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T. Rowe Price Equity-Income Stands Tall

Low-tech stance pays off for T. Rowe Price Equity-Income.


T. Rowe Price Equity-Income Fund (PRFDX) looks pretty snazzy these days. Its 13.1% return in 2000 landed in the top quartile of its peer group, the large-value category. So far in 2001, it's still humming along; its 3.8% loss through March 29, 2001, is also a top-quartile showing. A major reason for the fund's strong performance over the past year is the portfolio's lack of technology; at little more than 4% of assets, its stake in that hard-hit sector is less than half the category average. That's not all that has given the portfolio a boost, however. Rogers' stock-picking talent has also come to the fore. His picks among financials stocks, such as Mellon Financial (MEL) and Fannie Mae (FNM), soared last year. And so far in 2001, when few stocks are making money, top holdings like Texaco (TX) are eking out gains.

Though Rogers is still sticking with many of his true-value picks, he has been bargain-hunting amid the rubble in the tech sector. He added a position in Microsoft (MSFT) in the middle of last year as that stock was beaten up amid concerns about its litigation woes, and he has increased it a bit so far in 2001. Microsoft has been a solid pick so far, but things haven't worked out so well with Lucent (LU), which he also snapped up last year after it got cheap last fall. Unfortunately, it has only gotten cheaper since then, as earnings woes and management problems still plague the firm. Rogers says it's a small position these days that's simply too cheap to sell right now. But he's also betting that the company can right itself--Rogers says Lucent's problems are reminiscent of IBM's woes about 10 years ago, before new management came in to shape things up.

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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.