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PRWCX thoughts? (TRowe Price capital appreciation)
Old 02-25-2005, 05:15 PM   #1
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PRWCX thoughts? (TRowe Price capital appreciation)

I stumbled across PRWCX during my continuing quest for assets that won't tank in a bear/extended sideways market...to complement my diversified portfolio. It seems too good to be true: a long history of decent returns without any years of terrible losses. Expense ratio is a little high but still under 1%.

http://finance.yahoo.com/q/pm?s=PRWCX

Is the manager using legitimate techniques to reduce risk or is it just an extended streak of good luck & timing that could turn south in the next decline? Has anyone else looked at this fund and decided yay or nay? I'd be curious to hear your reasons.
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Re: PRWCX thoughts? (TRowe Price capital appreciat
Old 02-25-2005, 05:51 PM   #2
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Re: PRWCX thoughts? (TRowe Price capital appreciat

Quote:
I stumbled across PRWCX during my continuing quest for assets that won't tank in a bear/extended sideways market...to complement my diversified portfolio. It seems too good to be true: a long history of decent returns without any years of terrible losses. Expense ratio is a little high but still under 1%.

http://finance.yahoo.com/q/pm?s=PRWCX

Is the manager using legitimate techniques to reduce risk or is it just an extended streak of good luck & timing that could turn south in the next decline? Has anyone else looked at this fund and decided yay or nay? I'd be curious to hear your reasons.
Based on an admittedly cursory examination, it looks a lot like a balanced fund with a value tilt, and with a very good track record. I have met some of the people at T Rowe and I was pretty impressed with their smarts (Wellington too, for that matter). Having said that, I think you get basically the same thing with VWELX at a quarter of the price.
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Re: PRWCX thoughts? (TRowe Price capital appreciat
Old 02-25-2005, 06:55 PM   #3
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Re: PRWCX thoughts? (TRowe Price capital appreciat

All of my other funds are in index so this was a higher expense ratio, but it appealed to me for the same reason you noted--- the historical returns were impressively stable even in the rough times. I believe I stumbled upon it on a past Fool article.

I have been contributing twice monthly to this fund, incidentaly earmarked "new car fund". Not that there is anything wrong with my current vehicle, but someday it may need to be replaced, and I dont want to borrow for it.
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Re: PRWCX thoughts? (TRowe Price capital appreciat
Old 02-26-2005, 06:39 PM   #4
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Re: PRWCX thoughts? (TRowe Price capital appreciat

Quote:
I stumbled across PRWCX during my continuing quest for assets that won't tank in a bear/extended sideways market...to complement my diversified portfolio. It seems too good to be true: a long history of decent returns without any years of terrible losses. Expense ratio is a little high but still under 1%.

http://finance.yahoo.com/q/pm?s=PRWCX

Is the manager using legitimate techniques to reduce risk or is it just an extended streak of good luck & timing that could turn south in the next decline? Has anyone else looked at this fund and decided yay or nay? I'd be curious to hear your reasons.
I think it's the real deal. The 2005 Kiplinger's Mutual Funds Guide has it ranked in the first decile for performance for '00, '01, '02, and '04. I realize that it isn't a long timeframe to judge by, but it is still a pretty good indicator. Also, during the 2000-2002 downmarket, it returned 24.1% and it ranks 2 in the volatility rank.

I would consider putting my money in it.

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Re: PRWCX thoughts? (TRowe Price capital appreciat
Old 02-26-2005, 08:11 PM   #5
 
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Re: PRWCX thoughts? (TRowe Price capital appreciat

I own it. I think the higher expense ratio is worth it. The fund has been around for 18-19 years and has only had 1 down year. It's a core holding of mine and I plan to add to it this year.
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Re: PRWCX thoughts? (TRowe Price capital appreciat
Old 02-27-2005, 07:29 AM   #6
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Re: PRWCX thoughts? (TRowe Price capital appreciat

One concern with the fund is that it's holding 20% cash right now. Given the "value premium" we've seen over the last 20 years, have value stocks been bid up so much that they're no longer a value? As the fund has grown, is the fund manager having trouble identifying enough opportunities to invest all that cash? Also, I don't need to pay a 1% fee to have someone else hold my cash for me. I'm still interested in it but it seems like chasing performance to me...dunno what to do.
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Re: PRWCX thoughts? (TRowe Price capital appreciat
Old 02-27-2005, 07:33 AM   #7
 
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Re: PRWCX thoughts? (TRowe Price capital appreciat

I've looked at PRWCX in the past and liked the fund. Interesting to note that PRWCX has a good chunk of convertibles (~15%) for its fixed income allocation.
I went with Wellington because of the lower expense and a higher allocation of foreign stocks but PRWCX is right up there with Wellington, Wellesley, and D&C Balanced as steady performers for all-weathered markets.
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Re: PRWCX thoughts? (TRowe Price capital appreciat
Old 02-27-2005, 08:10 AM   #8
 
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Re: PRWCX thoughts? (TRowe Price capital appreciat

Quote:
One concern with the fund is that it's holding 20% cash right now. Given the "value premium" we've seen over the last 20 years, have value stocks been bid up so much that they're no longer a value? As the fund has grown, is the fund manager having trouble identifying enough opportunities to invest all that cash? Also, I don't need to pay a 1% fee to have someone else hold my cash for me. I'm still interested in it but it seems like chasing performance to me...dunno what to do.
Depends on how you want to look at it. I like the fact that the fund has the flexability to hold cash for good buying opprotunities. I bought the fund for them to manage a portion of my investments as opposed to buying a traditional balanced fund that has to keep a straight 50/50 split. It's been good to me so far.....but as they say, past performance is no guarantee of future results. :-/
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