T. Rowe Price CEO William Stromberg says “Over a market cycle, we’ll put up our results against passive any day of the week.” But investors, focused as usual on the short-term, continue to pour more money into index funds, eschewing actively managed funds. T. Rowe Price is trying to reverse a trend that has seen money pour out of its actively managed funds. Charles Stein writes at Bloomberg:

Challenging indexers will be a mighty effort. Investors have pulled $444 billion from funds run by stock pickers in the last 17 months while adding about $575 billion to mutual and exchange-traded funds tracking indexes.

“T. Rowe Price is a fine organization, but the forces of nature are lined up against them,” said Michael Rosen, chief investment officer of Angeles Investment Advisors in Los Angeles, which oversees about $25 billion in passive and active strategies. “I’m not sure the argument will resonate.”

T. Rowe Price hasn’t been immune from the shift to indexing. The company had $2.8 billion in net redemptions in 2016 after two years of modest inflows. Over the past five years the firm attracted a total of $7.7 billion in deposits. To put that in perspective, Vanguard Group Inc., known for its low-cost index products, has gathered about that much money each week this year. T. Rowe Price shares rose 9.6 percent over the past 12 months as of June 27 compared with a gain of 39 percent for the S&P index of asset managers and custody banks.

Everybody feels like a genius in a bull market, including those who have tied their fortunes to an index-based approach, but it is bear markets that separate the fools from their money.

If you aren’t confident about how your portfolio will perform over a full market cycle, it may be time for some help. We’ve long advised investors big and small, young and wise 😉, to seek the help of boutique investment counsel firms like Richard C. Young & Co., Ltd.