Hi. This is Matt Brundage from Bridgehouse, and I recently had a chance to speak with Paul Greene, portfolio manager for the T. Rowe Price U.S. Blue Chip Growth Fund. I asked him about the increase in concentration within the U.S. stock market and whether T. Rowe Price views this as a concern or an opportunity. Here's what Paul had to say. So, Matt, that's certainly been a reality that we've had to deal with. I would say it's long in the making.
You know, this is a trend that's been going on for over a decade. I'm not sure I would characterize it as necessarily a challenge or an opportunity. I think it is just a reality of the dynamics that's happening in the marketplace and something that we have to make sure we're paying attention to and and managing through. Few things I would point out in terms of the implications for us.
The first is just, obviously, as these companies become much larger and and larger pieces of our index and larger pieces of our portfolios, it makes it more important that we get them right. And fortunately for us, I think if you go back and you look over the the last decade or so following some of these large mega cap companies, we've had a really good track record of of getting stock selection right in those areas.
I think it's an area of particular strength for us, and I don't see any reason why the future should look different in terms of our ability to make investment decisions, good investment decisions, in this space. So, but that said, obviously, importance of getting them right is more important.
The second thing I would just say is, it can lead to more volatility in terms of total performance and relative performance relative to our benchmarks, just because, if you've got one or two stocks that are so large, if you do get one or two of them wrong, you can see a bigger divergence in performance and it goes the other way as well. If you go back to 2022 it was a very difficult year for us. We had a number of stocks in this group that we had large positions in and bets in.
And I'm thinking particularly of companies like Meta was very difficult stock in '22, Amazon, Google. You know, those are all stocks where, the market had a very different view, was treating them very negatively. We had a different view.
And I would say that, I think with the last 18 months, I think we could humbly say, I think we had those stocks right on a fundamental basis, but certainly the swings in those stocks have a very meaningful impact on our results and made '22 look worse than it probably should have, and we're probably benefiting on the other side of that now. So, just to be cognizant, that this concentration can lead to to more volatility around that.
And then the third thing I would just say is, we're a fundamentally driven shop. we pick stocks bottoms up. We have strongly held convictions, and we really want to make sure that we express those convictions in the bets that we're making in the portfolio. That gets harder to do as these become larger weights because you do bump up against just sort of absolute position size and absolute risk.
And so that's another thing that we just have to manage through, this tension that exists between absolute risk that we're taking these names and yet still our desire to have positive bets and drive alpha in these names.