An Inside Look at T. Rowe Price® ActivePlus PortfoliosJuly 13, 2017
- The multi-asset class portfolios offer investors T. Rowe Price’s strategic and tactical thinking on asset allocation and access to the firm’s top global investment ideas.
- Investors can request substitutions for many of the portfolios’ underlying investments and can see any trading activity in the account.
- The program pairs a digital, online platform with a trained phone support team.
The T. Rowe Price ActivePlus Portfolios are a new series of model portfolios that invest in varying allocations in a select number of the firm’s actively managed mutual funds. Thompson discusses these portfolios, which are now available for investment in individual retirement accounts (IRAs).
How are these model portfolios structured?
The 10 model portfolios correspond with different time horizons and risk tolerances to meet a wide variety of investor needs—ranging from the most aggressive portfolios (as much as 100% in equity funds) to those with limited equity exposure.
The portfolios invest in eight to 13 stock, bond, and money market securities. To choose an appropriate portfolio, investors complete a short online questionnaire about their risk tolerance and investment time horizon.
These multi-asset class portfolios offer investors...access to the firm’s top global investment ideas through a diversified range of funds.- Toby Thompson
How are these different from target date funds?
T. Rowe Price ActivePlus Portfolios is a digital discretionary investment program, rather than a mutual fund that in turn invests in a range of mutual funds, such as the firm's target date funds. Unlike target date funds, the model portfolios' asset allocations do not automatically reduce an investor’s equity exposure over time. Instead, investors annually retake the online questionnaire on risk tolerance and investment horizon to change their model portfolios.
Rather than holding a single fund of funds, investors in the portfolios hold separate positions in each of the underlying investments. They can request substitutions for many of the portfolios’ investments and will see trading activity in their accounts.
Do these portfolios benefit from the same research and knowledge as the firm’s target date funds?
These multi-asset class portfolios offer investors T. Rowe Price’s strategic and tactical thinking on asset allocation and access to the firm’s top global investment ideas through a diversified range of funds. Their strategic design reflects the same overall asset allocation thinking as the target date funds. The overall strategic allocations in the portfolios can be adjusted tactically by the investment managers.
What if I have questions about my portfolio?
While the program is completely digital and accessible on mobile and desktop devices, investors also will have access to client specialists—a trained phone support team that can help with questions.
Who can invest in these portfolios?
The new discretionary management service is open to IRA investors with a minimum investment of $50,000. There is no account fee or additional advisory fee. Expenses are based on the underlying costs of the funds in the model portfolios.
Understanding the differences between the two account strategies can help you decide if one is right for your retirement investing objectives.
*You may request to restrict up to 3 funds from your portfolio at a time. By restricting a fund(s), you're requesting us to replace that mutual fund with an alternative program fund within the same asset class (for example, U.S. large-cap growth, U.S. investment-grade fixed income, etc.). Keep in mind: Not all mutual funds within a portfolio have an acceptable alternative. In this scenario, we'll contact you to review your options, which may include changing or removing the request or, in some cases, closing your account.
The T. Rowe Price® ActivePlus Portfolios is a discretionary investment management program provided by T. Rowe Price Advisory Services, Inc., a registered investment adviser under the Investment Advisers Act of 1940. Brokerage services are provided by T. Rowe Price Investment Services, Inc., member FINRA/SIPC. Brokerage accounts are carried by Pershing LLC, a BNY Mellon Company, member NYSE/FINRA/SIPC. T. Rowe Price Advisory Services, Inc., and T. Rowe Price Investment Services, Inc., are affiliated companies.
The principal value of the Retirement Funds and Target Funds (collectively, the “target date funds”) is not guaranteed at any time, including at or after the target date, which is the approximate year an investor plans to retire (assumed to be age 65) and likely stop making new investments in the fund. The target date funds’ allocations among a broad range of underlying T. Rowe Price stock and bond funds will change over time. The Retirement Funds emphasize potential capital appreciation during the early phases of retirement asset accumulation, balance the need for appreciation with the need for income as retirement approaches, and focus on supporting an income stream over a long-term postretirement withdrawal horizon. The Target Funds emphasize asset accumulation prior to retirement, balance the need for reduced market risk and income as retirement approaches, and focus on supporting an income stream over a moderate postretirement withdrawal horizon. The target date funds are not designed for a lump-sum redemption at the target date and do not guarantee a particular level of income. The key difference between the Retirement Funds and the Target Funds is the overall allocation to equity; although they each maintain significant allocations to equities both prior to and after the target date, the Retirement Funds maintain a higher equity allocation, which can result in greater volatility over shorter time horizons. Diversification cannot assure a profit or protect against loss in a declining market.