T. Rowe Price US Lg Cap Gr Eq Q USD |
by Adam Sabban
T. Rowe Price Large Cap Growth remains a good option in a competitive arena thanks to strong analytical resources, deep research, and a steady investment framework. This offering is rebounding nicely from a subpar 2022. The institutional shares of the U.S. mutual fund gained 35% through the first seven months of 2023, placing in the top quartile of large-growth Morningstar Category peers and ahead of the Russell 1000 Growth Index. The strategy made up ground after a difficult 2022 when it placed in the bottom quartile of peers owing to poor stock picks and relative positioning. Those factors reversed course as keeping less capital in defensive or more cyclically oriented sectors such as consumer staples, industrials, and energy boosted performance, as did stock-picking in financials, technology, and communication services. Manager Taymour Tamaddon, like most other large-growth managers, has a difficult challenge in that the benchmark against which he is measured has become very concentrated. Companies such as Apple AAPL and Microsoft MSFT each account for more than 10% of the benchmark, and a handful of others are over 5%. Fortunately for investors in the U.S. mutual fund, Tamaddon has full flexibility to express bets relative to these behemoths because of its status as a nondiversified fund. In a year such as 2023 when mega-caps have performed well so far, that can be an important differentiator. However, the Luxembourg and U.K. open-ended vehicles are capped at a 10% weighting for a single stock, so they can still encounter some hurdles but over the long-term figure to be relatively uninhibited in a more balanced market environment. While the strategy is as concentrated as it has been and does bear higher single-stock risk than in the past, it still invests in more than 50 companies and has exposure to most economic sectors. Tamaddon gained a partner to help him tackle his challenging task when Jon Friar became associate manager in April 2023. Friar previously headed the firm’s business-services analyst team for about five years and has worked at T. Rowe since 2011. Friar distinguished himself with strong stock-rating efficacy as an analyst and is eager to contribute in a bigger way here. The addition of a dedicated resource is a plus for the strategy, which has the research framework, depth, and personnel to stay ahead of most rivals. |
Morningstar Pillars | |
People | Above Average |
Parent | High |
Process | Above Average |
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