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T. Rowe Price Overseas Stock’s Rating Drops Ahead of Manager Departure

Here are the Morningstar Medalist Rating highlights from April.

Medalist rating image
Securities In This Article
Artisan High Income Institutional
T. Rowe Price Overseas Stock
Victory Low Duration Bond A

An impending manager change took T. Rowe Price Overseas Stock’s TROSX People Pillar rating and overall Morningstar Medalist Rating down a notch in April.

Morningstar downgraded the fund’s People Pillar to Average from Above Average because since-inception lead manager Ray Mills will retire at the end of 2024 and hand the reins to comanager Elias Chrysostomou, who will take over on Jan. 1, 2025. Chrysostomou has been associate manager since October 2023 and comanager since April 1, 2024, and still has the fund’s strong and capable team at his disposal, so the transition should be smooth. Mills’ departure after 17 years, however, will be a significant loss, and Chrysostomou, while no stranger to the strategy, has far less experience with it.

The fund’s process, which entails looking for companies with long-term fundamental strengths like accelerating earnings, healthy financials, and strong management teams, won’t change. Neither should the characteristics of its 140-180 stock portfolio that often holds a mix of growth, core, and value stocks across sectors and geographies.

Key Morningstar Metrics for T. Rowe Price Overseas Stock

  • Morningstar Medalist Rating: Bronze
  • Process Pillar: Above Average
  • People Pillar: Average
  • Parent Pillar: High

Bond Fund’s New Managers and Process Still Unproven

The Medalist Rating for Victory Low Duration Bond’s RLDAX A share class dropped to Negative from Neutral last month because of a Process Pillar downgrade to Average.

Victory transferred management duties to the fixed-income team from USAA Asset Management, which Victory acquired in 2019. Experienced comanagers Brian Smith, Doug Rollwitz, and Zach Winters now handle day-to-day management with the support of four additional managers and nine research analysts.

The new team runs a more traditional, bottom-up approach that does not rely on quantitative filters and signals as much as the previous managers. The shift is promising, but the team needs to prove it can hit its performance target of 100 basis points of alpha over the Bloomberg 1-3 Government/Corporate Index, an ambitious goal in the short-term bond Morningstar Category where the dispersion of returns is usually narrow. The fund’s People Pillar rating remains Average.

Key Morningstar Metrics for Victory Low Duration Bond

  • Morningstar Medalist Rating: Negative
  • Process Pillar: Average
  • People Pillar: Average
  • Parent Pillar: Average

Specialty Bond Fund Continues to Impress

An upgrade to Artisan High Income’s APHFX People Pillar rating to High from Above Average boosted the Medalist Rating of all its share classes to Gold from Silver in April.

Under manager Bryan Krug’s decadelong leadership, the team has evolved from a startup into a highly effective group with extensive research capabilities. Krug’s team includes six senior analysts, a trader, a data scientist, and a chief operating officer. While the team is smaller than those of some larger competitors, it meticulously manages the workload of this high-conviction, research-intensive high-yield bond strategy. Each team member brings a background or skill set conducive to executing this strategy.

The fund typically keeps one third of its assets in its largest 10 issuers, which courts risk if one or more of its concentrated bets turns unfavorable. Several factors bolster confidence in this strategy, though, including the team’s rigorous fundamental research on individual companies, Krug’s valuation sensitivity across diverse market environments, and the team’s shareholder-friendly decisions, such as closing the fund to new investors for capacity management in 2021.

Key Morningstar Metrics for Artisan High Income

  • Morningstar Medalist Rating: Gold
  • Process Pillar: High
  • People Pillar: High
  • Parent Pillar: Above Average

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Ken Noguchi

Associate Analyst

Ken Noguchi is an associate manager research analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers active strategies across a variety of fixed-income categories.

Before assuming his current role in January 2024, Noguchi worked in customer success at Morningstar, initially as an onboarding specialist and later as an associate manager. He joined Morningstar in September 2022.

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