ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Active ETF Channel
  2. T. Rowe Price CEO Cautions Investors on Risk
Active ETF Channel
Share

T. Rowe Price CEO Cautions Investors on Risk

Karrie GordonDec 27, 2021
2021-12-27

The CEO of $1.6 trillion active asset management firm T. Rowe Price, Bill Stromberg, warned investors before he steps down at the end of the year to “step away from risk,” on the grounds that markets have ballooned on speculation, reports the Financial Times.

Markets have become more and more speculative with the introduction of government spending combined with an easy monetary policy from the Fed, leading to an environment that has many investors positioned in higher-risk assets. The strong markets in 2021 have been driven by this combination as well as high consumer demand, resulting in indexes logging record performances for much of the year.

“Over [the] last two years there has been a way above-average amount of speculation,” said Stromberg in an interview with the Financial Times. “We’ve been in a cycle where there has been very free-form risk-taking.”

He believes that the outperformance has been largely driven by a small number of the biggest companies that are currently overvalued, while the remainder of the market has been “picked over” by advisors and investors looking to find pockets of opportunity. In short, markets are currently very concentrated, which could ultimately create significant problems, should the economy pull back more significantly next year.

Stromberg also believes that investors should move out of strategies and positions that have worked in the last year to three years, in order to not be overexposed to risk. “Even if they are a year too early. Because when the market unwinds, it will be areas of risk that unwind the most,” he said.

“Investors should remain disciplined,” Stromberg said. “I can’t tell you when that period of speculation will end, but it won’t be sustained.” In an environment of highly concentrated investment and heavy allocation into risk and speculation, active management is more valuable, according to Stromberg.

T. Rowe Price has been one of the few active management firms to have grown exponentially in a largely bull market where retail investors could somewhat easily outperform large, active firms. Shares for the investment management firm have grown more than 150% in the last five years, and assets under management have doubled over that same time period.

The active management firm came to prominence when picking major tech names such as Twitter, Uber, and, more recently, the eyeglasses supplier Warby Parker, before they went to IPO. The company has managed to outperform the S&P 500 over the course of the last five years when many active management companies have faltered or failed, but they have underperformed the astronomical growth of the Nasdaq Composite, which has increased 200% over the same period.

Active management really “boils down to who can deliver and beat passive over the long term. We’re one of half a dozen scaled firms that have done that well over time,” Stromberg said. He has been with the firm for 34 years, was CEO for five years, and will be succeeded by Rob Sharps, the current CIO of T. Rowe Price.

For more news, information, and strategy, visit the Active ETF Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X