Kenneth Oshodi: Despite a pending manager departure, we believe that its strong team, steady process, and relatively cheap fees make T. Rowe Price High Yield a solid choice.
Following more than two decades as lead manager, Mark Vaselkiv plans to step away from day-to-day portfolio management responsibilities effective Jan. 1, 2020. With plans to take the helm following Vaselkiv's departure, Rodney Rayburn was appointed to the fund as a comanager on Jan. 14, 2019. He joined T. Rowe in 2014 and has served as portfolio manager of T. Rowe Price Credit Opportunities since July 2015. The team also includes 14 credit analysts and two associate analysts. After Vaselkiv's departure, the group plans to continue to implement the same value-driven process. It seeks bonds with compelling valuations that are issued by firms primed for a turnaround. Accordingly, many of the fund's holdings have split ratings. Non-U.S. high-yield bonds and out-of-benchmark holdings, including equities and bank loans, also figure prominently here.
The fund's long-term record is strong versus peers and owes much to deft moves by Vaselkiv. Most recently, his decision to avoid the high-yield market’s most-distressed names helped the fund to hold up better than 60% of distinct peers when high-yield fare struggled during 2018's fourth quarter. And overall, the fund's 6.6% annualized return landed among the best-performing quartile of its Morningstar cohort over the 15-year stretch ended January 2019.
This fund's overall experienced and robust team, consistent process, and affordable expenses support its Morningstar Analyst Rating of Bronze.