T. Rowe's Miller Tapped for Treasury Post

President Barack Obama intends to nominate T. Rowe Price's director of fixed income, Mary Miller, as U.S. Treasury assistant secretary for financial markets, T. Rowe Price said. The appointment requires Senate confirmation, and there has been no specific timeline disclosed for the hearings or Miller's departure.

For T. Rowe investors, we see no reason for concern here. T. Rowe tends to replace senior management positions internally, with the departing manager working with the incoming one over a transition period of several months. While the Treasury's timeline may not afford a generous transition period, we would note that if the successor is one of the senior portfolio managers, that person may not leave his or her current management post, as Miller herself retained portfolio management responsibilities in her role as director.

Whoever it is, he or she will have big shoes to fill.

Of the $315.6 billion in assets T. Rowe had as of June 30, 2009, 28% were in fixed income securities, and there are 35 fixed-income mutual funds. Moreover, the director of fixed income plays a key role in overall investment policy at T. Rowe through a seat on several management committees, including T. Rowe's influential asset allocation committee. That committee sets equity and fixed-income weightings for all the firms' asset allocation products, including T. Rowe's well-known target-date retirement fund lineups.

In addition, Miller had also continued at the helm of the municipal bond fund,  T. Rowe Price Tax Free Income (PRTAX), up until only last week, officially giving up the reins on Oct. 1 after managing the fund since 1997. A 26-year veteran at the firm, Miller's most recent fixed-income experience had been focused within tax-free munis before she was named head of T. Rowe's overall fixed-income division five years ago. At the time, her elevation surprised some who expected a candidate from a larger part of the fixed-income market to be chosen for the director's role. On the other hand, Miller's reputation as a diplomat scores high within T. Rowe's teamwork culture.

If the past is any guide, the list of possible successors is wide open and may include a number of T. Rowe's talented senior portfolio managers in fixed income. For example, there is Mark Vaselkiv, who heads the high-yield team and manages  T. Rowe Price High-Yield (PRHYX), a Fund Analyst Pick, and Ian Kelson, who heads up the global bond team and manages  T. Rowe Price International Bond (RPIBX), also an Analyst Pick. Besides Miller, these are the only two within fixed income who also have a seat within the asset allocation committee.

Meanwhile, it seems Miller is no stranger to politics. Before joining T. Rowe in 1983, she spent one year as a legislative aide to Congressman Robert Young in the U.S. House of Representatives. While she undoubtedly dealt with Treasury officials on occasion in her role, Robert Gensler, manager of  T. Rowe Price Global (PRGSX) offered his own circuitous connection to the Treasury. His twin brother, Gary, is now chairman of the U.S. Commodity Futures Trading Commission, but he was also under secretary of domestic finance at the Treasury from 1999 to 2001 and from 1997 to 1999, assistant secretary for financial markets, the position for which Miller has been nominated.