Fixed Income

Finding Opportunities in High Yield Markets

July 18, 2017
The T. Rowe Price U.S. High Yield Fund looks to capitalize on price inefficiencies and attractive relative valuation opportunities.

Key Points

  • T. Rowe Price acquired the Henderson High Yield Opportunities Fund, predecessor of the new U.S. High Yield Fund, expanding our high yield bond offerings.
  • The new fund’s manager was a portfolio manager and analyst with T. Rowe Price from 1996 to 2007.
  • The experienced team balances risk with a disciplined bottom-up credit selection process.

T. Rowe Price expanded its fixed income capabilities when it formed the U.S. High Yield Fund (TUHYX) through the acquisition of the Henderson High Yield Opportunities Fund. The firm welcomes Portfolio Manager Kevin Loome back to T. Rowe Price, where he was a portfolio manager and analyst from July 1996 to August 2007. The insights gained early in his career from working at T. Rowe Price helped shape Loome’s investment philosophy, which emphasizes a disciplined, fundamentals-driven, bottom-up credit selection process.

Collaboration Drives Performance

The fund’s investment team seeks to create a concentrated portfolio of below investment-grade bonds, capitalizing on price inefficiencies and attractive relative valuation opportunities. Security selections are focused on total return potential, using cash flow and liquidity analysis that position the fund to weather all phases of the credit cycle. The management team combines a balanced risk-aware approach with forward-looking research to identify high-conviction ideas or concerns. Their collaborative credit selection process helps them respond quickly when opportunities arise and provide the active management expertise investors have come to expect from T. Rowe Price.

Note that all investments are subject to risks, including the possible loss of principal. Fixed income securities are subject to credit risk, liquidity risk, call risk, and interest rate risk. As interest rates rise, bond prices generally fall. Investments in high yield ("junk") bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

A Strong Record

The fund has performed well relative to its benchmark as of 6/30/2017.

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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. The performance information shown does not reflect the deduction of any redemption fee; if it did, the performance would be lower. To obtain the most recent month-end performance, visit troweprice.com/uhy. The fund’s expense ratio as of its most recent fiscal year-end was 1.27%. (The gross expense ratio is as of the most recent prospectus. The fund is currently waiving certain expenses. See the prospectus for details.) Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions.

*The T. Rowe Price U.S. High Yield Fund (Fund) commenced operations on May 19, 2017. At that time, the Fund received all of the assets and liabilities of the Henderson High Yield Opportunities Fund (Predecessor Fund) and adopted its performance and accounting history. The Fund and the Predecessor Fund have substantially similar investment objectives and strategies. The Predecessor Fund was managed by the same portfolio manager as the Fund. Performance prior to that date reflects the performance of Class A of the Predecessor Fund. Predecessor Fund performance reflects its actual operating expense at the time and was not adjusted to reflect the impact of the Fund’s current fees. Since inception returns are shown from the inception date of the Predecessor Fund, April 30, 2013.

This material has been prepared by T. Rowe Price  for general and educational purposes only. This material does not provide fiduciary recommendations concerning investments or investment management. T. Rowe Price , its affiliates, and its associates do not provide legal or tax advice. Any tax-related discussion contained in this material including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this material.