T. Rowe Price CIO to Step Down as Portfolio Manager

(June 4, 2014) – T. Rowe Price’s Chairman and CIO Brian Rogers plans to relinquish portfolio management responsibilities next October, the asset management giant has announced.

He will remain on as CIO and chairman of the Baltimore-based company.

At the end of October 2015, Rogers is expected to hand over management of the firm’s $30 billion Equity Income fund to John Linehan, head of US equity.

Rogers and Linehan also co-manage the $2 billion T. Rowe Price Institutional Large-Cap Value fund. The CIO will step down from this role as well, according to the company.

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Linehan, a value-investing specialist, has already succeeded Rogers as manager of a large portfolio. In 2003, he took over the now-$20 billion Value fund, and led its investment until 2009.

The Equity Income fund enters its 30th year in 2015, and Rogers has managed it since inception.

“In reflecting on this milestone he has decided this will be an opportune time to hand over his portfolio management responsibilities,” T. Rowe Price said in its announcement, while explicitly noting that Rogers is not retiring.

Rogers joined the firm in 1982.

(June 4, 2014) — Japan’s ¥130 trillion ($1.27 trillion) Government Pension Investment Fund (GPIF) may struggle to pay its future obligations without greater contributions from taxpayers, according to a comprehensive Health Ministry review of the nation’s social security system.

Pension benefits accounted for half of the ¥108 trillion Japan spent on the system in 2011. While that proportion has remained steady since 1990, documents said, the total cost of social security has more than doubled without overall population growth.

“Current social security expenses involve increases due to aging,” the report’s English version said, calling it a “natural increase.” It deemed the current funding level a “failure to secure stable financial resources.”

The Health Ministry supported a plan to fund these ballooning costs with a 5% consumption tax. It made no mention, however, of the recommendations by Prime Minister Shinzo Abe to risk-up the massive portfolio for greater investment returns.

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His administration has called to reduce the fund’s 60% allocation to domestic government bonds and shift some of those assets into foreign markets. A 10-year Japanese bond yields 0.58%, according to Bloomberg data, and the 30-year security yields 1.69%.

This review followed up on a 2011 cabinet report called the “Definite Plan for the Comprehensive Reform of Social Security and Tax” which stressed the need to tackle funding issues early and aggressively.

“We cannot allow the social security costs, which are the investment for the future, to be shifted to the

future generations,” the provisional translation said. “Many of the current financial resources for social security benefits rely on deficit bonds; the burden is placed on the future generations. From the perspectives of not only the concept of social security but also the critical financial conditions of the national and local governments, we cannot any longer leave such circumstances as they are. We need to go back, as fast as possible, to the principle that ‘the costs of the social security, which benefits the current generation, must be borne by the current generation.’”

Planned reforms to the GPIF will be implemented over the next year-and-a-half, according to the Health Ministry.

GPIF

Source: Japan’s Ministry of Health, Labour, and Welfare