How T. Rowe Price is poised to outperform the market | Business
Frankel: 18,700% return since the mid-1980s. That’s a pretty impressive long-term track record.
Hall: I have another record here. It has increased its dividend every year for 35 consecutive years.
Frankel: It has been an excellent dividend payer. You can see lately that performance hasn’t been that good, but can’t we say that about most of the stocks we track?
Frankel: Just to explain why they were underperforming. A few different things. First, 2021 has been a bad year for actively managed mutual funds. I mean, look at the performance of the S&P500 (SNPINDEX: ^GSPC) and Dow Jones (DJINDICES: ^ DJI) over some of the stocks we love so much. It was a very bad year to be a stock picker, as most people listening here found out. It was a very good year for investing in index funds, as they significantly outperformed most individual investors. Being one of the largest providers of actively managed mutual funds, not all of their funds are actively managed, but that is one of their main goals. It is their differentiator. It was not a good year for many of their funds. #2, we’ve seen a lot of outflow from their funds. Not a lot based on the $1.7 trillion figure I mentioned. But throughout 2021 net outflows, meaning more money went out than went into their funds, $28.5 billion of investor money was taken out of the funds. Now, that’s largely because the market has done very well. It’s been pretty much straight since bottoming out in March 2020 through the end of 2021. In times like this, it’s natural to see many investors dipping into their accounts, start withdrawing some money, but still not quite what you want to see as an investor. I think T. Rowe Price has a fantastic track record as a great dividend payer, AUM builder and therefore revenue growth driver. I don’t really see that changing. I don’t think they’re going to return 18,000% over the next 40 years like they have for the past 40 years. It will always be, I think, an outperforming market and that is why I have classified it at the high end. . Guys?