T. Rowe Price Capital Appreciation

David Giroux, lead manager of T. Rowe Price Capital Appreciation PRWCX for over a decade, has regularly trounced his peers and benchmarks and shows no sign of slowing down.

Giroux has helmed this strategy since mid-2006. Over that time, he’s displayed an innate ability to opportunistically invest across both equities and bonds, capturing pockets of value through strong stock selection and impressively timed shifts between stock and bond exposure. His execution of this strategy’s nimble, contrarian approach has delivered topnotch returns for its investors. Over his tenure through September 2023, he’s outpaced all peers in the moderate allocation Morningstar Category on both an absolute and risk-adjusted basis (as measured by Sharpe ratio). The same holds true over the trailing 10 and five years as well; over the past three years, he beat only 98% of his peers.

Giroux delivers a high-conviction basket of roughly 50 stocks that account for 55%-70% of the fund’s assets. He’ll shift the exposures meaningfully when he identifies mispricing, such as scaling up equity exposure when drawdowns bring valuations to a more attractive level. Giroux executed this approach in 2018, early 2020, and again in 2022. Though such moves can be early at times, driving steeper short-term losses, they’ve paid off over the long run. Giroux and his team’s deep fundamental research drives security selection, which has been additive in the equity sleeve each of the past 10 calendar years. Recently, he’s pared back on the fund’s technology exposure to a 13-percentage-point underweighting compared with the S&P 500 while adding to utilities and industrials, mainly because of their more attractive prices and lower volatility.

Recently he’s been adding U.S. Treasury exposure as rates have soared and in case the U.S. economy slides into a recession in the next year or two. The strategy’s 3.9-year duration as of the end of June is the highest it’s been since 2007.

Whether or not there is a recession looming, shareholders in the strategy (which has been closed to new investors since 2014) are in good hands.