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

*Firm refers to T. Rowe Price Associates and Affiliates
Quarterly Commentaries
as of 12/31/2013

U.S. stocks rose strongly in the fourth quarter amid favorable economic data and a two-year bipartisan federal budget deal. Equities shrugged off a federal government shutdown and debt ceiling showdown in October. Investment-grade bonds were mixed. Longer-term interest rates increased as the Federal Reserve prepared to taper its asset purchases starting in January 2014. High yield bonds outperformed high-quality issues, helped by favorable corporate fundamentals and continued strong demand for securities with attractive yields. Leveraged loans also produced positive returns.

The Capital Appreciation Fund returned 6.28% in the quarter compared with 10.51% for the S&P 500 Index and 6.40% for the Lipper Mixed-Asset Target Allocation Growth Funds Index. For the 12 months ended December 31, 2013, the fund returned 22.43% versus 32.39% for the S&P 500 Index and 20.33% for the Lipper Mixed-Asset Target Allocation Growth Funds Index. The fund's average annual total returns were 22.43%, 17.07%, and 8.98% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.73% as of its fiscal year ended December 31, 2012.

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

The portfolio's allocation to equities increased during the quarter. We continue to look for companies with depressed valuations but attractive longer-term fundamentals, as well as companies that we believe have the potential for a value-unlocking corporate event, such as a takeover, that is not reflected in the stock price. Within fixed income, we used some cash reserves to purchase some 10-year Treasuries with yields around 3%. We think this investment can provide a total return comparable with cash reserves if long-term rates rise a little further over the next couple of years. On the other hand, if Treasuries rally and rates fall, the positive returns would help offset losses in other asset classes.

We are focusing a little more on capital preservation and a little less on capital appreciation. This is based on our perception that most of the markets in which we invest (equity, high yield bonds, investment-grade debt, and leveraged loans) are now slightly overvalued on a historical context, investor sentiment and expectations are high, and downside risk (if something unexpected goes wrong) is elevated given valuations. We are finding it harder to identify good risk-adjusted return ideas in these markets.

See Glossary for additional details on all data elements.