Standard & Poor's looks favorably on mutual fund distributor T. Rowe Price Group, according to a report from BusinessWeek online. S&P is impressed by its strong competitive advantage, in addition to its robust net customer inflows, cautious expense growth and equity market appreciation.
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.