Capturing the Best Ideas in the US
The US Equity Fund strategy is a 50 stock portfolio of all US stocks and our approach since the beginning of the portfolio is what we really wanted to do is to take advantage of what we believe was the core competitive of T.Rowe Price, which is our US analyst stock pickers. So the bottom-up portfolio construction is really involved with using our analyst’s best ideas at any given point in time and we really want to populate those best ideas into the 50 stocks within the portfolio.
This fund seeks to differentiate itself from its peers in two different ways. Number one, we’re taking advantage of again, what we believe is the core strength of T.Rowe Price, which is our analyst stock pickers, putting their best ideas into our portfolio and the second way, given we are a more than $500 billion asset manager in the United States, we’ve got great access to managements. So we want to use that to our advantage to the extent that we can. Given that we have this great access to management, we’re able to understand their strategy and understand how they intend to create value over time, which we think should give us a competitive advantage over our peers.
We’ve always believed that US politicians often campaign and offer promises during the campaign season, that they’re often not able to interact once they get elected to office. We think the Donald Trump campaign was no different. Some of his policies that he wants to enact on healthcare or on tax reform are very unlikely to actually make it into policy. So what we really try and do is position our portfolio from a bottom-up basis, looking at the individual company level. We want to be aware of what some potential political ramifications could be to the overall business, but really we’re just trying to position with great companies from a bottom-up perspective.
We actually don’t view stocks as either value stocks or growth stocks. We’re just looking for good ideas where we believe we can make money for our investors. So at any given point in time, any idea that moves into the portfolio certainly, valuation is a consideration, but we’re looking at the fundamentals first and then we’ll look at the valuation last to make sure the valuation makes sense based on the free cash flow or earnings growth for that individual business.
Our focus is on capital appreciation with a quality bias to the portfolio. So we think we would fit with an investor style who wants certainly, capital appreciation within the markets, but wants some downside protection should the markets grow more volatile and actually start to go down.
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