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Adding Value With Our Strategic Investing Approach

T. Rowe Price

 

We reviewed 18 T. Rowe Price diversified active US equity strategies against their benchmarks over 20 years or their lifetime.1

 

Our Results

The study measured the performance of 18 diversified active US equity strategies, net of fees and trading costs, against their designated benchmarks over multiple rolling time periods from 31/12/1997 through 31/12/2017.

Past performance data throughout this material are not reliable indicators of future performance. For more information, please visit troweprice.com/active.

 

Longer Horizons, Stronger Returns

What seems like a relatively small amount of excess returns can accumulate over time to produce significant returns.

Average Annualized Time-Weighted Excess Returns for T. Rowe Price Strategies Net of Fees (over rolling 10-year periods)

Hypothetical US Large-Cap Equity Portfolio

An investment of US $10 million in a T. Rowe Price US large-cap equity portfolio could have grown to more than US $51 million over the 20-year period ended 31/12/2017, almost US $11.8 million ahead of the total generated by the weighted benchmark portfolio. The T. Rowe Price total reflects an equal-weighted hypothetical portfolio of the 10 US large-cap equity strategies included in our study, rebalanced monthly and measured against the weighted combination of the designated benchmarks.

The data above are hypothetical in nature and are shown for illustrative, informational purposes only. The graphic is not intended to forecast or predict future events, but rather to demonstrate T. Rowe Price’s capability to manage assets in this style. It does not reflect the actual returns of a portfolio or strategy. Certain assumptions have been made for modeling purposes, and no representation or warranty is made as to the reasonableness of the assumptions made or that all assumptions used in achieving the hypothetical returns have been stated or fully considered. Changes in the assumptions may have a material impact on the hypothetical returns presented. Data shown represent the manager’s analysis as of 31/12/2017 and are subject to change over time. Management fees, transaction costs, taxes, potential expenses, and the effects of inflation are not considered and would reduce returns. Actual results experienced by clients may vary significantly from the hypothetical illustrations shown. This information is not intended as a recommendation to buy or sell any particular security. All figures in US dollars.

 

Strategic Investing Takes Us Beyond the Numbers

1 The study spanned the 20 years up to the end of December 2017 for older strategies, or since inception for newer ones. It covered 18 of the 29 institutional diversified active US equity strategies currently advised by T. Rowe Price. In instances where a portfolio manager managed multiple strategies in a particular sub-asset class style (e.g., US small-cap growth), we included only the strategy with the most assets under management to avoid double counting. Benchmarks included the S&P 500, Russell 1000 Growth, Russell 2000 Growth, Russell 1000 Value, Russell 2000 Value, Russell 2500, Russell 2000, Russell Midcap Growth, and Russell Midcap Value Indexes.

2 Investment staff as of 31/12/2017. Includes 104 portfolio managers, 24 associate portfolio managers, 148 investment analysts, 47 associate analysts, 10 multi-asset specialists, 3 specialty analysts, 2 strategists, and 17 senior managers.

3 As of 12/31/2017.

The T. Rowe Price group of companies includes T. Rowe Price Associates, Inc., T. Rowe Price International Ltd, T. Rowe Price Hong Kong Limited, T. Rowe Price Singapore Private Ltd. and T. Rowe Price (Canada), Inc. “T. Rowe Price portfolio” reflects an equal-weighted portfolio, rebalanced monthly, of the T. Rowe Price US large-cap strategy composites included in our study. From 31/12/1997 through 31/5/1999, this comprised: US Growth Stock, US Large-Cap Equity Income, US Capital Appreciation, US Dividend Growth Equity, US Large-Cap Core Growth Equity, US Value Equity, and US Large-Cap Value Equity Composite Strategies (one-seventh each). From 31/5/1999 through 30/4/2000, US Structured Research Equity was added to the previous strategies (weighted one-eighth each). From 30/4/2000 through 30/11/2001, US Multi-Cap Growth Equity was added to the previous strategies (weighted one-ninth each). From 30/11/2001 through 31/12/2017, US Large-Cap Growth Equity was added to the previous strategies (weighted one-tenth each). Benchmark data were also rebalanced monthly, with the weights used reflecting the components of the T. Rowe Price portfolio. From 31/12/1997 through 31/5/1999, the benchmarks were: Russell 1000 Growth (two-sevenths), S&P 500 (two-sevenths), and Russell 1000 Value (three-sevenths); from 31/5/1999 through 30/4/2000, Russell 1000 Growth (one-quarter), S&P 500 (three-eighths), and Russell 1000 Value (three-eighths); from 30/4/2000 through 30/11/2001, Russell 1000 Growth (one-third), S&P 500 (one-third), and Russell 1000 Value (one-third); and from 30/11/2001 through 31/12/2017, Russell 1000 Growth (two-fifths), S&P 500 (three-tenths), and Russell 1000 Value (three-tenths). No rebalancing costs were assumed.

Frank Russell Company (“Russell”) is the source and owner of the Russell Index data contained or reflected in these materials and all trademarks and copyrights related thereto. Russell® is a registered trademark of Russell. Russell is not responsible for the formatting or configuration of this material or for any inaccuracy in T. Rowe Price Associates’ presentation thereof.

Copyright © 2018, S&P Global Market Intelligence (and its affiliates, as applicable). Reproduction of S&P 500 Index in any form is prohibited except with the prior written permission of S&P Global Market Intelligence (“S&P”). None of S&P, its affiliates or their suppliers guarantee the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions, regardless of the cause or for the results obtained from the use of such information. In no event shall S&P, its affiliates or any of their suppliers be liable for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use of S&P information.

Key Risks

The following risks are materially relevant to the strategies highlighted in this material:

Transactions in securities of foreign currencies may be subject to fluctuations of exchange rates which may affect the value of an investment. Strategies are subject to the volatility inherent in equity investing, and their value may fluctuate more than strategies investing in income-oriented securities. The value approach carries the risk that the market will not recognize a security’s true worth for a long time, or that a security judged to be undervalued may actually be appropriately priced. There is an increased risk where a strategy has the ability to employ both growth and value approaches. Certain strategies are subject to sector concentration risk and are more susceptible to developments affecting those sectors than strategies with a broader mandate. Investment in small companies involves greater risk than is customarily associated with larger companies, since small companies often have limited product lines, markets or financial resources.

IMPORTANT INFORMATION

This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and 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.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.

It is not intended for distribution to retail investors in any jurisdiction.

Australia—Issued in Australia by T. Rowe Price International Ltd (ABN 84 104 852 191), Level 50, Governor Phillip Tower, 1 Farrer Place, Suite 50B, Sydney, NSW 2000, Australia. T. Rowe Price International Ltd is exempt from the requirement to hold an Australian financial services licence in respect of the financial services it provides in Australia. T. Rowe Price International Ltd is authorized and regulated by the UK Financial Conduct Authority under UK laws, which differ from Australian laws. For Wholesale Clients only.

Canada—Issued in Canada by T. Rowe Price (Canada), Inc. T. Rowe Price (Canada), Inc.’s investment management services are only available to Accredited Investors as defined under National Instrument 45-106. T. Rowe Price (Canada), Inc. enters into written delegation agreements with affiliates to provide investment management services.

DIFC—Issued in the Dubai International Financial Centre by T. Rowe Price International Ltd. This material is communicated on behalf of T. Rowe Price International Ltd by its representative office which is regulated by the Dubai Financial Services Authority. For Professional Clients only.

EEA—Issued in the European Economic Area by T. Rowe Price International Ltd., 60 Queen Victoria Street, London EC4N 4TZ which is authorized and regulated by the UK Financial Conduct Authority. For Professional Clients only.

Hong Kong—Issued in Hong Kong by T. Rowe Price Hong Kong Ltd., 21/F, Jardine House, 1 Connaught Place, Central, Hong Kong. T. Rowe Price Hong Kong Ltd. is licensed and regulated by the Securities & Futures Commission. For Professional Investors only.

Singapore—Issued in Singapore by T. Rowe Price Singapore Private Ltd., No. 501 Orchard Rd, #10 02 Wheelock Place, Singapore 238880. T. Rowe Price Singapore Private Ltd. is licensed and regulated by the Monetary Authority of Singapore. For Institutional and Accredited Investors only.

Switzerland—Issued in Switzerland by T. Rowe Price (Switzerland) GmbH (“TRPSWISS”), Talstrasse 65, 6th Floor, 8001 Zurich, Switzerland. For Qualified Investors only.

USA—Issued in the USA by T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, MD, 21202, which is regulated by the U.S. Securities and Exchange Commission. For Institutional Investors only.

T. ROWE PRICE, INVEST WITH CONFIDENCE and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc. All rights reserved.

 

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GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®). TRP has been independently verified for the twenty one- year period ended June 30, 2017 by KPMG LLP. The verification report is available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

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

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