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T. Rowe Price Capital Appreciation & Income Fund Summary prospectus
This offering makes me think of comparing it to Vanguard's VWINX (Conservative Allocation) which 40/60. Time will tell.
Maybe this fill a niche between some of TRP's more conservative funds like PRSIX (35/65) and PRWCX (80/20) which tends to be a more aggressive allocation fund.
0.74% ER (with waiver) looks a tad on the high side for this type of fund. Their 40/60 TRRIX carries a .57% ER. The slightly more aggressive TRRFX, is at .60%. It's also higher than the .70% they currently charge for PRWCX.
Looks in part like an attempt to profit from PRWCX's sterling reputation and from Giroux's high-profile name (He'll be lead manager.) *Deleted cheap.
What does opening a new fund at a time of extremely high market valuations (both equity and fixed income) do to the metrics? I'd think that puts a new fund at a disadvantage, having to buy initially at very high prices. For new investors, however, probably no different than buying into an established fund at high valuations. ---
Added: At a glance this doesn't appear to be simply an "allocation" between PRWCX and some income funds. Appears to be a stand-alone. However, there's sure to be overlap in many assets.
Why a new fund? I'd like to say it's because many of Price's funds have grown very large, presenting obstacles to managers. Just a guess. But this conclusion wouldn't appear consistent with the broader trend away from active management and into indexing. Another thought - It may pull some assets away from PRWCX (due to having a similar name and the same manager). If so, that could ease some of the bloat Price is surely dealing with in PRWCX.
A lot of their best funds are bloated. I am sort of surprised with the size of some of the small cap funds. Blue chip growth is enormous, but they have lower ERs and shareholders. They're pretty good at asset gathering with active funds.
A couple of key elements are missing from this so far, like equity/bond weighting, if strictly domestic and what equity cap size. It does talk a lot about investments in more risky bond types fwiw. Anything TRP is worth watching in my opinion.
MORE INFORMATION ABOUT THE FUND’S PRINCIPAL INVESTMENT STRATEGIES AND ITS PRINCIPAL RISKS Consider your investment goals, your time horizon for achieving them, and your tolerance for risk.
The fund seeks to balance the potential capital appreciation of equity securities with the income and relative stability of bonds and fixed income instruments over the long term. The fund’s focus on risk-adjusted returns is intended to reduce the fund’s overall risk profile and volatility relative to that of the broader stock market. In addition, the fund’s ability to seek income opportunities outside the stock market may also aid performance when stocks are declining. While there is no guarantee, spreading investments across different types of assets could reduce the fund’s overall volatility since prices of stocks and bonds may respond differently to changes in economic conditions and interest rate levels. A rise in bond prices, for example, could help offset a fall in stock prices.
The addition of high yield bonds, bank loans, foreign securities, and derivatives provides the opportunity for capital appreciation and higher income and the ability to better adapt to changing market conditions when compared to funds with less flexible investment programs. The fund’s investments in high yield securities may include securities that are unrated but deemed to be below investment grade by T. Rowe Price. In addition, bank loans with floating interest rates and certain other holdings could help to moderate the fund’s price decline when interest rates rise because they may be less sensitive to interest rate movements. As with all funds, the fund’s share price can fall because of weakness in the broad stock or bond markets, a particular industry, or specific holdings.
While high yield corporate bonds are typically issued with a fixed interest rate, bank loans have floating interest rates that reset periodically (typically quarterly or monthly). Bank loans represent amounts borrowed by companies or other entities from banks and other lenders. In many cases, the borrowing companies have significantly more debt than equity and the loans have been issued in connection with recapitalizations, acquisitions, leveraged buyouts, or refinancings. The loans held by the fund may be senior or subordinate obligations of the borrower, and may or may not be secured by collateral. The fund will primarily acquire bank loans as an assignment from another lender who holds a floating rate loan, but the fund has flexibility to also acquire bank loans directly from a lender or through the agent, or as a participation interest in another lender’s floating rate loan or portion thereof.
In addition to investing in a wide array of bonds and other debt instruments, the fund also uses interest rate futures; interest rate, credit default, and currency swaps; and forward currency exchange contracts as part of its principal investment strategies. Interest rate futures and interest rate swaps are typically used to manage the fund’s duration and overall interest rate exposure, but futures may also be used as a tool to help manage significant cash flows into and out of the fund. Currency swaps and forward currency exchange contracts are used to protect the fund’s non-U.S. dollar-denominated holdings from adverse currency movements by hedging the fund’s foreign currency exposure back to the U.S. dollar, as well as to gain exposure to a currency believed to be appreciating in value versus other currencies. Credit default swaps are used to protect against a negative credit event (such as a bankruptcy or downgrade) or an expected decline in the creditworthiness of an issuer, to hedge the portfolio’s overall credit risk, or to efficiently gain exposure to certain sectors or asset classes (such as high yield bonds or bank loans).
Just like every other fund company, a day will come when TRP start sucking and people will bail. Needless to say, at the wrong time.
A great company in my opinion. Still water runs deep. But I’ve long felt PRWCX walks on water and have kept relatively little in it. My bad. As regards any particular fund there at any particular time, I’d agree with VF.
TRP pulled the fund's launch several months ago. IIRC they said the 'market conditions' weren't right. I'd rather them postpone things than launch just to try and gather more AUM -- so IMO they did the responsible thing and probably what was better for them, too.
I have the prospectus bookmarked. I'm watching. I hear ya about CYA jargon. It's everywhere today. Don't we most of the time look past it? I suppose I'm guilty.
TRP pulled the fund's launch several months ago. IIRC they said the 'market conditions' weren't right. I'd rather them postpone things than launch just to try and gather more AUM -- so IMO they did the responsible thing and probably what was better for them, too.
Comments
(TCAPX, TCIFX, TCAMX)
Is this new fund asset allocating between PRWCX and one of its other established "income" funds?
Thanks for the head up Shadow.
Maybe this fill a niche between some of TRP's more conservative funds like PRSIX (35/65) and PRWCX (80/20) which tends to be a more aggressive allocation fund.
Looks in part like an attempt to profit from PRWCX's sterling reputation and from Giroux's high-profile name (He'll be lead manager.) *Deleted cheap.
What does opening a new fund at a time of extremely high market valuations (both equity and fixed income) do to the metrics? I'd think that puts a new fund at a disadvantage, having to buy initially at very high prices. For new investors, however, probably no different than buying into an established fund at high valuations.
---
Added: At a glance this doesn't appear to be simply an "allocation" between PRWCX and some income funds. Appears to be a stand-alone. However, there's sure to be overlap in many assets.
Why a new fund? I'd like to say it's because many of Price's funds have grown very large, presenting obstacles to managers. Just a guess. But this conclusion wouldn't appear consistent with the broader trend away from active management and into indexing. Another thought - It may pull some assets away from PRWCX (due to having a similar name and the same manager). If so, that could ease some of the bloat Price is surely dealing with in PRWCX.
https://www.sec.gov/Archives/edgar/data/1689311/000168931117000012/cann1aa.htm
seeks to balance
potential ... appreciation
may also aid
the relative stability
could help to moderate
intended to reduce
could reduce
may respond
could help offset
the opportunity for
TRP pulled the fund's launch several months ago. IIRC they said the 'market conditions' weren't right. I'd rather them postpone things than launch just to try and gather more AUM -- so IMO they did the responsible thing and probably what was better for them, too.
I have spent many a long afternoon writing exactly these words.