Download

Audience for the document: Share Class: Language of the document:

Download

Share Class: Language of the document:

Change Details

If you need to change your email address please contact us.
Subscriptions
OK
You are ready to start subscribing.
Get started by going to our products or insights section to follow what you're interested in.

Products Insights

GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the twenty four-year period ended June 30, 2020, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

TRP is a U.S. investment management firm with various investment advisers registered with the U.S. Securities and Exchange Commission, the U.K. Financial Conduct Authority, and other regulatory bodies in various countries and holds itself out as such to potential clients for GIPS purposes. TRP further defines itself under GIPS as a discretionary investment manager providing services primarily to institutional clients with regard to various mandates, which include U.S, international, and global strategies but excluding the services of the Private Asset Management group.

A complete list and description of all of the Firm's composites and/or a presentation that adheres to the GIPS® standards are available upon request. Additional information regarding the firm's policies and procedures for calculating and reporting performance results is available upon request

Other Literature

You have successfully subscribed.

Notify me by email when
regular data and commentary is available
exceptional commentary is available
new articles become available

Thank you for your continued interest

Please enter valid search characters

Video

Why Knowing the Absolute Market Bottom Doesn't Matter

Sébastien Page, CFA, Head of Global Multi-Asset

Summary

In considering how much risk to take on in this environment, especially stocks relative to bonds, our Asset Allocation Committee has analyzed previous significant market sell-offs over the past 90 years. The analysis shows that investors should not be overly focused on trying to time the absolute market bottom.

Transcript

We don’t have a house view at the firm, but the key question we’re debating in our asset allocation committee is how risk-on do we want to position our portfolios, in particular the stocks versus bonds decision. We think people saving for retirement should be invested for the long run and should stay diversified over time, but tactically are there opportunities to add to stocks on weakness or should we be pulling back and playing defense?

During the sell-off, we have been adding to stocks on the margin. Now, over the last two weeks, the S&P 500 is up 26%, which is remarkable, so at this point we’re going to sit tight and keep our moderate overweight stocks relative to bonds position. Should we try to time the bottom? Have we seen the bottom? Or are we going to revisit an even deeper bottom? It turns out it doesn’t matter that much. You don’t necessarily have to try to time the absolute bottom in order to implement tactical decisions on stocks versus bonds.

We just did a study going back 90 years. We looked at 17 times during which the S&P 500 sold off by 15% or more, and if you had bought early, say one month before the absolute bottom, you still would have made money on stocks versus bonds 12-month forward 17 out of 17 times, a 100% hit ratio. Interestingly, if you bought late, say one month after the absolute bottom, you still would have seen a 100% hit ratio. You would have made money 17 out of 17 times.

This is historical evidence. The current crisis is quite different in the speed of the sell-off, in the speed of the economic heart attack, and in the speed of the monetary and fiscal response. But nonetheless, the bottom line is that there’s no need to time the absolute bottom if you’re willing to add to risk assets when they’ve sold off significantly. Now on stocks versus bonds, we’re going to sit tight for the moment, but we’re also going to look for other opportunities to add risk. Over time, one year forward, two years forward, it’s likely that those positions will pay off.

202004-1152395