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T. Rowe Price Capital Opportunity Looks Fetching

Fund's returns continue to improve under new strategy.


T. Rowe Price Capital Opportunity Fund (PRCOX) made a strategy shift a couple of years ago, and it's paying off nicely. Back in 1999, the fund switched from a traditional single-manager, all-cap style to one that uses a 20- to 30-person analyst team to pick stocks. Each analyst is responsible for one industry, and they keep the fund's sector weightings close to those of the S&P 500 while trying to beat that index's performance through stock selection. 

So far, there's no quibbling with the analyst team's results. Last year, the fund beat the bogy by nearly three percentage points, and this year it's ahead of it, too. What's more, the fund has landed in the top half of the large-blend category during that time, too. Top pick GE (GE) is doing fairly well this year. The fund's supervisor, Bill Stromberg, says the fund's position in the stock  is quite sizable when its position in Honeywell (HON) is factored in, but the GE stake will likely stay large after the merger because the analysts still have plenty of confidence in the stock. 

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Catherine Hickey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.