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Fund chief upbeat for 2002
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October 10, 2001: 7:11 a.m. ET
T. Rowe Price chairman says markets will rebound early next year.
By Staff Writer Joseph Lee
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NEW YORK (CNNmoney) - Many investors were already reeling from a weak economy when the Sept. 11 terrorist attacks hit New York and Washington, but a top mutual fund executive says the best approach is to keep your portfolio diversified.
George Roche, chairman of investment management firm T. Rowe Price, the nation's seventh largest mutual fund family, told CNNmoney.com he sees a rebound in early 2002.
CNNmoney.com: Have investors become more leery about the markets? Are investors switching from stock funds to safer investments?
Roche: Yes, there have been some modest redemptions. It's not been a huge amount of money. It's been modest. Everybody in the short term is very concerned about what has happened in the stock market, and there are good reasons for that.
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George Roche
Chairman and President of T. Rowe Price | |
CNNMoney.com: Has the fund investing landscape changed since the tragedy?
Roche: No, I think the incident basically added another dimension to the uncertainty, but the whole economy was pretty weak prior to that.
CNNmoney.com: What was the first thing you said to your fund managers after the attack? Did you tell them to do anything differently?
Roche: Each fund has specific objectives, and the funds are run in coherence with those objectives. We can't change their style on a short-term basis, so basically we were much more concerned about the phone operators and talking to our customers than we were about to tell our portfolio managers what to do.
CNNMoney.com: Many economists say that the tragedy has pushed us into a recession. What do you think?
Roche: I would say that appears to be a reasonable statement. We were very close, and now this will result in a recession. The thing is recessions don't last forever. They last six to nine months, and you add a tremendous stimulus in monetary policy, and that usually takes time to work.
CNNMoney.com: Personally, what have you been doing with your money?
Roche: [laughs] I have long-term strategies that I've put in place with my own money. There's no reason to change them. I'm invested primarily in the security of our own company and in mutual funds.
CNNMoney.com: Many Wall Street firms are cutting back on staff and expenses right now? Are you doing any of that?
Roche: We are continuing to review our expenses very carefully and every category of expense, and I'm sure that's true with virtually every company in our industry. We had a modest reduction in our staff early in the year, but it's something you continue to review. It depends upon not just the level of the market but what are the levels of activities, how many people do you need if the business has slowed down.
CNNMoney.com: What investment advice do you have for fund investors during a volatile time like this?
Roche: People should be diversified, and they should have a long-term strategy. If you diversify and have a long-term strategy, then yes, you will be hurt in periods like this, but you will get through it and that's the desirable way to go.
CNNMoney.com: When will things start to look better?
Roche: I think that the market will begin to improve probably in the first quarter next year, and then even better in the second quarter. I think that the Fed policy will begin to work, and you'll also have some stimulus in fiscal policy as well, so you have both monetary and fiscal policy working. We will see results from the Fed's rate cuts starting next year. 
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