T. Rowe Price High Yield Fund (PRHYX)
Ticker Symbol:
Fund Status:
Closed to new Retail investors  /  Open to subsequent Retail investments
Closed to new Retail Investors as of April 27, 2012 at 4pm EST
Fund Management
Fund Manager
  • Mark J. Vaselkiv
  • Managed Fund Since: 11/01/1996
  • Joined Firm On 02/08/1988*
  • B.A., Wheaton College; M.B.A., New York University, Leonard N. Stern School of Business

* Firm refers to T. Rowe Price Associates and Affiliates
Quarterly Commentaries
as of 12/31/2015

U.S. high yield bonds posted fourth-quarter losses and underperformed the broad investment-grade bond universe. The most significant detractor for our market has been plunging oil and commodity prices and their negative impact on the energy and mining segments. Heightened high yield market volatility is occurring within the context of an improving U.S. economy and accommodative central bank policy elsewhere, particularly in Europe.

The High Yield Fund returned −1.29% in the quarter compared with −2.58% for the Credit Suisse High Yield Index and −1.90% for the Lipper High Yield Funds Average. For the 12 months ended December 31, 2015, the fund returned −3.23% versus −4.93% for the Credit Suisse High Yield Index and −4.09% for the Lipper High Yield Funds Average. The fund's average annual total returns were −3.23%, 5.06%, and 6.44% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2015. The fund's expense ratio was 0.74% 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.
The High Yield Fund charges a 2% redemption fee on shares held 90 days or less. The performance information shown does not reflect the deduction of the redemption fee; if it did, the performance would be lower.

Benchmark Definitions

From an industry perspective, performance across the high yield universe was mixed, with few standout contributors and several large detractors. Energy bonds, the fund's and market's largest industry allocation, endured steep losses as the price of oil declined sharply. However, credit selection and the fund's underweight allocation to energy bonds were solid contributors to our performance comparison with the benchmark. The fund remains focused on the upper credit quality tiers of the high yield market, bonds rated B and BB. In an effort to dampen the portfolio's volatility, we have systematically reduced our exposure to CCC and lower-rated holdings. We have also increased our allocation to bank loans, which are senior in the capital structure and tend to be less volatile than high yield bonds.

The majority of our companies are in good financial shape, and we believe that the U.S. economic expansion is stable and durable. From a regional perspective, the fund has about three-quarters of its holdings in North American bonds and loans. We believe that European high yield bonds can continue to outperform their U.S. counterparts. However, we remain cautious in the near term as defaults could continue to rise in commodity-related sectors. There has been little tolerance for issuers that report lackluster revenues and earnings; companies issuing lower guidance have been punished. As always, our focus in managing the fund is on delivering high current income while seeking to contain the volatility inherent in this market. Our team maintains a commitment to thorough credit research and risk-conscious investing, which has led to favorable longer-term returns for our shareholders over various market cycles.

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