Morningstar has placed the $52.7bn T. Rowe Price Growth Stock fund (PRGFX) under review following the news that the strategy’s long-time manager, Joseph Fath, will be stepping down from his role next year.

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The Baltimore-based asset manager disclosed earlier this month that Fath, who has been PRGFX’s sole portfolio manager since January 2014, would be stepping back from the role in September 2025. He is not retiring from the firm and will move to take up a position in T. Rowe’s private equity investment team, according to a spokesperson for the company. 

Ahead of Fath’s exit from the fund, T. Rowe has added James Stillwagon as a co-PM, and he will take over as lead manager when Fath steps back. Eric DeVilbiss will remain an associate portfolio manager on the fund.

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Stillwagon has been the sole portfolio manager of the $10.2bn T. Rowe Price Communications & Technology fund (PRMTX) since 2019. He took over the fund when its previous manager, Paul Greene, was promoted to run the firm’s flagship Blue Chip Growth fund, replacing Larry Puglia.

Morningstar’s fund analyst team has given PRGFX a silver rating since at least the start of 2022, but has now placed the fund under review as it considers the impact of the management change.

‘Stillwagon has long played an important role on Growth Stock because he covers key stocks featured in the portfolio. However, time is needed to review the situation given the nature of the change and other potential implications. The strategy’s Morningstar medalist rating is under review,’ wrote Morningstar analyst Adam Sabban in a note published earlier this month.

Sabban has also placed the T. Rowe Price Communications & Technology fund under review as Stillwagon will exit in March next year to focus on the Growth Stock strategy. He will be replaced by Daniel Shear. The fund has had a gold medalist rating since October 2022, when it was upgraded from silver. 

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A spokesperson for T. Rowe stated that Stillwagon is well-suited to take over from Fath and familiar with many of the stocks in the Growth Stock portfolio. 

‘The overlap in holdings between the Communications and Technology strategy and the Growth Stock strategy allows Jim to join the team with familiarity of holdings that represent 74% (32 holdings) of the US Growth Stock strategy portfolios as of September 30, 2024,’ the spokesperson said. ‘As leader of the media and telecom sector, Jim has had positive impact on broader strategies, and he is known for his effective communications internally and with clients.’

PRGFX enjoyed a strong 2023 during which it returned more than 45%, beating nearly 80% of its Large Growth peers and its benchmark. However, it struggled during the selloff of 2022, falling about 40%, meaning that its three-year annualized numbers place it in the bottom quartile of its category, lagging both its average peer and index.

According to an analysis from Sabban, published earlier this year and prior to the management changes being announced, Fath was willing to ‘go where some of his large-growth colleagues won’t,’ sometimes buying foreign stocks and the occasional turnaround name, as well as investing in private companies.

The Growth Stock fund has suffered about $19bn of total outflows over the last two years, likely reflecting a wider trend for active mutual funds in its category as investors increasingly move to index-based options for exposure to this asset class. Despite outflows, the roaring equity market means the fund’s assets under management are up marginally from about $44bn at the start of 2023. They are still down from a peak of about $78bn in July 2021.