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Updated on Friday, January 18, 2019
T. Rowe Price has a long history of providing quality investments with reliable performance at a reasonably low cost. The Baltimore-based company is well-known for its variety of proprietary no-load, actively managed mutual funds, managing more than $1 trillion for individual and institutional investors, primarily in the U.S.
Among the most popular offerings are T. Rowe Price’s target-date funds, which are managed for growth or preservation, depending on your retirement timeline. T. Rowe Price also manages workplace 401(k) plans for corporate employers. Overall, about two-thirds of assets under management are in retirement-based accounts.
T. Rowe Price also offers discount brokerage services, with a simplified trading platform for self-directed investors. Investors can access a wide range of investment types, including competitor no-load mutual funds, no-fee exchange-traded funds (ETFs), Stocks, Bonds, Options and more.
Who should consider T. Rowe Price
Whether you should consider T. Rowe Price as a broker depends largely on the type of services you seek. If you are an investor who likes the idea of outperforming the stock market without having to select the individual investments, then investing through a T. Rowe Price fund is worth considering. Over a 10-year period ending on Sept. 30, 2018, more than 90% of the company’s stock funds outperformed their Lipper averages based on cumulative return. If you invest in an a T. Rowe Price actively managed fund directly, you can cut out the broker fee.
Investors who are looking to trade Stocks on a regular basis or dabble in more speculative markets probably should look elsewhere. While T. Rowe Price does offer an online brokerage, high trading costs and minimum balances make it ill-suited to both new investors and frequent traders. Timely, in-depth stock analysis is not part of the company’s offerings. And while they’re easy to use, the site’s tools are not designed to give active traders an edge.
T. Rowe Price fees and features
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Strengths of T. Rowe Price
- Consistent active management: T. Rowe Price’s actively managed funds have been standouts for decades. As of November 2018, more than 70 T. Rowe Price funds had four- or five-star ratings from Morningstar based on risk-adjusted returns.
- Low-cost Mutual funds and ETFs: If Vanguard is known for being the low-cost index fund giant, T. Rowe Price is known for being the low-cost active management giant. T. Rowe Price offers thousands of no-load mutual funds, and more than 80% of the company’s funds for individual investors charge less than the Lipper average for their categories.
- Products, services and tools for long-term planners: Need help building a portfolio for retirement? T. Rowe can get you started with access to a portfolio-building tool as well as a simulator called FuturePath, which can help you calculate your odds of long-term success.
It also offers robo-advisor services through its ActivePlus Portfolios, along with Private Asset Management and Select Client Services for clients with a higher net worth. T. Rowe Price even offers a top-rated 529 college savings plan, according to a November 2018 analysis from Savingforcollege.com.
Drawbacks of T. Rowe Price
- High trading costs: If you’re investing directly in T. Rowe Price funds, you can save a bit by cutting out the brokerage middleman. Investing in other funds through T. Rowe Price’s brokerage, however, will run you about $35 per trade. Trading Stocks or ETFs will cost you $9.95 or $19.95 per trade, depending on the number of executed trades in the prior 12 months or your account balance. These costs can eat into investment performance, and they seem particularly steep compared to trades as low as $4.95 offered by Fidelity and Schwab.
- Steep account minimums: You’ll need at least $1,000 if you want to invest in a mutual fund through an individual retirement account (IRA). Otherwise, it takes a minimum of $2,500 to invest with T. Rowe Price in a taxable account.
- Added fees: Once you have an account, you’ll also pay a $20 annual fee for a mutual fund account and $30 annually for a brokerage account. You can bypass these fees if you’ve made 30 or more trades in the past 12 months, hold more than $50,000 in T. Rowe Price mutual funds or qualify for Select Client Services (which requires a minimum of $250,000 invested). You also may pay an additional amount when an account is closed.
Is T. Rowe Price safe?
Over the company’s 80-plus-year history, it has built a reputation of stability, straightforwardness and character, and it has been named among the world’s most admired companies by Fortune. T. Rowe Price portfolio managers spend an average of 16 years with the company, almost unheard of in the churn-and-burn world of finance.
T. Rowe Price is a member of the Financial Industry Regulatory Authority (FINRA), which monitors broker activity, and the Securities Investor Protection Corporation (SIPC), which protects investor assets up to $500,000 should the brokerage fail (although this does not cover losses from market fluctuation). For all client accounts, the company has protection on an aggregate loss limit of $1 billion and a per-client loss limit of $1.9 million for cash awaiting reinvestment.
The company protects customers online by using a two-factor authentication process for login on both desktop and mobile and provides industry standard secure encryption within your account.
If your goal is sophisticated, high-speed trading without a lot of hand-holding, there are less expensive options that may be more suited to your needs. As of the date of publishing, stock trading is just $4.95 at large competitor firms Fidelity and Schwab, and Ally Invest is offering $0.00 trades for active investors, and you can trade no-load funds there for $9.95. But if your chest of tools includes risk-adjusted mutual fund investing, T. Rowe Price funds can offer benchmark-beating, long-term track records at a reasonably low cost.
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