T. Rowe Price Group will reopen its more than $27 billion New Horizons U.S. small-cap growth equity strategy to new investors for the first time in more than nine years, a spokesman for the $1.2 trillion money manager confirmed Thursday.
For institutional investors, the strategy will open, effective April 26, on a restricted basis that requires internal approvals, reflecting lingering concerns that sizable institutional mandates could again run up against long-term capacity constraints.
Among the factors behind the decision, portfolio manager Josh Spencer, who oversees the strategy's $22.3 billion in mutual fund assets at the end of 2022 and $5 billion in institutional and collective investment trust assets, felt he could take on new flows without compromising the interests of existing clients, the spokesman said.
New Horizons has closed to new investors in the past at smaller levels when the velocity of inflows got too high, relative to new investment opportunities, the spokesman said. But today the reverse is true, with attractive investment opportunities at a time when inflows to growth equities have reversed, he said.
According to one estimate, assets under management for T. Rowe's U.S. small-cap growth equity strategy peaked at more than $50 billion during the quarter ended Sept. 30, 2021, before the March 2022 start of a U.S. Federal Reserve rate-hiking cycle resulted in a broad-based retreat for growth equity valuations.
In addition to New Horizon, T. Rowe announced it will ease restrictions on inflows to three other funds:
- The $17.2 billion emerging markets equity strategy, which had been closed to new investors since September 2018.
- The $8.9 billion integrated U.S. small-cap growth equity strategy, which had been on restricted status since October 2013, requiring internal approvals for inflows from new clients.
- The $4.2 billion U.S. structured active midcap growth equity strategy, which had been on restricted status since April 2010.