T. Rowe Price

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T. Rowe Price
T-Rowe-Price-logo.PNG

Start date: 1937
Founder: T. Rowe Price Jr.
Location: Baltimore
State: Maryland
Ticker: NASDAQ TROW
Key people:James Kennedy, CEO
AUM: US $555 billion

T. Rowe Price is a publicly owned investment management company headquartered in Baltimore, Maryland. The company was founded in 1937 by Thomas Rowe Price, Jr. [1] and offered its first mutual fund, T. Rowe Price Growth Stock Fund in 1950. [2]. In 1986 management took to the company public, with an initial public offering of stock under the symbol TROW on the NASDAQ exchange. [2] The company currently offers mutual funds [3], individual [4] and small company retirement plans, [5] college savings plans, [6] brokerage [7] and banking services [8], and institutional accounts for defined pension, contributory pension, endowments and other institutional accounts. [9]

International expansion

In 1999 the firm made its first expansion into international markets by partnering with Robert Fleming Holdings Limited to open operations in Japan. The following year the company acquired Rowe Price-Fleming International and created T. Rowe Price International, Inc. to manage international operations. International expansion continued with cross border funds (T. Rowe Price Funds SICAV, domiciled in Luxembourg, for non-U.S. institutional investors and financial intermediaries in qualifying jurisdictions); in 2004 an expansion into Amsterdam and Sydney Australia (serving Australia and New Zealand); in 2007, an office was opened in Toronto, Canada; in 2008 an office in Zurich, Switzerland (serving institutional investors in Switzerland and Liechtenstein); in 2010 the firm opened an institutional client service office in Dubai. [2]

Boglehead-style investing at T.Rowe Price

The building blocks of Boglehead-style investing are low-expense-ratio index mutual funds and/or ETFs. Vanguard fans would suggest that Vanguard has the best and most complete lineup of such funds, and that the most convenient place to hold Vanguard mutual funds is directly at Vanguard. Thus, the Bogleheads forum and Wiki tends to be Vanguard-oriented. But investing according to the Bogleheads investment philosophy certainly does not require you to invest at Vanguard or use Vanguard products. Here are some notes on how to do it at T.Rowe Price.


Imbox notice.png The information below was last revised in June, 2012. Writers have striven for accuracy, but investors should verify information before taking action.


Index funds

T.Rowe Price is primarily a firm devoted to actively managing investment portfolios. Thus, the firm's balanced fund of fund offerings (the Spectrum series of balanced funds, and the target retirement series of funds) primarily employ active funds as underlying investments.

The firm offers five broadly based index funds, outlined in the table below. T.Rowe Price investors can create a simple indexed three-fund-portfolio using the following three funds:

  • Total Equity Market Index Fund
  • International Equity Index Fund
  • US Bond Enhanced Index Fund

Investors can also create a US total market allocation using the Equity Index 500 Fund and the Extended Equity Market Index Fund See also: Extended market index fund .

T. Rowe Price index funds have higher expense ratios than index funds available from Vanguard, Fidelity, or from many exchange traded funds.

The T. Rowe Price International Index Fund is a developed market international index fund. The fund does not include emerging market stocks or Canadian stocks. Small cap international stocks make up only a minimal part of the portfolio. See also: Approximating total international stock market


In addition, index purists should take note that the US Bond Enhanced Index Fund utilizes an active management component. The investment manager has the authority to adjust certain holdings versus the benchmark index, which could result in the fund being marginally underweight or overweight in certain sectors, or result in the portfolio having a duration or interest rate exposure that differs slightly from those of the index. [10]

T. Rowe Price Index Funds
Fund Ticker Index Expense Ratio Redemption Fee
Total Equity Market Index POMIX S&P Total Market Index 0.41% 0.50% < 90 days
Equity Index 500 PREIX S&P 500 Index 0.30% 0.50% < 90 days
Extended Equity Market Index PEXMX S&P Completion Index 0.42% 0.50% < 90 days
International Equity Index PIEQX FTSE Developed ex North America Index 0.50% 2.00% < 90 days
US Bond Enhanced Index PBDIX Barclays US Aggregate Bond Index 0.30% 0.50% < 90 days

References

  1. Thomas Rowe Price, Jr., is known as the "father of growth investing." , investopedia. Retrieved 25 June 2012
  2. 2.0 2.1 2.2 T. Rowe Price History, Retrieved 25 June 2012
  3. Mutual funds, Retrieved 26 June 2012
  4. Traditional IRA and Roth IRA, Retrieved 26 June 2012
  5. Small Business Retirement Plans and 403(b) Plans Retrieved 26 June 2012
  6. 529 College Savings Plans, Retrieved 26 June 2012
  7. Brokerage, Retrieved 26 June 2012
  8. Savings Bank, Retrieved 26 June 2012
  9. Institutional Investors, Retrieved 26 June 2012
  10. According to the summary prospectus (available at Morningstar): "The fund’s overall investment strategy is to match or incrementally exceed the performance of the U.S. investment-grade bond market. To achieve this goal, the fund seeks to provide total returns (after all of the fund’s expenses have been deducted) that match or incrementally exceed the total returns of its benchmark index, the Barclays Capital U.S. Aggregate Bond Index. While the fund’s portfolio is structured to have similar overall characteristics to the fund’s benchmark index, the portfolio manager may adjust certain holdings in relation to their weighting in the index and use other investment strategies in an attempt to generate a modest amount of outperformance over the index. The portfolio manager evaluates specific traits and sectors within the fund’s benchmark index and, within each broad segment of the index (such as corporate bonds, U.S. government securities, and asset- and mortgage-backed securities), selects a set of U.S. dollar-denominated bonds that represents key benchmark traits. The most important of these traits are interest rate sensitivity, credit quality, and sector diversification, although other characteristics may be considered. Based on the portfolio manager’s views as to the relative value or attractiveness of a specific trait or sector, the fund places a slightly greater or lesser emphasis on certain index characteristics than their representation in the index. This could result in the fund being marginally underweight or overweight in certain sectors versus the benchmark index, or having a duration or interest rate exposure that differs slightly from those of the index."

External links