Active US Equity Management: Adding Value With the T. Rowe Price Approach

• T. Rowe Price has demonstrated that skilled active management, backed by in-depth fundamental research, can add value for clients over longer time horizons. Focusing solely on short-term relative performance could be a critical mistake, as active portfolio strategies may take time to come to fruition.

• Research has shown that specific market environments are often associated with periods of active underperformance and outperformance. Research also indicates that some specific manager characteristics may contribute to long-term active success.

• We reviewed the performance of 19 T. Rowe Price institutional diversified active U.S. equity strategies over the 20 years ending in 2015, or since inception in cases where the strategy had less than a full 20-year track record. On average, the strategies included in the study generated positive excess returns, net of fees, versus their designated benchmarks over rolling 1-, 3-, 5-, and 10-year periods.¹

• The likelihood that T. Rowe Price’s diversified U.S. equity strategies would outperform the relevant benchmarks typically increased as rolling time periods were extended.

• We attribute the value we have been able to create for our U.S. equity clients to the strengths of our underlying investment process and research platform, which we believe match many of the characteristics linked to active management success.

To learn more, download the full paper here.

¹ Given that the U.S. equity market is generally considered the world’s most efficient, transparent market, we believe it provides a strong test for activemanagement skill. See Appendix A (page 10) for additional information on the performance study methodology.

2016-GL-3686