T. Rowe Price Ultra Short-Term Bond Fund (TRBUX)
Ticker Symbol:
TRBUX
Fund Status:
Open to new Retail investors  /  Open to subsequent Retail investments
Fund Management
Fund Manager
  • Joseph K. Lynagh, CFA
  • Managed Fund Since: 12/03/2012
  • Joined Firm On 05/14/1990*
  • B.S. and M.S., Loyola College, Baltimore, Maryland

*Firm refers to T. Rowe Price Associates and Affiliates
Quarterly Commentaries
as of 03/31/2014

Treasury yields fell across most maturities during the quarter amid risk aversion resulting from Russia's annexation of Crimea and concerns about the economic health of some emerging markets. Longer-term Treasury bonds experienced significant price increases and posted strong returns. Some weak U.S. economic data also helped boost Treasury prices. While the labor market has been improving, recent reports show that the economy has not been adding as many new jobs as the government would like to see. The unemployment rate stood at 6.7% at the end of the period, but participation in the labor force has also declined.

The Ultra Short-Term Bond Fund returned 0.07% in the quarter compared with 0.07% for the Barclays Short-Term Government/Corporate Index. For the 12 months ended March 31, 2014, the fund returned 0.27% versus 0.25% for the Barclays Short-Term Government/Corporate Index. The fund's 1-year and Since Inception (12/03/2012) average annual total returns were 0.27% and 0.27%, respectively, as of March 31, 2014. The fund's expense ratio was 0.61% as of its fiscal year ended May 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 goal is to maintain a highly diversified portfolio that acts as a cash surrogate, limiting price fluctuation to the greatest extent possible while offering an attractive risk-adjusted yield relative to money market funds. We attempt to maintain minimal exposure to cash, but we consider our Treasury positions to be a reliable source of liquidity. While we had a low exposure to Treasuries, our allocation to corporate securities and securitized asset-backed securities was relatively high. At the end of the period, we were primarily invested in corporate debt and held approximately 10% each in Treasuries and securitized assets.

During the first quarter, the Federal Reserve continued to taper its asset purchases, and new Fed Chair Janet Yellen also discussed monetary tightening. We believe that the central bank could begin to raise short-term rates sometime within the next 12 to 18 months. As a result, we expect the shortest maturities to price in potentially higher interest rates during the coming quarters. We expect to remain defensive, adding to our floating rate positions and scaling back holdings with longer than two-year maturities. We believe credit fundamentals remain solid. Although valuations have become somewhat stretched, we will continue to pursue a strategy that is heavily weighted in corporate credits to generate extra yield above that available in Treasuries.

See Glossary for additional details on all data elements.