Equities

T. Rowe Price Small-Cap Value Fund

June 7, 2017
Investing in high-quality, undervalued companies that other analysts may have overlooked.

Key Points

  • Small-cap stocks have tended to outperform larger growth stocks.
  • The T. Rowe Price Small-Cap Value Fund invests in small high-quality, undervalued firms.
  • These companies often have been overlooked by Wall Street and other analysts.

The T. Rowe Price Small-Cap Value Fund (PRSVX) seeks long-term growth of capital by investing primarily in common stocks of companies with relatively small market capitalizations. Reflecting a value approach to investing, the fund looks for companies whose current stock prices do not appear to adequately reflect their underlying values as measured by assets, earnings, cash flow, or business franchises.

Advantages of small-cap stocks

“The small-cap space is a very dynamic part of the market with a lot of innovation, a lot of great undiscovered companies, and a tremendous amount of value,” says David Wagner, portfolio manager of the T. Rowe Price Small-Cap Value Fund. Wagner says his competitive advantage lies with the firm’s global equity analysts, who seek small high-quality and undervalued companies that have been overlooked by other analysts. About 20% of the stocks in the fund are not covered by Wall Street analysts, underscoring the advantages of T. Rowe Price’s active management philosophy.

One of 25 Favorite No-Load Mutual Funds

- Kiplinger, February 2017

Risks muted through diversification

The small-cap sector is inherently riskier and thus more volatile than the large-cap space. Additionally, the value approach to stock investing carries the risk that the market will not recognize a security’s intrinsic worth for a long time or that a stock judged to be undervalued actually may be appropriately priced. Wagner tries to reduce risk through diversification and by buying when stocks are undervalued. Of course, diversification cannot assure a profit or protect against loss in a declining market.

A Record of Strong Performance
The T. Rowe Price Small-Cap Value Fund has regularly outperformed its benchmark as of 3/31/2017.
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Current performance may be higher or lower 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. For the most recent month-end performance, visit troweprice.com/scv. The fund’s expense ratio as of its most recent fiscal year-end was 0.93%. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions.

* Fund inception date 6/30/1988.
Source for Lipper data: Lipper Inc.

This material is provided for general and educational purposes only and is not intended to provide legal, tax, or investment advice. This material does not provide fiduciary recommendations concerning investments or investment management; it is not individualized to the needs of any specific benefit plan or retirement investor, nor is it directed to any benefit plan or investor in connection with a specific investment or investment management decision.