Analysts on site in developed and emerging market countries are able to assess the impact local and regional concerns are likely to have on companies and bond issuers. Having resources around the world is particularly important today, as growth in emerging markets and the fiscal crisis in Europe can move markets and affect individual securities.
T. Rowe Price's emphasis on collaboration enables analysts and portfolio managers around the world to communicate their insights throughout the company. McGonigle points out that the firm has nine London-based fixed income analysts and two based in Hong Kong, who bolster the firm's staff in the U.S. "It's critical to be in local markets and to understand their political and fiscal developments," he notes. "These resources give us the ability to analyze more corporate credit—we have sovereign debt expertise that is crucial with the current situation in Europe."
IN-DEPTH KNOWLEDGE, NEW INSIGHT
In the later phases of research, analysts write detailed evaluations that lay out the thought process behind their recommendations and provide details about key factors such as the company's management team, its financial strength, and potential risks. Analysts and portfolio managers refine the investment thesis on an ongoing basis, incorporating new information and taking advantage of the extensive experience within the firm's fixed income and equity teams. Portfolio managers at T. Rowe Price generally come up through the ranks as analysts, so they may have an especially deep understanding of management teams—their skills, experience, and personalities—throughout an industry. Says Allen, the portfolio manager of the T. Rowe Price Science & Technology Fund, "Each person's work gets amplified and strengthened by the insights and the perspectives of others with whom he or she is working."
The invesTMenT decisiOn
The ultimate investment decisions rest with individual portfolio managers. When a portfolio manager and an analyst disagree about their assessments of a particular security, the discussion often becomes a catalyst for further research and exploration. "I tread somewhat carefully if an analyst doesn't like a stock as much as I do," Allen says. "I spend time to really understand his or her perspective and assess whether I may be missing something and shouldn't be as positive as I am."
The research process at T. Rowe Price continues throughout the investment phase and often long after a security is sold, as it may offer compelling investment possibilities down the road. The complexity of global financial markets and the ever-changing dynamics that are part of any industry or sector require constant monitoring. Analysts provide portfolio managers with frequent updates on their recommendations and stay current with developments at a particular company or bond issuer—and they follow industry and sector trends closely. Their reports, both written and verbal, help management teams around the world distill enormous amounts of information and construct mutual funds that seek the best opportunities in today's investment climate, while adhering to the firm's long-term