Active Management: The Professionally-Educated, Profit-Focused, Intense Approach to Asset Management
Active management is a strategy employed by investment firms and fund managers to outperform the market by making informed decisions and taking deliberate actions based on their analysis and research. This approach contrasts with passive management, where the investment strategy is designed to match the performance of a specific market index.
The Evolution of Active Management
Active management has been a key pillar of the asset management world for some time. As that space has grown, some funds have stood out specifically for their ability to deliver strong returns through active management. One such fund is the T. Rowe Price New Horizons Fund.
Founded in 1987, the T. Rowe Price New Horizons Fund is a small-cap growth equity fund that has consistently delivered impressive returns. According to its fact sheet, the fund’s five-year annualized return (as of March 31, 2023) was 21.47%, which was significantly higher than the S&P 500’s five-year annualized return of 13.68% during the same period.
The T. Rowe Price New Horizons Fund: A Closer Look
The T. Rowe Price New Horizons Fund’s success can be attributed to several factors. First, its investment team is led by a group of experienced and highly-educated portfolio managers who are dedicated to identifying growth opportunities in small-cap companies. The team’s investment process is rigorous and disciplined, involving extensive research and analysis.
Second, the fund’s investment strategy is focused on companies with strong growth potential. The team looks for companies that have a competitive advantage, a solid business model, and a proven management team. They also consider the company’s financial health, including its revenue growth, earnings growth, and cash flow.
The Impact on Individuals
For individual investors, the success of actively managed funds like the T. Rowe Price New Horizons Fund can provide an opportunity to outperform the market and potentially grow their wealth. By investing in actively managed funds, investors can benefit from the expertise and research of professional fund managers who have a deep understanding of the markets and the companies they invest in.
The Impact on the World
At a larger scale, the success of actively managed funds like the T. Rowe Price New Horizons Fund can have a significant impact on the global economy. By investing in growth companies, these funds can help to fuel innovation and create new jobs. Additionally, their investments can help to attract capital and attention to industries and sectors that may not have received as much focus from passive investors.
Conclusion
Active management is a professional, educated, profit-focused, and intense approach to asset management that has proven successful for both individual investors and the global economy. Funds like the T. Rowe Price New Horizons Fund demonstrate the potential for active management to deliver strong returns through rigorous research, disciplined investment strategies, and a focus on growth opportunities.
- Active management is an investment strategy employed by fund managers to outperform the market
- The T. Rowe Price New Horizons Fund is a small-cap growth equity fund with a strong track record of returns
- The fund’s success can be attributed to its experienced investment team and disciplined investment process
- Individual investors can benefit from the expertise of professional fund managers through actively managed funds
- Actively managed funds can have a significant impact on the global economy by fueling innovation and creating jobs
