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T. Rowe Price Capital Appreciation Conquers

Early 2001 performance update.

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These are flush times for T. Rowe Price Capital Appreciation Fund (PRWCX). At a time when the vast majority of funds are in the red (and the domestic-hybrid category average is down 6.91%), this fund is eking out a tiny gain for the year to date through March 22, 2001. That return is tops in the category and comes on the heels of an outstanding 2000 for the fund, when it once again topped the category with a cool 22.2% return. Those numbers came in part because the fund is totally unexposed to technology, so as most tech shares have been in freefall in the past several months, this fund has gone unscathed. In addition, manager Rich Howard has always favored such traditional value sectors as utilities and energy, two areas that were shunned in 1999 but were very much in favor in 2000. Though some energy shares have fallen so far this year, some of Howard's picks are still making small gains, like Amerada Hess (AHC). He eliminated Amerada in late 2000 but bought it back in early 2001 after its stock had been knocked down a few pegs.

At 28%, the fund's turnover is pretty low. And true to form, Howard hasn't been making too many moves lately. He found values in the convertible area (like Roche Pharmaceuticals), so that area of the portfolio has edged up a bit to 24% of assets. He has looked around at technology shares that have taken a beating, but he feels that there is still more room for those shares to correct, so he hasn't jumped into that sector. Instead, the only "tech" he has bought recently is Teck, a Canadian mining company that he thought was trading at a sizable discount to its value. 

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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.