Many active fund managers tout deep research teams to boost their investing capabilities. A firm’s fundamental research capabilities can distinguish between middling returns and consistent, significant returns. Whether a growth or value strategy, in equities or fixed income, fundamental research matters for active strategies. T. Rowe Price’s “tech tours” present one key example of a boots-on-the-ground research approach to watch.
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For almost twenty years, per T. Rowe Price, the firm has deployed analysts and managers to Silicon Valley every year. Certainly, the shop sends teams out more often than that, but the tentpole visit allows the firm to deepen its research into a key sector: technology. Amid a boom in AI, getting in the door provides key insights, amplifying fundamental research.
“This is clearly the best use of my time every year,” said T. Rowe Price portfolio manager Dom Rizzo":https://www.troweprice.com/institutional/us/en/insights/articles/2024/q1/tech-tour-insights-whats-next-for-ai-investing-na.html." "We meet with forty of the leading-edge mission critical, linchpin technologies in Silicon Valley, the CEOs and CFOs of the likes of Google, META, Nvidia, Netflix, you name it, we meet them.”
AI and Fundamental Research
The firm’s most recent trip saw managers including Rizzo, James Stillwagon, and Anthony Bruce Wang all emphasize the significant opportunity in AI. Although many firms and investing strategies get abstracted exposure to AI, T. Rowe Price’s managers have gotten in the door for direct conversations on the opportunities there.
With A.I. potentially approaching bubble status, that level of direct research and engagement matters. Additionally, this can help set a firm’s whole approach apart from its rivals. Investors can access that research in strategies like the T. Rowe Price U.S. Equity Research ETF (TSPA ).
TSPA leans heavily on fundamental research, charging only 34 basis points (bps) for its research-driven approach. It is nearing its three-year ETF milestone, having returned 11.2% YTD. Consequently, investors may want to take a closer look at a firm’s fundamental research strategy moving forward, given the role it can play for active investing in particular.
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