Winnersrationale

The US equity market had a stellar performance in 2021, rallying more than 20% YTD as of the end of August. But another year of broad-based growth has meant that active managers are challenged to demonstrate their value and the capacity for long-term outperformance. As of 31 August 2021, the T. Rowe Price Funds SICAV – US Large Cap Growth Equity Fund had beaten its benchmark over a 5-year and 10-year period.

The fund strictly follows an investment process emphasising fundamental research with ESG integration and active, bottom-up stock selection. The fund’s strategy has remained consistent since its inception in November 2003. Within its portfolio of 65-75 US large cap growth stocks, the fund identifies opportunities beyond the better known mega-cap technology names, which keeps the concentration risks of the portfolio in check.

One of its major calls in the past year was in Snap Inc, the parent company of social media application Snapchat, which the fund believes has a more competitive business model than its peers and keeps innovating. Other attractive US companies in the fund’s investment universe fall outside the information technology sector. For instance, within the consumer discretionary sector, the fund recognised Carvana, a used car business, as having the potential to materially disrupt the US$800 billion used-car market in the US through its use of data and artificial intelligence in creating an online proposition for customers.

A carefully composed, back-tested stock selection process coupled with a discreet risk management process has allowed T. Rowe Price Funds SICAV – US Large Cap Growth Equity Fund to stand out among its peers. By the end of August 2021, the fund had delivered a return of 18. 21% after fees, with a Sharpe ratio of 1.38.

For its ability to consistently demonstrate the value of active management and bottom-up stock selection, T. Rowe Price has been selected as Asian Private Banker’s Best Fund Provider – US Equity for the year 2022.

Winners rationale

After the market sell-off in March and April 2020, US equities were instrumental in leading the market recovery. T. Rowe Price defended its title and outperformed its peers with a persistence in performance that few manage to achieve.With a global equity research team of more than 173 analysts and industry specialists, T. Rowe Price followed a clearly defined investment process, emphasising fundamental research and active, bottom-up stock selection. On the back of a consistent investment style, T. Rowe Price recorded a strong performance in US equities, with its flagship strategy — T. Rowe Price Funds SICAV – US Large Cap Growth Equity Fund — achieving top quartile performance among peers in terms of YTD, one-year, three-year, five-year and ten-year returns, as of end-August 2020.

A strong performance track record usually goes hand-in-hand with a robust investment process and approach. As a strong believer of fundamental investments, the portfolio management team first performs high-level screening of a universe of approximately 500 companies with market capitalisations greater than US$8 billion. It constructs portfolios on the basis of identifying large-cap growth companies that are expected to generate real, double-digit earnings growth for a minimum of three years.

Worth noting, although the broad US market has been driven by big tech firms’ market price expansion, T. Rowe Price proactively looked beyond FAANG (Facebook, Apple, Amazon, Netflix, and Google) stocks and believed in high active share, with over 70% of the outperformance of the strategy driven by non-FAANG names (during the period under review) — something which helped investor to diversify their portfolios.

For its persistent performance in the US equity market and its dedicated research team, T. Rowe Price is selected as Asian Private Banker’s Best Fund Provider – US Equity.

Winners rationale

Leading the stock market recovery, US equities have been significantly outperforming global peers in 2019 despite market swings and broader geopolitical tensions. Yet, in this highly efficient market, generating consistent alpha is unprecedentedly difficult for an active manager and few can exhibit the persistence in outperformance as T. Rowe Price.

With a consistency in investment style and performance, the US large cap growth strategy of the firm made itself stand out from peers, achieving strong medium and long term excess returns in terms of three-, five-, and 10-year performance.

Such persistent performance could not be achieved without a robust investment philosophy and process. With a strong belief in a fundamental and bottom up approach, the team endeavoured to invest in companies with superior growth in cash flow and sustainable earnings momentum even during an economic downturn.

Despite the fact that large cap growth stocks in the US were dominated by FAANG stocks — Facebook, Apple, Amazon, Netflix, and Alphabet (Google) — the firm proactively looked beyond FAANG and believed in high Active Share, with over 70% of the outperformance of the strategy driven by non-FAANG names.

Equities in 2019 overall have not been a favoured asset class, but T. Rowe Price’s US large cap growth equity fund has garnered support from investors with its AUM trending up to US$2.2 billion as of end of August 2019, with a part of asset growth sourced from the region’s private banking clients.

A long and sound track record of US equity investing, backed by top notch dedicated supporting team makes T. Rowe Price Asian Private Banker’s Best Fund Provider – US Equity.

Winners rationale

While market swings, trade tensions, and broader geopolitical flare-ups kept investors busy in 2018, the US economy provided some solace from the storm, with the country’s equities notably outperforming other major global asset classes.

Morgan Stanley Investment Management emerged as a standout provider in the space, with one of its flagship strategies, the US Growth Fund, gaining recognition from the region’s leading fund selectors.

Since its launch in 1992, the fund has enjoyed consistent capital inflows, bringing its current AUM to US$2.5 billion. It has also outperformed its benchmark, the Russell 1000 Growth Net 30% Withholding Tax TR Index, on a one-, three-, and five-year basis.

Adopting a bottom-up approach, Morgan Stanley’s Counterpoint Global Team focuses on high-quality companies with a sustainable competitive advantage, business visibility, rising return on invested capital, free cash flow, and a favourable risk/reward profile. This long-term vision enables the firm to capitalise on secular growth without becoming distracted by short-term market events.

Further, and thanks to thorough fundamental due diligence and research, Morgan Stanley’s investment team holds a portfolio of high-quality growth stocks that it expects to perform regardless of market conditions. Indeed, heading into 2019 with late-cycle headwinds stirring and volatility rising, the team remains confident in its approach of assessing companies over longer-term horizons.

Backed by strong investment and distribution teams, Morgan Stanley Investment Management delivered in 2018 by providing long-term investment performance, high-quality servicing, and a comprehensive suite of solutions to the region’s private banking industry. Morgan Stanley Investment Management is the deserved recipient of the Best Fund Provider – US Equity award.