Brian Rogers is the Chairman of T. Rowe Price Group (. He also manages the company’s Equity Income Fund (PRFDX), a fund with more than $17.3 billion asset under management as of February, 2010. The fund returned -35.75% in 2008 and 25.62% in 2009, almost mirrored the performances of S&P 500. That is what the fund has been doing since 2003. His fund is becoming more and more like an index fund, although it holds much fewer names. At the beginning of the century, he was able to outperform the S&P 500 by a large margin.
Performance of T. Rowe Price Equity Income Fu
In January, 2010, Aline van Duyn, US markets editor of Financial Times, interviewed Brian Rogers, about the financial crisis, bubbles and historical cycles and investing strategies. This is an except highlighting with his view on the market and economy:
Read the complete transcript here.
Top Holdings
Conclusions
Brian Rogers is bullish on the stock market. His top holdings have the biggest banking, the biggest industry and the biggest oil companies in the country.
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| Year | Return (%) | S&P500 (%) | Excess Gain (%) |
|---|---|---|---|
| 2009 | 25.62 | 26.5 | -0.9 |
| 2008 | -35.75 | -37 | 1.2 |
| 2007 | 3.3 | 5.61 | -2.3 |
| 2006 | 19.14 | 15.79 | 3.3 |
| 2005 | 4.26 | 4.91 | -0.6 |
| 2004 | 15.05 | 12 | 3.1 |
| 2003 | 25.78 | 28.7 | -2.9 |
| 2002 | -13.04 | -22.1 | 9.1 |
| 2001 | 1.64 | -11.9 | 13.5 |
| 2000 | 13.12 | -9.1 | 22.2 |
In January, 2010, Aline van Duyn, US markets editor of Financial Times, interviewed Brian Rogers, about the financial crisis, bubbles and historical cycles and investing strategies. This is an except highlighting with his view on the market and economy:
FT: So, Mr Rogers, the financial markets – many segments have gained tremendously in the last 12 months since the lows in March of last year. The stock markets are up sharply, but also corporate bonds have rallied more than they ever have in the last year; government bonds have also rallied. Are you concerned about bubbles forming in some of these markets?In the same interview, during the long/short game session, Rogers stated that he is long on S&P500 and US real estate, and US Dollar, and he is short on US Treasuries and Gold.
BR: Aline, investors always worry about bubbles, but I think investors have to be somewhat humble about their ability to forecast bubbles and you can go back to the time when Alan Greenspan said in 1996 – his first utterance of the phrase irrational exuberance – really came three or four years before the bubble burst and I think any time you see massive moves in certain markets or asset classes people worry about bubbles. Could there be the early stages of a bubble forming in gold? Yes. Have emerging markets shown some signs of slight, minor, irrational exuberance? Yes – the Chinese market – people point to that. I think we look at most asset classes coming out of the severe price dislocations caused by the crisis – most major asset classes do not appear to be in that bubble territory, but I think there are little simmering signs around the edges of certain areas where there is a very aggressive investor activity, very high expectations and very high expectations for continued high returns and those are some things you worry about.
FT: And do you think ...? You said investors are always looking for bubbles, but do you think investors are looking at them with a different perspective now than they were a couple of years ago?
BR: Well, some investors look for bubbles to try and get in on them; other investors look at bubbles to try find things to be a little bit cautious about and I think that investor’s expectations are somewhat more realistic and subdued after what we’ve been through over the last couple of years. Whenever market rebounds are as strong as we saw in much of 2009 in categories like emerging market equities, high-yield bonds, precious metals – you always begin to wonder whether or not investors understand the risk and return balance involved. And at the same time I think that observers like myself have to be somewhat humble about one’s ability to call a bubble at the top. You just tend to tilt away from areas where perhaps there’s just too much excessive enthusiasm.
FT: And what are some markets you’re tilting away from at the moment?
BR: Well, as an investor you worry a little bit about too much money flowing into low-quality corporate debt. The high-yield market was an outstanding place last year. Our spreads have narrowed and so that might be an area where investors would want to be cautious.
FT: And there seems to be no sign that the enthusiasm is waning in this year.
BR: I agree with that. Investors really have to worry about precious metals because what are precious metals? And I think there are some speculative signs in some of the precious metal markets and I think if you’re not there you probably maybe want to do that some other time and I think emerging markets are showing signs of very aggressive investor behaviour.
FT: Emerging market equities?
BR: Yes and you never want to say, okay, today is the day where I will sell all of this, but you try to truncate your exposures and change them over time and increase them at certain times and decrease them at others and this would be a time to decrease them.
FT: So what are the main risks that you think investors need to be focuses on in the next year?
BR: I believe the biggest risk is will global economic growth recover at the pace people expect and will corporate earnings performance be as positive as people expect as we sit here in the first part of 2010? I think those are the two big variables.
FT: And if they’re not?
BR: And if they’re not I think there will be risk in equity markets. There are always what I call left field events that can occur ranging from a terrorist event to some financial calamity in a smaller market. Look at what’s going on in Greece right now, for example – it’s a mess. But at the same time the direction of the ship has changed. When the ship was heading into dangerous waters ... The direction of the ship has been changed and there is much economic data that suggests things are getting better slowly, depending on where you are in the world – that trend probably continues this year, but a year ago the question was will the system hold together? I think for 2010 the big question will be will the system continue to recover?
FT: Right, and is inflation one of the risks that’s on your radar screen?
BR: Inflation is always a risk on the radar screen. My view is it won’t be a big risk in 2010 when we look at all of the stimulus that has been injected around the world. At some point it could be an issue, but I don’t think that’s going to be an issue for this year. You really have to watch wage activity and also housing price activity and you really need increases in both of those to contribute to a serious inflation problem.
FT: But you don’t thin there’s a need for a complete overhaul essentially of the basic strategy that you, for example, have been pursuing?
BR: No, if you invest in an equity you own a share of the business. That’s always been the case – that will probably always be the case. I think you have to make a reasoned valuation assessment. As Warren Buffet would say, you have to make an assessment of the competitive viability of the company and if you’re comfortable with both of those factors markets will ebb and flow and we will have lost decades and we will have found decades, but if you’re a long-term investor you will benefit over the long term.
Read the complete transcript here.
Top Holdings
R.Rowe Price Equity Income Fund held 119 stocks. As a huge fund, its top holdings are big companies:
No. 1: JPMorgan Chase & Co. (JPM, Financial), Weightings: 3.43% - 13,950,800 Shares
J.P. Morgan Chase & Co. is a global financial services firm. Jpmorgan Chase & Co. has a market cap of $182.24 billion; its shares were traded at around $45.87 with a P/E ratio of 20.7 and P/S ratio of 1.8. The dividend yield of Jpmorgan Chase & Co. stocks is 0.4%.No. 2: Chevron Corp. (CVX, Financial), Weightings: 2.69% - 5,917,700 Shares
Chevron is the fifth-largest integrated energy company in the world. Chevron Corp. has a market cap of $161.09 billion; its shares were traded at around $80.21 with a P/E ratio of 16.6 and P/S ratio of 0.9. The dividend yield of Chevron Corp. stocks is 3.4%. Chevron Corp. had an annual average earning growth of 11.5% over the past 10 years. GuruFocus rated Chevron Corp.the business predictability rank of 3-star.No. 3: Exxon Mobil Corp. (XOM, Financial), Weightings: 2.38% - 5,917,700 Shares
Exxon Mobil Corporation's principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacturing of petroleum products and transportation and sale of crudeoil, natural gas and petroleum products. Exxon Mobil Corp. has a market cap of $324.16 billion; its shares were traded at around $68.66 with a P/E ratio of 17.1 and P/S ratio of 1. The dividend yield of Exxon Mobil Corp. stocks is 2.4%. GuruFocus rated Exxon Mobil Corp.the business predictability rank of 4-star.No. 4: General Electric Company (GE, Financial), Weightings: 2.33% - 26,136,600 Shares
General Electric is one of the largest and most diversified industrial corporations in the world. General Electric Company has a market cap of $202.19 billion; its shares were traded at around $18.95 with a P/E ratio of 16.5 and P/S ratio of 1.3. The dividend yield of General Electric Company stocks is 2.1%. General Electric Company had an annual average earning growth of 14.1% over the past 10 years. GuruFocus rated General Electric Companythe business predictability rank of 4-star.No. 5: American Express Company (AXP, Financial), Weightings: 2.24% - 9,368,400 Shares
American Express Company is a credit card company. American Express Company has a market cap of $53.74 billion; its shares were traded at around $44.99 with a P/E ratio of 31.2 and P/S ratio of 2.2. The dividend yield of American Express Company stocks is 1.6%.No. 6: Bank of America Corp. (BAC, Financial), Weightings: 2.21% - 24,918,486 Shares
Bank of America Corp. is one of the world's financial services companies. Bank Of America Corp. has a market cap of $161.67 billion; its shares were traded at around $18.67 with and P/S ratio of 1.1. The dividend yield of Bank Of America Corp. stocks is 0.2%.Conclusions
Brian Rogers is bullish on the stock market. His top holdings have the biggest banking, the biggest industry and the biggest oil companies in the country.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Brian Rogers for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
