Just in:
IIT Delhi and TeamLease EdTech Kick‑start AI for Healthcare Executive Programme // MENA Investment Banking Fees Slip Amid Equity Underwriting Lull // Galaxy AI Elevates On‑Device Intelligence with Privacy at Core // Entrepreneurs Turn to Harsh AI ‘Red Teamers’ to Stress‑Test Ideas // Caltex Commemorates SG60 with Launch of Limited Edition National Day Picnic Sets // BRICS Pledge Cooperation, Not Confrontation With U.S. // CGTN: Beauty in diversity: How wisdom at Nishan Forum inspires global modernization // TÜV SÜD Appoints Interim Leadership Following CEO Transition // Meta pixel ruling marks watershed in EU data privacy // Dong Yuhui’s Fujian Journey: The Sea’s Lesson – 30% Destiny, 70% Determination // DNA‑Crafted Nanomachines Self‑Assemble in Water // Celebratory 911 Club Coupe Marks Half-Century Porsche Partnership // Can India Emerge As The Trusted Leader Of Global South Like Earlier Years? // Coffee Chains Join Bitcoin Mania with Bold Treasury Moves // Qingzhen’s Zhanjie Town Leverages Ecological Resources to Drive Industrial Upgrading and Integrate Culture and Tourism for Rural Revitalization // Behomes Launches Behomes Hub – Cashback & Networking App for Real Estate Professionals // Moroccan‐Born Duo Secures $4.2 Million to Sharpen AI Search Precision // Uweb, the Digital Asset Education Institute, Announces Successful Completion of a US$3 million Angel Funding Round // Aramco Eyes New U.S. LNG Offtake in Cameron Deal // MCP Ignites AI Agent Revolution Amid Looming Security Quagmire //

T Rowe Price fund reveals private investment detail

167d7432 fdc1 11e6 96f8 3700c5664d30

T Rowe Price’s flagship small companies fund has revealed annualised returns of nearly 35 per cent from its private investments, rebutting critics who argue that mutual funds should eschew riskier, unlisted companies. 

With more companies delaying stock exchange listings due to the abundance of venture capital and onerous requirements of being a public company, asset managers have begun to invest more aggressively in private groups such as Uber and Pinterest.

ADVERTISEMENT

Such an approach by large institutional investors has raised concern that it exacerbates frothy valuations, and blurs the line between private and public markets. It also exposes mutual funds to liquidity risks given the difficulty in valuing unlisted companies or when they try and sell private holdings.

In its annual letter to investors, T Rowe Price’s $17bn New Horizons fund for the first time provided more transparency about its $1.2bn of investments in 63 private companies since 2009, noting annualised weighted returns of 34.8 per cent. Previously the fund merely provided a list of individual investments, the purchase price and current valuations.

While the letter admitted that “any early-stage growth investment — especially a private investment — carries a high level of risk”, it argues that it helped the fund understand industries under disruption and was a valuable contributor to returns. 

“We felt there was enough of a record now that it was an appropriate time to share it,” Henry Ellenbogen, the fund’s manager, told the FT. “We feel our strategy adds value to shareholders.”

97%

Private investment has helped New Horizons beat 97% of its peers over the past five years, according to Bloomberg data

Private investment has helped New Horizons beat 97 per cent of its peers over the past five years, according to Bloomberg data, and it has 28 investments valued at $836m in its portfolio.

Morningstar last autumn counted 194 US mutual funds that have invested in 133 private companies, with their overall holdings valued at $11.5bn. Fidelity is the biggest investor in unlisted companies, according to the study, followed by T Rowe Price and Hartford. 

“Mutual funds provide daily liquidity that allows investors to contribute or withdraw money each day, so the inclusion of less-liquid private firms has come under scrutiny,” the data provider noted.

A lot of the criticism peaked in early 2016, and Mr Ellenbogen said that this year’s letter was the first chance to address some of the concerns. Moreover some mutual funds active in private markets are now stepping gingerly back, so the fund manager thought it was “timely” to assure investors and investments that it remained committed to unlisted companies. 

The New Horizons fund has won big on early investments in companies such as Twitter and GrubHub, and still holds a $79m stake in the latter. But the letter also revealed a few duds along the way.

The 2012 vintage of investments badly undershot its return target, gaining only 5.5 per cent, three of its 63 private investments since 2009 have been marked down to zero and last year it slashed the estimated value of its investments in Evernote, a once high-flying business software company. 

New Horizon’s private investment activity dropped off last year, but Mr Ellenbogen expected a recovery in 2017. “We’re still looking at the same rate. The market feels more active and valuations have come down slightly,” he said.

Source link


Notice an issue?

Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.


ADVERTISEMENT
Just in:
Caltex Commemorates SG60 with Launch of Limited Edition National Day Picnic Sets // Dong Yuhui’s Fujian Journey: The Sea’s Lesson – 30% Destiny, 70% Determination // Can India Emerge As The Trusted Leader Of Global South Like Earlier Years? // OPEC+ Champions Insist Surge in Output Meets Market Demand // Behomes Launches Behomes Hub – Cashback & Networking App for Real Estate Professionals // TÜV SÜD Appoints Interim Leadership Following CEO Transition // Entrepreneurs Turn to Harsh AI ‘Red Teamers’ to Stress‑Test Ideas // Meta pixel ruling marks watershed in EU data privacy // Nigeria’s Coastal Highway Passes $747 m Funding Milestone // Baku ID 2025 Concludes: Baku Becomes the Regional Hub for Innovation // Aramco Eyes New U.S. LNG Offtake in Cameron Deal // Motorbike Theft Kingpin Apprehended in Accra // Uweb, the Digital Asset Education Institute, Announces Successful Completion of a US$3 million Angel Funding Round // Tokyo Real Estate Set for $75 Million Blockchain Shake‑Up // DNA‑Crafted Nanomachines Self‑Assemble in Water // Celebratory 911 Club Coupe Marks Half-Century Porsche Partnership // MENA Investment Banking Fees Slip Amid Equity Underwriting Lull // Qingzhen’s Zhanjie Town Leverages Ecological Resources to Drive Industrial Upgrading and Integrate Culture and Tourism for Rural Revitalization // CGTN: Beauty in diversity: How wisdom at Nishan Forum inspires global modernization // Moroccan‐Born Duo Secures $4.2 Million to Sharpen AI Search Precision //