Does a Spate of Manager Departures at T. Rowe Price Signal Trouble?
Three key stock fund managers have left or are leaving soon. If you invest in Price funds, here’s what to do now.

Corporate culture is, in my view, a key determinant of a fund company's success. This is just common sense. When people hate to come to work every morning, they don't usually do their best work. When they work together and share ideas, they tend to succeed more often than they fail.
I mention this because I was shocked to hear of the recent departures of three key U.S. stock fund managers, along with a couple of top analysts, from T. Rowe Price. I've always considered Baltimore-based T. Rowe one of the nation's best-run fund outfits. One manifestation of that is the company's low manager turnover — three managers typically leave about every five years, not in a few months. Many managers spend their entire careers at Price. So I can't help but worry whether the spate of departures signals a fundamental change at the company.
Take a look at the damage. Kris Jenner, manager of top-performing T. Rowe Price Health Sciences (symbol PRHSX), along with two health analysts, left to start a hedge fund. Under Jenner, who had run the fund since 2000, it returned an annualized 11.0% until his February 14 departure. That compares with an annualized 2.2%% over the same period for Standard & Poor's 500-stock index. Health Sciences' new manager is Taymour Tamaddon, previously an analyst at the fund.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
An equally big blow was the departure on May 10 of Joseph Milano, who had managed T. Rowe Price New America Growth (PRWAX) superbly since 2002. Under his stewardship, the fund returned an annualized 10.2% — an average of 1.5 percentage points per year better than the S&P 500. Milano may start a hedge fund, too.
Daniel Martino has taken over from Milano. Martino put up good numbers in 3½ years managing T. Rowe Price Media and Telecommunications Fund (PRMTX). But he lacks experience running a diversified fund or a fund as large as New America Growth, which contains $4 billion in assets.
Meanwhile, Tim Parker has announced his resignation as manager of T. Rowe Price New Era (PRNEX), a natural resources fund, after less than three years on the job. That's perplexing because Parker has worked at T. Rowe since 2001 and was groomed for years to take over New Era. Returns were mediocre under his leadership, however. Parker will leave by September 30 and be replaced by Shawn Driscoll, who has been a natural resources analyst at Price for the past seven years.
John Linehan, head of U.S. stock funds at Price, is unhappy about the cluster of resignations. But, he says, "we've seen this play before." In 2001 and 2002, four T. Rowe managers left in a short period. "Obviously, the recent turnover has been disappointing," Linehan says. "It's never any fun to go through. But it emphasizes the importance of having a deep bench. Which is why we go out and hire the best people we can find and then work hard to develop their talents so that they can be ready to take over a fund."
The company's culture hasn't changed at all, Linehan says: "Collegiality and collaboration are crucial to us. We reward people who work well with each other, trading insights and expanding on one another's investment ideas."
The manager is, of course, the most important person at any fund. Anytime a manager leaves, you need to take careful notice. At the same time, manager losses at big fund shops such as Price historically haven't been as devastating as manager departures from small firms, where the manager is pretty much synonymous with the fund.
The bottom line: I'm willing to give Linehan and T. Rowe the benefit of the doubt. But I see no reason to commit new money to any of the three affected funds. If you own them, you have a tough choice. It's hard to find a good health-sector fund as broad as T. Rowe's, which holds a healthy dose of biotech stocks as well as drug and health insurance companies. I'd probably give the new manager a year to prove himself. But I'd probably sell New America Growth — there are plenty of good growth funds. And I'd sell New Era — the natural resources sector doesn't appeal to me, anyway.
My favorite Price funds include Capital Appreciation (PRWCX), Mid-Cap Growth (RPMGX) and all of the firm's retirement funds. The retirement funds hold other Price funds, with their division between stock and bond funds becoming increasingly conservative as shareholders approach retirement. With the departures of Jenner and Milano, T. Rowe boasts fewer exceptional funds, but most are still pretty good.
Steven T. Goldberg is an investment adviser in the Washington, D.C. area.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

-
The Rubber Duck Rule of Retirement Tax Planning
Retirement Taxes How can you identify gaps and hidden assumptions in your tax plan for retirement? The solution may be stranger than you think.
-
No Passport? No Problem. Seven US Getaways That Feel Like an International Vacation
From Puerto Rico’s Caribbean flair to Santa Fe’s old world charm, these American destinations deliver a global travel experience — without the hassle of customs or currency exchange.
-
Stocks Rise to End a Volatile Week: Stock Market Today
The market's fear index reached and retreated from a six-month intraday peak on Friday as stocks closed the week well.
-
Dow Sinks 301 Points on Trade War Talk: Stock Market Today
The contentious relationship between the world's two biggest economies continues to drive global financial markets.
-
Trade Uncertainty Sparks Whipsaw Session: Stock Market Today
Volatility is making a cameo here in mid-October, a generally positive month marked by its historic stock market events.
-
Stocks Swing in Volatile Session: Stock Market Today
The main indexes fell sharply in early trading on rising China tensions, but rebounded thanks to encouraging bank earnings.
-
Dow Adds 587 Points as Stocks Bounce: Stock Market Today
The main indexes rebounded sharply Monday after President Trump took a calmer stance toward China.
-
Dow Dives 878 Points on Trump's China Warning: Stock Market Today
The main indexes erased early gains after President Trump said China is becoming "hostile" and threatened to cancel a meeting with President Xi.
-
Stocks Retreat as Shutdown Continues: Stock Market Today
While the main indexes closed lower today, Delta and PepsiCo gained ground on encouraging earnings reports.
-
S&P 500 Hits New Highs as Rally Resumes: Stock Market Today
Tech stocks were the biggest gainers on Wall Street today, with Nvidia and Dell making notable moves.