T. Rowe Price issued a study concluding that its actively managed funds have outperformed its passive peer funds over the last 20 years ended September 30. Looking at rolling monthly 10-year periods from October 1, 2002, to September 30, 2022, for 124 actively managed T. Rowe Price mutual funds and exchange traded funds, the manager’s offerings beat comparable passive fund averages 73% of the time. By comparison, the aggregate of all actively managed funds (excluding T. Rowe Price’s) comprising the Morningstar Direct database did so 47% of the time.
The annualized excess returns above passive averages achieved by all T. Rowe Price equity funds across rolling 10-year periods were, on average, 1.06% after fees and expenses. Broken down by region and sector, the average annualized excess returns for U.S. equity funds was 0.078%, 0.64% for international equity funds, and 2.59% for sector equity funds.
The frequency of better returns over passive averages was 76% for all equity funds, 73% for U.S. equity funds, 77% for international equity funds, and 81% for sector equity funds.
“While passive funds have a place in some client portfolios, active management that is executed properly and consistently can deliver more attractive returns over the long term,” said Eric Veiel, head of global equity and chief investment officer at T. Rowe Price, in a news release announcing the study.
Meanwhile, its fixed income funds outperformed in 59% of the rolling 10-year periods analyzed. The average amount of better returns, net of fees and expenses, over passive averages for T. Rowe Price fixed income funds was 0.17%.
Andy McCormick, head of global fixed income and CIO, added: “The balance between generating active returns and mitigating downside volatility is a key focus of our portfolio construction and risk management disciplines. Our global research platform has enabled differentiation from passive fixed income offerings, which, for various reasons, often struggle to mirror the bond indices they track and could make them more volatile than actively managed bond funds. Fixed income allocations continue to be an important source of income and diversification for our clients, and we remain committed to helping them meet their investment objectives.”
T. Rowe Price offers a suite of actively managed ETFs. T. Rowe Price has been in the investing business for over 80 years, conducting field research firsthand with companies, utilizing risk management, and employing a team of experienced portfolio managers carrying an average of 22 years of experience.
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