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Robert Gensler and Kunal Kapoor

T. Rowe Price manager Rob Gensler discusses his approach to investing in the world's diverse markets.

Morningstar Advisor, 08/04/2008

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Ask his colleagues at T. Rowe Price about Robert Gensler, and the descriptions you often hear include "bright," "no nonsense," and so on. But while Gensler is all those things, he also has a reputation for intensity. Spend an hour with him and the one thing you come away impressed with is his clarity of thought and his clear bias toward action.

Gensler, who today runs more than $15 billion, most prominently at T. Rowe Price Global Stock PRGSX, challenges both the analysts he works with at T. Rowe Price and external contacts, whether they are company managements or other sources of research. Since taking over what was then a relatively moribund offering, Gensler has led his fund to a trailing three-year return in excess of 16% annually through June 30. That return bests 96% of his peers in the world-stock category and has been, not unexpectedly, a magnet for investor money.

What is this globe-trotting investor contending with in these challenging times? A good deal, as it turns out. During an hour-long conversation with Morningstar, Gensler didn't hold back, opining on the hot-button issues of today--from the U.S. economy and the BRIC (Brazil, Russia, India, and China) countries to currencies, commodities, and portfolio construction. Kunal Kapoor, president and chief investment officer of Morningstar Investment Services, interviewed Gensler May 14. It has been edited for clarity and length.

Kunal Kapoor: I've spoken to you many times through the years, and the one thing that always strikes me when I look at your strategy is that it's not your typical T. Rowe Price strategy [laughter]. Explain how you arrived at your strategy and how you fit into the picture at T. Rowe--because your research process is a little bit different than some of the other well-known managers at T. Rowe.

Robert Gensler: The strategy's portfolio construction is probably what's more different. I would say the research process is not that different, because this strategy was created to be a cherry-picking strategy of best ideas across the platform. We're blessed because it's a global strategy, so you can say, "Look, we've got this great domain expertise in broad regions--the U.S., Europe, Japan, emerging markets--and in the sectors--health care, financials, tech, etc."--and this strategy gets to cherry-pick the best ideas off of others.

Also, it's a relatively concentrated strategy, and that might be what you're saying is slightly different from other T. Rowe funds. We're running about 79 names as we speak. I feel strongly that there should always be less than 100 names in the strategy and maybe closer to 60. I call it "moderately concentrated." Many of the T. Rowe strategies are at 120 or 150 names, so it's different. It's higher predicted tracking error, higher active risk than many of the strategies.

KK: Also higher turnover.PAGEBREAK

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