T. Rowe Price New Horizons Fund (PRNHX)
Ticker Symbol:
PRNHX
Fund Status:
Closed to new Retail investors  /  Open to subsequent Retail investments
Closed to new Retail Investors as of December 31, 2013 at 4pm EST
Fund Management
Fund Manager
  • Henry Ellenbogen
  • Managed Fund Since: 03/01/2010
  • Joined Firm On 04/16/2001*
  • A.B. Harvard College (magna cum laude); J.D., Harvard Law; M.B.A. Harvard Business School (Baker Scholar)

*Firm refers to T. Rowe Price Associates and Affiliates
Quarterly Commentaries
as of 12/31/2014

In the fourth quarter of 2014, small-cap growth stocks rebounded sharply from their third-quarter sell-off. The Russell 2000 Growth Index gained more than 10%, easily outpacing the returns of large- and mid-cap equities. For the year, however, small-cap growth stocks generated less than half of the 13.69% gain of the large-cap Standard & Poor's 500 Index. In the quarter, health care was the best-performing sector in the Russell 2000 Growth Index, while energy was a significant laggard. The U.S. economic recovery finally appeared to gain traction; the Commerce Department reported that the economy expanded at a 5.0% annualized pace in the third quarter, its best performance since 2003.

The New Horizons Fund returned 6.98% in the quarter compared with 10.06% for the Russell 2000 Growth Index and 7.82% for the Lipper Small-Cap Growth Funds Index. For the 12 months ended December 31, 2014, the fund returned 6.10% versus 5.60% for the Russell 2000 Growth Index and 1.98% for the Lipper Small-Cap Growth Funds Index. The fund's average annual total returns were 6.10%, 21.43%, and 11.49% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2014. The fund's expense ratio was 0.80% as of its fiscal year ended December 31, 2013.

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

Our bottom-up investment process focuses on picking individual stocks, which drives sector allocations. We strive to select companies that are either early-stage innovators with the potential to grow from the small-capitalization category into large-caps or that are firms that can durably grow over time as a result of the advantages of scale, a new technology, or an ability to increase efficiency in their markets. Information technology and consumer discretionary continue to be the portfolio's largest sector allocations, and the portfolio has overweight both sectors relative to the benchmark index. The next-largest allocation is to the health care sector, where the portfolio has a significant relative underweight.

The relative underperformance of small-cap growth equities in 2014 has helped moderate the extreme valuation levels in the asset class to some degree, but valuations remain very high by historical standards. As a result, we remain wary of another period of price adjustment, but the most concentrated period of underperformance may now be behind us. On the positive side, the U.S. economy appears capable of expanding at a healthy rate, even with subpar growth abroad. Small-cap growth companies continue to increase their revenues and earnings. We remain confident in our ability to find smaller companies that are poised to grow rapidly and to hold them for the long term, even through the downturns and valuation adjustments that are part of every market cycle.

See Glossary for additional details on all data elements.