T. Rowe Price Doubles Down On Active Management Strategy
April 27--William J. Stromberg, president and CEO of T. Rowe Price Group. Inc., offered a broad defense Wednesday of the asset manager's focus on active management of investors' money as individuals join institutions in seeking more passive management that costs less.
The comments came during the company's annual meeting after shareholders quickly approved board reappointments, non-binding "say on pay" proposals and other items and heard a review of largely positive quarterly results including a profit of $385.9 million and earnings per share of $1.54, up 36 cents from a year ago.
On the passive investing trend, officials said the company plans some kind of public campaign to make the case that extra fees are worth it because the company brings value by actively managing assets for the long run.
They acknowledged the message may be something of a tough sell in recent years because the stock market is strong and passive investments, such as index funds, have been hard to beat.
"We have to work to counteract the trend," said Stromberg.
Only about 5 percent of assets are passively managed at T. Rowe Price, and one shareholder suggested that the company seek to boost that amount. But Stromberg said a few companies control the bulk of the passive management market making a broad expansion difficult and potentially detrimental to the company's bottom line and stock price because revenue from fees would drop substantially.
Also at the meeting, shareholders unsuccessfully offered three proposals that asked the company to consider climate change in its investing, review executive compensation and report publicly more information on employee race and ethnicity in an effort to improve diversity.
The last proposal is the only one for which the board did not recommend against passage, instead offering no recommendation. Company officials said they were already working to improve diversity among the workforce.
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