Thread regarding T. Rowe Price Group Inc. layoffs

Why launch products that don’t sell?

I can’t understand why the company is launching all these products that end up being duds. Products that have very little AUM in them after 1-2 years and where they likely will not grow to reach scale. It ends up being a drain on resources and time and effort from various teams. Why? Just to keep people in a job and to use certain products as scapegoats for not winning.

Sales team probably said they could sell it. Product team likely did analysis to say it could be a winner. Management must’ve signed off on it.

Where is the accountability?


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Post ID: @OP+1kvp279w6

3 replies (most recent on top)

Honestly, y'all, read a chapter in a book called 7 Powers that describes this.
T. Rowe is in a tough position where it's not "worth it" to invest into entering passive, but it's not optimal to just stay in active or doing what the firm is doing either. Fidelity and others (see Legg Mason) faced essentially an identical problem to the one T. Rowe is facing now. Legg owned a bunch of boutiques but wasn't able to compete independently. T. Rowe could sell but can't (yet) convince someone to buy the company outright.

Ultimately, they have to find some way to diversify, and have entered an array of areas with no clear direction since they don't know precisely what will stick. It's a tough spot with a lack of clear strategy to follow since they are not sure that entering an area they know will succeed will be "worth it" (i.e., passive and random ETFs) and since they don't know if other areas will lead to problems that other managers faced (i.e., Legg with alternatives).

They could diversify, but not get the return that justifies investing.
They could buy smaller companies, but be weighed down by their own purchases.
They could sell the firm, but nobody wants to pay the premium they would have gotten in yesteryear.
It's a secularly challenged company actively looking for a good path forward. It hasn't found that yet.

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Post ID: @ee+1kvp279w6

Active management all looks the same — no real differentiation. Everyone keeps stressing the same things, "bottom-up," "fundamentals," year after year. It's the age of AI. Change is intelligence. I get that some see the essence in tradition and not changing, but can we really afford that mindset now? Performance is on the edge of a cliff. I want firms that keep questioning whether they've fallen into mindless complacency, and that aren't afraid to change, take risks, and differentiate.

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Post ID: @ch+1kvp279w6

What about the PMs that can’t outperform? Why even bother giving them a portfolio to manage?

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Post ID: @aw+1kvp279w6

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