Morningstar - Summer 2019 - 53

State Street/SPDR

T. Rowe Price

DFA

Parent Rating: ¶ Neutral

Parent Rating: ∞ Positive

Parent Rating: ∞ Positive

Assets and Flows

Assets and Flows

Assets and Flows

Total Fund Assets (Bil)
$592 (5/150)

1-Yr Flows (Bil)
-$0.7 (78/150)

Morningstar Ratings

1-Yr Flows (Bil)
-$15.4 (148/150)

Total Fund Assets (Bil)
$372 (7/150)

Medalist Funds
64 (4/150)

Neutral/Negative Funds

Medalist Funds
20 (14/150)

Neutral/Negative Funds

5-Star Funds
83 (6/150)

1-Star Funds

5-Star Funds
9 (50/150)

1-Star Funds

Morningstar Ratings

Medalist Funds
23 (11/150)

Neutral/Negative Funds

5-Star Funds
18 (32/150)

1-Star Funds

7

11

Fees

Avg. Expense Ratio
0.17% (4/150)

Total Fund Assets (Bil)
$550 (6/150)

Morningstar Ratings
5

4

Fees

Morningstar Fee Level
19% (8/150)

Stewardship

Avg. Expense Ratio
0.68% (36/150)

1-Yr Flows (Bil)
$16.6 (5/150)

1

5

Fees

Morningstar Fee Level
42% (34/150)

Stewardship

Avg. Expense Ratio
0.34% (8/150)

Morningstar Fee Level
8% (2/150)

Stewardship

Manager Ownership
0% (106/150)

Manager Retention (5 Yr)
92% (85/150)

Manager Ownership
40% (34/150)

Manager Retention (5 Yr)
93% (65/150)

Manager Ownership
0% (106/150)

Manager Retention (5 Yr)
96% (32/150)

Manager Tenure (Yrs)
8.2 (75/150)

Success Ratio (5 Yr)
60% (32/150)

Manager Tenure (Yrs)
8.4 (71/150)

Success Ratio (5 Yr)
75% (14/150)

Manager Tenure (Yrs)
7.8 (89/150)

Success Ratio (5 Yr)
70% (18/150)

Under new leadership and with a slight shift in
strategy, State Street Global Advisors needs
to show it can execute. Ron O'Hanley, who led the
investment organizations of BNY Mellon and
Fidelity, took the helm in April 2015. The firm has
moved quickly to focus its fund lineup by
shuttering offerings that haven't met their
asset-growth targets, though it has also launched
new funds. Most of SSGA's $2.5 trillion in assets
are from institutional clients, and its new funds
tend to be clones of institutional strategies or stem
from client requests. Some of these offerings have
been niche or me-too funds. The firm has invested
in risk-management and sales efforts. On the
investment side, O'Hanley oversaw the acquisition
of GE Asset Management, which added alternative
investment capabilities; otherwise, the firm
hasn't added to its investment personnel. These
changes keep SSGA on the right track, but a longer
record under new leadership and demonstrating
more restraint with fund launches would inspire
confidence. We maintain its Neutral Parent rating.

T. Rowe Price is best in class, earning a Positive
Parent rating. The firm's success is rooted in its
fundamental approach to active management and
deep analyst bench. Investors benefit from
managers' long tenures, well-planned manager
transitions, reasonable costs, and attention to
capacity. Many top executives, including CEO Bill
Stromberg, rose from the analyst ranks, which
helps keep a focus on investors at the forefront,
even as the firm expands its distribution and
bolsters its technology resources. The investment
side has received resources, too. The multi-asset
team has grown in size, reflecting its importance to
the firm's future beyond the esteemed target-date
lineup. Despite headwinds facing active managers,
T. Rowe is a powerhouse within equities. Fixed
income is an area to watch. Several long-tenured
managers have retired or will do so soon. Sound
succession planning has smoothed the transitions,
but the firm needs to ensure the bench remains
deep. Overall, T. Rowe Price retains the investorfocused culture that has driven its success.

Dimensional Fund Advisors continues to be
an outstanding steward of its shareholders' capital
and maintains its Positive Parent rating. The firm is
under new management after turnover at both
co-CEO positions in 2017. But Dimensional's culture
remains strong, and it continues to follow a
singular investment philosophy that is rooted in
market efficiency and transaction cost
management. All of DFA's investment strategies
are subjected to a rigorous vetting process that is
overseen by some of the top academics in the
industry. Modifications to existing processes and
the introduction of new strategies are few and far
between. Manager retention is high, and its
team-oriented approach maintains continuity and
minimizes any potential issues when turnover
occurs. DFA requires that investors gain access to
their funds through an approved investment
advisor or platform. Limited access acts like a
barrier that protects funds from short-term trading,
which can increase transaction costs and harm the
interests of long-term shareholders.

Adam McCullough, CFA, is director of equity strategies
with Morningstar Research Services.

Katie Reichart, CFA, is director of equity strategies with
Morningstar Research Services.

Daniel Sotiroff is an analyst with Morningstar
Research Services.

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