BALTIMORE, May 2, 2017 /PRNewswire/ -- T. Rowe Price
Group (NASDAQ-GS: TROW) today announced the results of a new study
that chronicles the outperformance of its target date strategies
against passive benchmarks over the long term.
The study used two performance measures: "hit rates" (the number
of times a fund beat its benchmark in a given time period) and
"excess return" (the margin of outperformance). All 11 of the
firm's Retirement Funds with at least 10 years of history
outperformed their passive benchmarks net of fees in at least 84%
of the rolling five-year periods and in 100% of the rolling10-year
periods from inception through December 31,
2016. In addition, average excess returns relative to the
passive benchmarks used in the study were consistently positive, on
average, across all time periods for all 11 Retirement Funds. The
returns for the passive benchmark components do not incorporate the
potential fees that are normally charged to provide such exposure;
the relative results for the actively managed target date funds
would have been stronger had they been included.
Active management is core to the firm's target date strategies
and the outperformance demonstrated in the study was primarily
driven by positive contributions from active security
selectioni and tactical asset allocationii .
Full results of the study can be found here.
"The results of our study and the success of our target date
franchise stem from the firm's core strengths, including the depth
of our global research platform, the disciplined approach of our
portfolio managers, and the experience and quality of our Asset
Allocation team," said Sebastien
Page, head of Asset Allocation for T. Rowe Price. "Our excellent investment results
show that active managers with outstanding people, process, and
culture can deliver substantial value to clients over the long
term. We are fortunate to have some of the brightest minds in
the investment management business working for our clients."
A similar T. Rowe Price study
evaluated the performance of 18 T. Rowe Price diversified, actively
managed U.S. equity funds over the 20 years ending December 31, 2016. Fifteen of the 18 T.
Rowe Price U.S. equity funds studied outperformed their benchmarks
in more than half of all rolling 10-year periods in the study.
Moreover, 11 funds beat their benchmarks in at least 99% of all
rolling 10-year periods. On average, the funds generated positive
excess returns, net of fees, over 1-, 3-, 5-, and 10-year rolling
time periods. The likelihood of outperformance and the margin of
excess return both tended to increase over longer periods.
Full results of the U.S. Equity study can be found here.
T. Rowe Price is the third
largest provider of target-date portfolios in the U.S., with
$202.6 billion in assets under
management as of March 31, 2017.
Target date strategies have become important retirement investment
vehicles for many individual investors and for a growing majority
of those participating in defined contribution plans or other
tax-deferred retirement savings program. These funds are an
effective investment solution for investors who prefer to delegate
their investment and asset allocation decisions to professional
money managers.
T. Rowe Price's Retirement Funds
seek to provide investors with an age-appropriate, diversified
portfolio that can carry an investor to and through retirement.
100% of the firm's Retirement Funds beat their 10-year Lipper
average as of March 31,
2016iii.
Download a prospectus or obtain one by calling
1-800-541-8803. The prospectus includes investment objectives,
risks, fees, expenses, and other information that you should read
and consider carefully before investing.
Past performance cannot guarantee future results. All funds are
subject to market risk including possible loss of principal.
The principal value of the Retirement Funds is not guaranteed at
any time, including at or after the target date, which is the
approximate year an investor plans to retire (assumed to be age 65)
and likely stop making new investments in the fund. If an investor
plans to retire significantly earlier or later than age 65, the
funds may not be an appropriate investment even if the investor is
retiring on or near the target date. The funds' allocations among a
broad range of underlying T. Rowe
Price stock and bond funds will change over time. The funds
emphasize potential capital appreciation during the early phases of
retirement asset accumulation, balance the need for appreciation
with the need for income as retirement approaches, and focus on
supporting an income stream over a long-term postretirement
withdrawal horizon. The funds are not designed for a lump-sum
redemption at the target date and do not guarantee a particular
level of income. The funds maintain a substantial allocation to
equities both prior to and after the target date, which can result
in greater volatility over shorter time horizons.
T. Rowe Price Investment Services, Inc.
ABOUT T. ROWE PRICE
Founded in 1937,
Baltimore-based T. Rowe Price
Group, Inc. (troweprice.com) is a global investment management
organization with $861.6 billion in
assets under management as of March 31,
2017. The organization provides a broad array of mutual
funds, subadvisory services, and separate account management for
individual and institutional investors, retirement plans, and
financial intermediaries. The company also offers sophisticated
investment planning and guidance tools. T.
Rowe Price's disciplined, risk-aware investment approach
focuses on diversification, style consistency, and fundamental
research.
i Active security selection: The value added by the
active management of the underlying funds in the Retirement Fund
portfolios relative to the size-and style-specific benchmarks used
by the target date investment team to measure the performance of
each underlying fund.
ii Tactical asset allocation: Shorter-term allocation
in the Retirement Fund portfolios made by the T. Rowe Price Asset
Allocation Committee in order to seek to take advantage of
potential valuation anomalies or other excess return
opportunities.
iii *24 of 36 Retirement Funds had a 10-year track
record as of March 31, 2017 (includes
all share classes). 23 of these 24 funds (96%) beat their Lipper
averages for the 10-year period. 21 of 36, 35 of 36, and 35 of 36
of the Retirement Funds outperformed their Lipper average for the
1-, 3-, and 5-year periods ended 12/31/16, respectively.
Calculations are based on cumulative total return. Not all funds
outperformed for all periods. (Source for data: Lipper Inc.)
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SOURCE T. Rowe Price Group, Inc.