 10‑year periods, underlining the value of our strategic investing approach.
T. Rowe Price’s Large‑Cap Strategies Proved Worth
The study challenges the commonly held belief that it is not possible for active managers to add value in what is widely regarded as the world’s most efficient capital market. The majority of our U.S. large‑cap strategies beat their benchmarks over all relevant time periods. Again, a long‑term mindset was rewarded as excess returns for our large‑cap and mid‑cap managers increased over time.
Our Approach to Strategic Investing
of strategies had positive active success rates over rolling 10‑year periods
17 of 18
strategies generated positive average excess returns over every time horizon examined
We attribute our success primarily to careful stock selection and in‑depth fundamental research conducted by our long‑tenured investment team.
We go out into the field to get the answers we need. That means that over 430 of our investment professionals see firsthand how the companies we’re investing in are performing today in order to make skilled judgments about how we think they’ll perform in the future.3
Experience has been a critical component of our success as well. Our skilled portfolio managers have deep experience—an average of 23 years in the industry and 18 years with T. Rowe Price, as of December 31, 2019.
Independent academic research supports our approach: Active equity managers, as a group, have been able to trade profitably, before costs, in part because they are able to forecast earnings‑related fundamentals.4 While stable, long‑tenured management teams tend to hold less risky portfolios.5
Our own study shows that skilled management can help navigate challenging market conditions.
Look to the Long Term
We don’t wait for change, we seek to get ahead of change for our clients. Our people have the conviction to think independently but act collaboratively. This means we’re able to respond quickly to take advantage of short‑term market fluctuations, or we can also choose to hold tight.
Past performance is not a reliable indicator of future performance.
For more information on the complete analysis, please visit troweprice.com/results.
This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.
The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.
Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.
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