T. Rowe Price New Income Fund (PRCIX)

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Ticker Symbol:
Fund Status:
Open to new Retail investors  /  Open to subsequent Retail investments
Fund Management
Fund Manager
  • Daniel O. Shackelford
  • Managed Fund Since: 12/01/2002
  • Joined Firm On 03/15/1999*
  • B.S., University of North Carolina at Chapel Hill; M.B.A., Fuqua School of Business, Duke University

* Firm refers to T. Rowe Price Associates and Affiliates
Quarterly Commentaries
as of 03/31/2016

Bond returns in the first quarter were broadly positive. Longer-term Treasury yields declined and bond prices rose as diminishing expectations for more Fed rate increases and negative interest rates overseas prompted investors to favor U.S. bonds. In the investment-grade universe, long-term Treasuries performed best, but corporate securities did well, too. Other segments lagged with milder gains. High yield bonds produced good returns, helped by rebounding commodity prices.

The New Income Fund returned 2.67% in the quarter compared with 3.03% for the Barclays U.S. Aggregate Bond Index and 2.71% for the Lipper Core Bond Funds Average. For the 12 months ended March 31, 2016, the fund returned 1.13% versus 1.96% for the Barclays U.S. Aggregate Bond Index and 0.92% for the Lipper Core Bond Funds Average. The fund's average annual total returns were 1.13%, 3.55%, and 5.00% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2016. The fund's expense ratio was 0.60% as of its fiscal year ended May 31, 2015.

For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.

Benchmark Definitions

We seek to add value in a number of ways for shareholders and enhance returns in a range of market environments. This includes maintaining a highly diversified portfolio that can offer some downside protection and, especially important in the current environment, ample liquidity. Our exposure to lower-rated commercial mortgage-backed securities (CMBS) detracted from results, as they were slow to rally alongside other risk assets during the latter half of the quarter given the ongoing liquidity challenges in the sector. Similarly, the portfolio's more esoteric asset-backed securities (ABS), such as whole-business securitizations, detracted. Sector allocation decisions were positive overall, however. Our overweight to CMBS offset most of our selection underperformance in this sector, as the sector turned higher in March as sentiment improved and supply estimates fell. Additionally, our strategic underweight to Treasuries contributed as the sector lagged the broader index after a turnaround in investor sentiment allowed credit-sensitive sectors to outperform.

The troubled global economy and the Fed's response to it will continue to inform the management of our domestically focused portfolio. We will closely monitor our existing overweights to segments such as CMBS and ABS for any meaningful signs of stress or fatigue as the Fed removes accommodation. We anticipate that sectors such as investment-grade corporate, floating rate bank loans, and high yield will continue to reveal opportunities in U.S. companies less exposed to international crosscurrents. Global awareness also means that we will continue to monitor international opportunities for thematic changes, particularly related to global growth, inflation, and dollar strength. Shareholders should also know that highly liquid cash, Treasuries, and mortgage-backed securities compose almost half of the fund's assets and provide a high degree of overall portfolio liquidity and flexibility.

See Glossary for additional details on all data elements.