HEAD-TO-HEAD: Lazard versus T Rowe Price

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Darius McDermott, Chelsea Financial Services

Introduction

Earlier this week, the S&P 500 completed its longest run of all-time closing highs since 1997, and has now closed at a record high 65 times this year. Fears of rising inflation or a contraction of monetary stimulus polices instigated to buoy economies floundering from pandemic-induced lockdowns have failed to dampen investors’ confidence.

Instead, sentiment has been boosted by strong corporate earnings, better employment figures in the US and the passing of Washington’s infrastructure spending bill, and reassured – once again – that major central banks will not tighten policy through higher interest rates or a drastic reduction in asset purchases any time soon.

The S&P 500 index has surged 26.4% year-to-date, according to FE Fundinfo, extending a decade-long rise of 350%, compared with 216% by the MSCI ACWI.

However, corporate earnings growth on the scale of the latest reporting round, which were magnified by the low base effect of the coronavirus shocks in 2020, are unlikely to be repeated next year, and some investors are focusing on incipient inflation caused by supply chain blockages and rising energy prices.

As Thomas Poullaouec, head of multi-asset solutions Apac at T Rowe Price wrote this week: “Companies are citing the supply chain bottlenecks at every link—including labour shortages, backlogs at ports, increased delivery times, and limited trucking availability—leading to increased input costs and concerns about impacts on corporate margins.

“Just as the global economy is finally gaining traction after delta variant setbacks, some economies are facing severe energy shortages, with energy prices up over 70% since last year,” he noted.

Against this background, FSA asked Darius McDermott, managing director at Chelsea Financial Services, to select two US equity products for comparison: the Lazard US Equity Concentrated Fund and the T Rowe Price US Large Cap Growth Equity Fund.

Source: FE Fundinfo, Morningstar. (Data in US dollars, 10 November 2021)

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