Why We Downgraded This Big T. Rowe Price Fund
Plus, other Morningstar Medalist Rating highlights from March
Lower conviction in T. Rowe Price Equity Income’s REIPX unremarkable stock-picking approach resulted in a Process Pillar rating downgrade to Average from Above Average, dropping its Morningstar Medalist Rating to Bronze from Silver.
The strategy’s process is sound but lacks a clear edge. Manager John Linehan combines dividend yield, fundamental quality, and valuation in stock selection, yet two structural weaknesses persist. The strategy tends to hold deteriorating positions too long—its Fiserv stake, which shed more than 67.0% in 2025 while the Russell 1000 Value gained 15.9%, is the most recent example. Meanwhile, tight sector constraints, rarely exceeding 5 percentage points of benchmark weights, have left the portfolio benchmarklike; its average active share over the five years through January 2026 ranked in the lowest quartile among large-value peers. The fund looks more like the Russell 1000 Value than a distinctive income-oriented fund.
Linehan has led this strategy since November 2015, bringing experience trading mortgage-backed securities and oil contracts at Bankers Trust and ET Petroleum before joining T. Rowe Price in 1998. He also manages the US Select Value strategy and comanages Large-Cap Value. Though the sole decision-maker, Linehan meets weekly with four fellow value managers and draws on roughly half of T. Rowe Price Associates’ approximately 70 equity analysts. Simon Paterson joined in January 2026 as an associate manager, bringing an industrials background that Linehan credits with sharpening his contrarian thinking.
Key Morningstar Metrics for T. Rowe Price Equity Income Fund
Morningstar Medalist Rating: Bronze
Process Pillar: Average
People Pillar: Above Average
Parent Pillar: High
Multisector Approach to Short-Term Bonds
Increased confidence in Lord Abbett Short Duration’s LDLVX rigorous yet flexible approach to short-term bonds warranted a Process Pillar rating upgrade to Above Average from Average, raising its Morningstar Medalist Rating to Silver from Neutral.
This active multisector strategy tries to beat the ICE BofA 1-3 Year US Corporate Bond Index. Macro considerations inform sector allocation, security selection, and, to a lesser extent, duration positioning, which the managers keep within 0.25 years of the benchmark. Corporate bonds typically comprise 40%–70% of assets, including a meaningful high-yield exposure—averaging roughly 15% over the past decade—while securitized debt makes up the remainder of the portfolio. The flexibility to invest in some lower‑quality bonds helps the fund earn a higher yield than peers while keeping risk in check with limited derivatives use and a disciplined way of measuring interest rate and credit risk.
Key Morningstar Metrics for Lord Abbett Short Duration Income Fund
Morningstar Medalist Rating: Silver
Process Pillar: Above Average
People Pillar: Above Average
Parent Pillar: Above Average
A Well-Structured Emerging-Market Bond Fund
American Funds Emerging Market Bond’s REGGX thoughtful multimanager, collaborative approach earned a Process Pillar rating upgrade to Above Average from Average and elevated its Morningstar Medalist Rating to Silver from Neutral.
The team combines market‑level views with detailed bond analysis and shares its best ideas through ongoing collaboration. It prioritizes investments with lasting value over short‑term market moves, stays flexible across emerging‑market bonds, and manages risk through daily, comprehensive monitoring.
Veteran managers Kirstie Spence, Luis Freitas de Oliveira, and Robert Burgess oversee independent portfolio sleeves and have complementary expertise with various regions’ local interest rates, corporate credit, and distressed debt. A dedicated research group of sovereign and corporate analysts, an interest rates specialist, and a global trading team rounds out the effort.
Key Morningstar Metrics for American Funds Emerging Markets Bond Fund
Morningstar Medalist Rating: Silver
Process Pillar: Above Average
People Pillar: Above Average
Parent Pillar: High
Correction: A previous version of this article stated that T. Rowe Price Equity Income's Process Pillar was downgraded from Below Average. It was downgraded to Average from 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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