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Wednesday, July 29, 2009|
Kennedy Says He's Open-Minded Toward ETFs
Wednesday's Fund Track column in the Wall Street Journal took a look at mutual fund heavy hitter T. Rowe Price as a model of enduring success, calling the Baltimore-based firm "one of the few publicly traded money managers that enjoys broad support on Wall Street". The column discussed the firm's plans to continue the relative success it has enjoyed as compared to many of its peers, and these plans do not seem to include any notably new products or initiatives but rather a focus on maintaining the integrity of the firm's existing management style.
The firm's broad support weathered even the most recent market downturn, as T. Rowe saw net inflows in the first and second quarter, and "light" net outflows in the fourth quarter of 2008. While the company's stock plunged 20 percent over the past year, it has still managed to beat out a majority of companies in its sector.
The column praises T. Rowe's longstanding management style, citing a client-oriented approach, avoidance of market timing and late trading scandals, cost cutting measures and a focus on long term performance as drivers behind the company's success.
"We want to be the best in clients' minds," CEO James Kennedy told the WSJ. "If you service them you'll do just fine."
The article also notes that T. Rowe is one of the few major fund firms to refrain from jumping into the ETF business, and that T. Rowe's focus on active management could prove a significant barrier to entry into the field.
Kennedy seems ambivalent towards ETFs, at least as they are defined by current transparency restrictions.
"If we could have an ETF that didn't disclose our trades, we'd be happy to do them," Kennedy told the WSJ. "I'm open-minded towards ETFs."
Overall, the firm seems less concerned about growth than about continued performance and client service.
"We're not driven by growth, but by being the top performers over time," Kennedy said.
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