T. Rowe Price is in talks with nine gatekeepers about adding separately managed accounts (SMAs) to their platforms and has three new strategies to offer.
The Baltimore, Maryland-based asset manager could also roll out an active ETF by the end of 2018, which would be the firm’s first foray into that market, depending on Securities and Exchange Commission (SEC) approval.
On December 31 2017 T. Rowe seeded three new SMAs: T. Rowe Price US Equity Income, T. Rowe Price US Large Cap Core and T. Rowe Price International Core SMAs.
The US Equity Income SMA follows the same strategy as the $22.4 billion T. Rowe Price Equity Income fund and the US Large Cap Core SMA follows the same strategy as the $535.4 million T. Rowe Price US Large Cap Core fund.
The International Core SMA is a mirror of the $16.4 billion T. Rowe Price Overseas Stock fund.
The firm already offered three equity and two fixed income SMAs, covering large cap growth, large cap value, blue chip growth, municipal intermediate bonds and short intermediate term bonds.
These SMAs can be found on platforms at a number of firms including Envestnet, Lockwood, JPMorgan Private Bank, PNC Private Bank and Wells Fargo Private Bank.
T. Rowe is working out contracts with an additional nine firms, including broker-dealers and private banks, George Riedel, head of US intermediaries at T. Rowe Price, told Citywire.
The firm entered the retail SMA business last year and launched a number of strategies in May 2017 for model delivery and traditional SMAs. It partnered with outsourced technology and operations provider Archer for the launches.
‘We had to look at the transparency issues with SMAs and then the portfolios that our underlying portfolio managers manage to come up with a short list of strategies that we could optimize in a way that allows for consistently repeatable results that look like the underlying strategy,’ Riedel said.
He added that after the three new equity SMAs the firm would look to offer some taxable fixed income strategies, including US core bond, US core plus and US total return.
‘There are… taxable fixed income strategies where we think SMA is a viable vehicle for client use and those are under development as we speak,’ he said.
The firm is also looking very closely at actively managed ETF, which it first filed for exemptive relief for back in December 2009.
According to a document filed SEC, the firm filed for the T. Rowe Price Diversified Bond ETF.
This relief has not been granted as yet, but Riedel believes increased activity at the regulator over the last few months may herald a change.
‘I think if the SEC grants non-transparent active ETFs to T. Rowe Price, you will probably see us in market at some time in very late 2018 or at the start of 2019,’ he said.
‘We’re thinking through product development and design but a lot of it hinges on whether or not that active non-transparent application gets approved.’