Here’s T. Rowe Price’s gameplan for pushing further into the $7 trillion private-investing space

Here’s T. Rowe Price’s gameplan for pushing further into the $7 trillion private-investing space

  • This month, T. Rowe Price hired a specialist from Pimco to lead alternative investment sales.
  • The new role is part of a wider push to expand its alternative offerings, like private credit.
  • T. Rowe Price’s top Americas institutional executive spoke with Insider about those plans. 

T. Rowe Price is no stranger to the private markets. The Baltimore-based money manager, which oversees some $1.6 trillion in assets, has invested in private companies since the 1980s

But private markets have ballooned in recent years. So has demand for other corners of the alternative investments universe, like real estate, private debt, and infrastructure. More companies are staying private for longer, while low interest rates have pushed investors to search for yield outside of traditional stocks and bonds.

With those shifts, T. Rowe Price, known for its active investment management prowess, has looked for ways to diversify. 

The firm told investors during its investor day in May that expanding alternatives offerings would be a key investment area over the next two to three years. Rivals like BlackRock and Invesco have also pegged that as priorities.

It’s what the clients want: the private markets industry’s assets under management grew 20% last year to $7 trillion, Morgan Stanley analysts said this month, and a Boston Consulting Group report said real assets, led by real estate, rose to a record $235 trillion in 2020. 

Chris Newman, head of the Americas for T. Rowe Price’s institutional business, told Insider that the firm is responding to clients’ demand, and that may include acquiring alternatives-focused capabilities.

“Part of it will be continued organic ways of looking at different capabilities that we can bring to market based on skills — and then potentially for us, inorganic if the opportunity is right,” Newman said.

This month, T. Rowe Price hired Chris Tarui away from Pimco as business development executive for alternatives, a newly created post reporting to Newman, to draw up a global distribution plan for alternatives and lead those sales.

Clients typically must qualify to invest in certain alternative assets, since they tend to be more complex and carry higher management fees than public-market-focused funds. Private equity and debt also don’t require the same disclosures as public investments, so there’s usually less transparency around performance.

“Clearly, it’s competitive. There’s a lot of demand there,” Newman said of alternatives broadly.

“Will it continue, I guess is the question. Will the interest in private credit continue longer-term, given where rates are going?” he said. The

Federal Reserve
last week signaled it may gradually start hiking interest rates in 2023, sooner than investors previously expected. 

Newman said he may look to add additional alternatives specialists to the firm’s distribution team, but there’s “nothing on the books” yet. The firm does not disclose total alternative assets under management.

There are other dimensions to asset managers’ alternatives expansion. One is clients’ preference to work with fewer vendors, leading some fund managers to offer more products and services in-house.

Large distributors “such as Morgan Stanley, Bank of America, or Schwab are working with fewer asset managers over time,” T. Rowe Price Chief Executive William Stromberg said during the firm’s investor day last month.

And big money managers offering private investments were seen as the big winners when the Trump administration’s Department of Labor said last year that it would start allowing some retirement funds to invest in private equity. But Newman has not seen much demand for those strategies in some retirement plans like 401(k) plans.

“I would never say never,” he said.

“But then the real thing I think is

liquidity
, and the ability to continue to deal with daily valuations, and how do you get private inside a DC plan,” Newman said, referring to defined contribution plans. “From a fiduciary perspective, it’s challenging for plan sponsors to tolerate that.”

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