March 2020 / POLICY INSIGHTS
T. Rowe Price’s Strategic Investing Approach Has Benefited Our Results
Discipline has brought long-term rewards for clients.
- Research has shown that active manager performance can be cyclical and that some specific manager characteristics may contribute to long‑term success.
- We reviewed the performance of 18 T. Rowe Price institutional diversified active U.S. equity strategies to quantify the value added by our strategic investing approach.
- We found that the vast majority of our strategies generated positive average excess returns, net of fees, over their benchmarks across multiple time periods.1
- We credit our success to our efforts to go beyond the numbers and get ahead of change, which we believe leads to better decisions and prudent risk management.
Most sophisticated investors are aware of the pitfalls of overreacting to short‑term market trends—a habit that can lead to disappointing long‑term returns. Capital markets are volatile, and investors who rush to sell or buy assets based solely on their recent performance may find they’ve taken on more risk than they expected.
The same principle applies to actively managed investments—those that seek to add value for clients through security selection, sector rotation, factor weighting, or other techniques. Like the markets themselves, relative performance tends to be volatile. Evaluating managers based on quarterly or even annual results can be difficult and potentially misleading. Successful strategies often take time to bear fruit, and contrarian bets are rarely rewarded immediately. Attractive growth opportunities may be prospective, not immediate, and undervaluedcompanies may remain undervalued for months or years.
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