T. Rowe Price Capital Appreciation Fund (PRWCX)
Ticker Symbol:
Fund Status:
Closed to new Retail investors  /  Open to subsequent Retail investments
Closed to new Retail Investors as of June 30, 2014 at 4pm EST
Fund Management
Fund Manager
  • David R. Giroux, CFA
  • Managed Fund Since: 07/01/2006
  • Joined Firm On 06/22/1998*
  • B.A., Hillsdale College

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

U.S. stocks rose in the fourth quarter, rebounding from third-quarter weakness, and the S&P 500 Index posted a positive total return for the seventh consecutive year. The U.S. economy expanded in 2015, but corporate earnings growth stagnated from a combination of lower oil prices, a strong dollar, and further slowing in emerging markets. U.S. bonds generally declined during the quarter, as Treasury yields increased and the Federal Reserve raised short-term interest rates on December 16. High yield bonds fared worst due to weakening fundamentals in energy, energy-related, and metals firms. Leveraged loans, which have less exposure to commodities, declined but held up much better.

The Capital Appreciation Fund returned 4.54% in the quarter compared with 7.04% for the S&P 500 Index and 3.67% for the Lipper Mixed-Asset Target Allocation Growth Funds Index. For the 12 months ended December 31, 2015, the fund returned 5.42% versus 1.38% for the S&P 500 Index and −0.54% for the Lipper Mixed-Asset Target Allocation Growth Funds Index. The fund's average annual total returns were 5.42%, 11.39%, and 8.54% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2015. The fund's expense ratio was 0.70% as of its fiscal year ended December 31, 2014.

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 cash reserves increased during the quarter, as we sold select equities on strength and reduced exposure to fixed income securities with longer duration. Among equities, we opportunistically trimmed holdings in the health care, utilities, and consumer sectors that performed well as the market rebounded. We added to select financial stocks, as we believe there is leverage in this sector to rising interest rates and an improving economic environment. In fixed income, we trimmed select high yield and investment-grade corporate bond holdings. We continue to believe that high yield bonds are the most attractive asset class on a risk/reward basis, and we tend to favor the higher-quality tiers of the high yield market.

While your fund has been consistently underweight equities for the last couple of years due to elevated valuations, irrational euphoria in parts of the market, and decelerating earnings growth, the equity market correction at the start of 2016 is beginning to produce some interesting opportunities. We are hopeful that this correction will provide us with an opportunity to lower our substantial cash reserves.

See Glossary for additional details on all data elements.