The T. Rowe Price approach to investment management is rooted in fundamentals and consistency. Since our founding in 1937, and through the experience of myriad bull and bear markets, the firm has adhered to a strict set of core beliefs that have stood the test of time. Our goal is to provide consistently competitive long-term performance and world-class service to our investors. We are committed to managing our clients' assets in a disciplined manner and will not compromise the integrity of our investment products or high standards of service. Our strengths include:
- Organizational Integrity, Focus, and Stability
- Collaborative Effort
- Disciplined Approach
- Attention to Risk
- A Leading, Long-Tenured Investment Team
- Concern for Corporate Governance
- Our Mission
The business of investing is complex, uncertain, and competitive. Success in this industry requires talent and experience in every phase of operations. We seek to create long-term value, and that means bringing our processes, talent, and culture together for the benefit of our clients. The T. Rowe Price approach is built on the fundamental principle of putting the customers' interests first in the way we invest their money and the way we conduct our business.
T. Rowe Price believes that regardless of how skilled and talented an individual investment professional may be, a collaborative process can bring the necessary insight and focus to ensure we respond appropriately to the markets' inevitable surprises. Teamwork pervades our entire organization-from a Management Committee that sets the firm's strategic direction and policy, to fund Advisory Committees that review each of our mutual funds' performance. We believe that with teamwork we can achieve the consistent, superior quality-across all business areas and for all clients-that is the hallmark of a strong organization.
T. Rowe Price, with more than 70 years of investment experience, believes that adhering to sound fundamentals, managing risk effectively, paying reasonable prices for securities, and staying true to style regardless of short-term fluctuations can help us to provide the best long-term results for our clients. We use time-tested, disciplined approaches with a long-term orientation to navigate unpredictable markets and pursue above-average returns with below-average risk.
A key feature of the T. Rowe Price approach is style consistency, making sure that each fund invests in accordance with its prospectus, because for investors to achieve effective diversification, they must be confident that their funds remain true to their investment charters. Investment styles routinely cycle in and out of favor, and it can be tempting to chase the market's best performers-often just before they fall back to earth. Our analysts conduct in-depth examinations of thousands of companies and then conduct a rigorous valuation analysis before determining whether an investment is purchased, held, or sold.
Our policy is to run fully invested portfolios, but we keep a vigilant eye on values and will liquidate when valuations reach unsustainable levels. Our approach to valuation is not rigid. Valuations are measured in relation to general market and economic conditions and to the specific areas in which each fund invests. Ultimately, valuation is a judgment call, one that our managers make by measuring each company against its peers and against general market conditions.
Managers typically evaluate stocks over a three- to five-year horizon. After rising stocks eclipse reasonable valuation measures, managers generally reduce positions even if a company's growth prospects remain good. Managers are willing to lock in some gains when the future risks outweigh the potential reward. We believe that our disciplined approach has helped us recognize and avoid the kinds of short-term fads that have harmed investors.
T. Rowe Price's approach recognizes that there is always a delicate balance between risk and reward. Our primary goal is to provide attractive rates of return to our shareholders, but our portfolio managers carefully weigh the potential reward against the potential risk of each investment. No investment philosophy is foolproof. However, a risk-aware approach to investing has helped T. Rowe Price keep a collective eye on the long-term, pursuing opportunities when markets are trending down and sticking with sound fundamentals when they trend up.
Our portfolio managers try to avoid performance extremes and may give up potential gains when the downside risk appears excessive. We focus on managing portfolio risk from a total return perspective by broadly diversifying the funds among sectors, industries, and securities; controlling the size of our positions; and focusing on valuation and the degree of financial strength companies have to weather difficult financial times.
Even in funds that focus on specific areas such as science and technology or health care, our managers hold a wide range of companies. Funds that concentrate their holdings in a small number of stocks or a narrow market segment can soar at times, but they are also extremely volatile and prone to periods of negative performance. By comparison, diversification is a method used to potentially increase returns over time with less volatility. Over the long haul, we believe diversification tends to produce better results than a concentrated approach. (Diversification cannot assure a profit or protect against loss in a declining market.)
T. Rowe Price is widely recognized for the strength of its fundamental research. At T. Rowe Price, investment professionals tend to come into the organization as research analysts and spend the majority, if not all, of their careers with the firm. Our team of researchers is highly respected worldwide. The quality of our research effort provides a critical information edge that supports well-informed investment decisions. On average, our portfolio managers have nearly two decades of investment experience and have spent more than a decade at T. Rowe Price. Members of our senior management team have been with T. Rowe Price for more than two decades.
T. Rowe Price takes its role as a fiduciary on behalf of its funds and clients who are shareholders of publicly held companies very seriously. T. Rowe Price has always exercised the rights of its clients and mutual funds as shareholders by actively voting on proposals that portfolio companies offer in their annual proxy statements. Our goal has always been to advance the interests of all shareholders, including our investors, by voting the way we think best on proposals put forward. We have an active, comprehensive proxy review process that has been in place for many years. Our goals are fully consistent with our fiduciary obligations to our clients and shareholders.
Our mission is to generate above-average returns for our investors, first and foremost. We have an unwavering commitment to customer service and meeting your investment needs. We believe investors should hold a wide variety of investments and remain invested for the long term. The responsibility of investment managers to act in the investors' interest has never been greater. T. Rowe Price has recognized and lived up to this responsibility since its founding in 1937, and we will draw from our heritage to deal with the investment challenges and opportunities of the future.
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