A Model U.S. Active Manager?
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Wednesday, December 12, 2018

A Model U.S. Active Manager?

When it comes to active, U.S.-based asset managers, at least the publicly traded ones, T. Rowe Price [profile] is at the top of the pack, according to a key industry watcher.

William J. Stromberg
T. Rowe Price Group
President, CEO
Morningstar financial services sector strategist Greggory Warren makes the case that the Baltimore-based mutual fund giant is the U.S.-based, active asset manager that is best-positioned to weather the oncoming asset management industry storm. Avid T. Rowe watchers will want to dig into the full piece, which also offers other fundsters a glimpse at what it will take, in M*'s eyes, to succeed as an active manager in the coming years.

T. Rowe's strengths, as highlighted by M*, include: the stickiness of its AUM, thanks in part to its big presence in the 401(k) space; the scale of its operations; its brand strength; a "relatively small amount of employee turnover through the years"; its "cost-conscious culture"; a management team that is both "highly insular and very protective of the culture that the company has built" and "willing to evolve" through product development, distribution channel expansion, and technological investments; an ability "to consistently generate operating margins in excess of 40%"; and, of course, the T. Rowe team's "consistent record of active fund outperformance."

"All of this explains why T. Rowe Price receives some of the highest marks for corporate culture among the U.S.-based asset managers we cover," M*'s Warren writes. "We believe T. Rowe Price is well positioned to navigate the headwinds that the U.S.-based asset managers will face during the next decade, and we expect it to be one of the rare organic growth generators in the group."

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