T. Rowe's conservative investment philosophy and its focus on diversification also drew kudos from the rating firm. S&P also thinks the company's extensive line of no-load mutual funds allows investors to easily reallocate assets among funds. S&P additonally finds that investors are partial to large asset-management companies, like T. Rowe, that have a wide range of product offerings and have steered clear of regulatory issues.
As a result, S&P has upgraded T. Rowe from "4 STARS" (buy) to "5 STARS" (strong buy).
Assets under management at T. Rowe were $235 billion at the end of 2004, up from $190 billion the previous year. At the end of last year, assets were split 75% in equity securities and 25% in bond and money markets.
S&P also sees major growth opportunity for T. Rowe abroad, particularly in Europe, as international clients accounted for only 5.5% of the assets under management at the end of last year.
The company's shares should continue to trade at a considerable premium, based on S&P's view of its strong investment performance, diversified client base and multiple distribution channels.
