Earn money by managing others’ money

Do you want to earn money by managing others’ money? I guess everyone would love that if they have such a chance, as long as there is no mandate for guaranteed profits. Does not sound like something that other people would accept, right? Wrong! This is exactly how fund managers are making money. You are probably one of them who are willingly pay them for managing your money regardless of whether they make money for you or lose your money. For mutual funds in general, they usually charge fees (often 1-3%) based on the amount of the managed money in the fund, not based on the profit. In other words, even if the fund is losing money day in and day out, the fund manager will still make money as long as there is money in the fund. It is even more aggressive for hedge funds that the fund manager will in addition get a portion of the profit, usually 20%. But you should understand, most of the funds, over 90%, are actually losing money based on their long-term performance. So you should think twice if you are thinking to buy mutual funds. In general, I’d check their fees and also their performance track record for at least over a 10 year period. So how about switch the roles and let you become the one to earn fees? You may think I’m kidding but no, you can do that by investing money in a good fund management company and enjoy their profit from such exuberant fees.

T. Rowe Price Group, Inc (TROW) is a financial services holding company, which provides global investment management services. It is one of the world’s largest asset managers with more than $700 billion in assets under management. For those who have bought mutual funds, you may likely have heard about T. Rowe funds as it offers a wide range of mutual funds in a variety of sectors including equity and fixed-income around the globe. In a nutshell, TROW is a very successful asset management company and is very profitable. You can see their revenue and earnings that are quite stable and climbing. Since it is making so much money, T. Rowe is also a relentless dividend grower. In the past 25 years, TROW has grown its dividend at 20% per year, a rather astonishing record! Its currently dividend yield is 2.26%. If TROW can keep this rate of dividend growth, in 10 years, your dividend yield would be 14% based on the current stock price.

So if now is the good time to buy TROW? Apparently someone inside the company thinks so. According to the public information, Director Mark Bartlett recently purchased 4,500 shares, at a price range of $83.32 – 83.32, with a total amount of $375,000. Keep in mind, there are many different reasons of selling stocks but only one reason for insiders to buy their own company stock: they think the current price is great based the prospects of the company! At the moment, you can even buy TROW at a much better price: $78 per share. Technically, $77 is a very strong support for TROW and I don’t see much downside from here, barring any unexpected bad news or the overall market turmoil. Regardless, long-term I like TROW very much for its growth potential as well as a great dividend. Investing in TROW is like you are making money by managing others’ money.