When a fund’s asset base grows quickly, it may become difficult for managers to invest while keeping with the stated objective. In those cases, a fund’s parent company will often close the fund to new investors. That protects shareholders by assuring that the fund sticks to the strategy for which they are paying. The T. Rowe Price High Yield Fund closed the doors to new investors in April 2012. Existing shareholders may continue adding to their positions. As of September 23, 2020, the fund has assets totaling almost $8.72 billion invested in 522 different holdings. Its portfolio consists primarily of below-investment-grade debt issued by U.S. corporations. About one-quarter of holdings are from issuers outside the U.S. The fund owns a small number of investment-grade bonds. Manager Mark Vaselkiv doesn’t shy away from the lower end of the high-yield universe. These bonds, rated CCC and below, are considered extremely speculative and carry significant risk of default. However, the fund aims to invest the majority of assets in somewhat higher-quality debt on the high-yield spectrum. The majority of holdings are rated B or higher.
High-yield bonds pay more than their investment-grade peers because investors demand a higher return for holding extra risk. Bonds categorized as below investment grade are at higher risk of default. Because of this added risk, high-yield bonds have more stock-like characteristics than investment-grade bonds.
The fund launched in 1984, so the strategy has proven staying power. On both a long- and short-term basis, the fund has outperformed its Morningstar category average. However, investors must recognize that a high-yield bond fund is not the sleepy asset that many imagine when purchasing a fixed-income instrument.
PRHYX – T. Rowe Price High Yield Fund: Parent Company
T. Rowe Price Group, Inc. is an American publicly owned global investment management firm that offers funds, advisory services, account management, and retirement plans and services for individuals, institutions, and financial intermediaries. The firm, with assets under management of more than $1.3 trillion at the end of 2019, is headquartered at 100 East Pratt Street in Baltimore, Maryland, and its 16 international offices serve clients in 47 countries around the world.
It was founded in 1937 by Thomas Rowe Price, Jr. who is best known for developing the growth stock philosophy of investing.
As of 2019, the company is focused on active management after strategically deciding against a major initiative in passive investment.
PRHYX – T. Rowe Price High Yield Fund: Performance
The T. Rowe Price High Yield Fund (PRHYX) has returned 2.97 percent over the past year and 4.10 percent over the past three years. It has also returned 5.61 percent over the past five years and 6.43 percent over the past decade.
PRHYX – T. Rowe Price High Yield Fund: Category
The fund falls in the Glbl High Yield category. The fund has returned 5.61 percent over the past five years and 6.43 percent over the past decade.
PRHYX – T. Rowe Price High Yield Fund: Role in Portfolio
As it does with most specialized funds, Morningstar says this fund should play a “supporting” role.
PRHYX – T. Rowe Price High Yield Fund: Ranking
The T. Rowe Price High Yield Fund (PRHYX) is ranked #26 in High Yield Bond.
PRHYX – T. Rowe Price High Yield Fund: Investment Strategy
The fund seeks high current income and, secondarily, capital appreciation by investing at least 80% of assets in a widely diversified portfolio of high-yield corporate bonds, often called “junk” bonds, income-producing convertible securities, and preferred stocks. Bonds will be those rated below investment grade.
PRHYX – T. Rowe Price High Yield Fund: Management
The fund has plenty of continuity going for it: Mark Vaselkiv has been at the helm since 1996. Before that, he was a high-yield credit analyst with parent company T. Rowe Price. Vaselkiv also serves on T. Rowe Price’s fixed-income steering committee, which oversees all of the firm’s fixed-income products. On the High Yield Fund, Vaselkiv is supported by a team of portfolio managers and analysts. In addition, the fund draws upon the expertise of traders who specialize in the high-yield universe.
PRHYX – T. Rowe Price High Yield Fund: Fees
T. Rowe Price High Yield Fund has an expense ratio of 0.71 percent.
PRHYX – T. Rowe Price High Yield Fund: Risk
All bond investing carries inherent risks. However, high-yield bonds represent a much greater risk of default than other bonds. For that reason, they are typically more volatile than investment-grade instruments.
Volatility measures reflect the uncertainty or risk of change in a security`s value.