LEVERAGING THE FIRM'S RESOURCES
Effectively leveraging the firm's talent to its fullest extent is a core element of the research process at T. Rowe Price—an effort supported by several key features of the firm's structure and culture. The firm created an internal information system that gives every manager or analyst in the firm instant access to every research product created across all global regions.
Current and past stock ratings and research reports are stored in a central research database that enables analysts in different regions to share and cross-check their findings. For example, a Baltimore-based utilities analyst can quickly review what a colleague in Singapore has written about a Chinese coal company. Research findings are also discussed on a daily international research conference call and at weekly calls covering the major equity styles (such as value and growth) and the major geographic regions. Several industry teams—including real estate and metals and mining—also schedule regular calls that provide support for other fund teams pursuing opportunities in those sectors.
"The sector funds are excellent platforms for analysts covering the same industries to share ideas across regions," says Baig. "Often these experts, including the managers, will travel together and go to industry conferences together, and we definitely encourage that."
BUILDING A DIVERSIFIED AND TALENTED TEAM
Any research program is only as good as the people who staff it, one reason the firm puts a heavy emphasis on recruitment and retention policies. Cultural diversity and local knowledge are both valued, but the primary focus of building a high-quality research operation is finding talented investment professionals. "We want to hire the best people, period," Baig says. "But to do that you have to look far and wide—across the entire spectrum in terms of backgrounds and nationalities. My colleague in the office next to me is an Italian. Two doors down is an Austrian. Down the hall is an American, a Malaysian, a Spaniard, an Argentinian, an Estonian, and a Russian. So we have quite a combination of country and sector expertise."
Research is at the heart of T. Rowe Price's approach to investing, and the firm has dedicated substantial resources to develop and improve its global research platform. The firm believes that the ideas and insights this program generates give its analysts and managers a clear competitive edge, potentially enabling them to spot trends that are not yet fully apparent to the markets—a critical advantage in the detection of both opportunities
Diversification cannot assure a profit or protect against loss in a declining market.