T. Rowe Price funds are great for diversifying your portfolio.
When you’re choosing how to invest for retirement, T. Rowe Price funds are a recognizable name. T. Rowe Price is a mutual fund company that manages more than $1 trillion for investors and competes with other large brokerages such as Vanguard and Fidelity. “There are a lot of great choices” at the fund provider, says Todd Rosenbluth, director of mutual fund and exchange-traded fund research at CFRA Research. T. Rowe is known for its actively managed mutual funds, although the firm has started to offer ETFs, too. With a wide range of mutual fund options to choose from, it’s possible to build a customized retirement portfolio centered on your needs and goals. Here are seven of the best T. Rowe Price funds to consider when investing for retirement.
T. Rowe Price Blue Chip Growth Fund (ticker: TRBCX)
T. Rowe Price Blue Chip Growth Fund is a growth fund with a relatively conservative approach that holds high-quality companies. “This could be a core stock fund within the equity sleeve of a retirement portfolio,” Rosenbluth says. Although the fund is helmed by a new manager, he says the investment process will remain the same, and the same team of analysts still work for the fund. Top holdings include Amazon.com Inc. (AMZN) and Visa Inc. (V). TRBCX has a low annual expense ratio of 0.68%, or $68 for every $10,000 invested, which Rosenbluth says is important for people holding this fund for the long term.
T. Rowe Price Growth Stock Fund (PRGFX)
T. Rowe Price Growth Stock Fund is a popular holding in 401(k) portfolios, says Steve Azoury, financial advisor and owner of Azoury Financial, and it continues to be a top performer for the fund manager. This fund has a strong long-term track record, having 18.7% annualized returns for the past 10 years. Manager Joseph Fath has been with the fund since 2014. PRGFX is overweight on consumer cyclical and communication services compared to its peers. Along with technology, those three sectors make up the bulk of exposure. The fund’s largest holding is Amazon. PRGFX has a low 33% turnover rate, meaning only 33% of stocks are changed in a given year, “so they must be happy with their picks,” Azoury says. It comes with a low expense ratio of 0.64%. “With a low cost and consistent performance, it continues to be a buy for my clients,” he says.
T. Rowe Price All-Cap Opportunities Fund (PRWAX)
Azoury calls T. Rowe Price All-Cap Opportunities Fund “a nice multicap fund that can buy from the fastest-growing sectors.” The $8.8 billion fund costs 0.77% annually and has beaten its peers, net of fees and on a risk-adjusted basis, over the three-, five- and 10-year period. It is underweight on technology compared to the category and overweight on health care and communication services. Its top 10 holdings include UnitedHealth Group Inc. (UNH), Visa and Netflix Inc. (NFLX). Manager Justin White has been with the fund since 2016. “It is one of the firm’s more consistent funds,” Azoury adds.
T. Rowe Price Global Stock Fund (PRGSX)
The T. Rowe Price International Stock Fund is another solid performer, Rosenbluth says, with a strong track record that outperforms its peers. “It has a nice mix between U.S. and international holdings,” he says. This fund includes stocks such as London Stock Exchange Group PLC (LSEG), T-Mobile USA Inc. (TMUS) and Airbus SE. About 60% of the fund’s holdings are U.S. equities and the remaining 40% are stocks based in several developed countries such as the U.K., Japan and Germany. Manager David Eiswert has helmed this $7.6 billion fund since 2012. He adds that the 0.79% expense ratio is also low for an international fund.
T. Rowe Price High Yield Fund (PRHYX)
Investors with a lengthy time horizon can afford a higher risk tolerance, so “high yield is good for the long-term investor,” Rosenbluth says. He likes the T. Rowe Price High Yield Fund because it’s relatively conservative for this otherwise somewhat-risky space. It has a newer manager who has been at the helm for three years, but the performance has been relatively good. PRHYX has a yield of 5% and a low effective duration of 3.13 years. In terms of credit quality, the fund has the bulk of its portfolio in assets rated BB and B, with a slightly higher weighting to the latter than its category. PRHYX comes with an expense ratio of 0.7%.
T. Rowe Price Emerging Markets Bond Fund (PREMX)
Craig Bolanos, CEO of Wealth Management Group, says he prefers actively managed bond funds because a strong manager can add value. The manager of the T. Rowe Price Emerging Markets Bond Fund, Michael Conelius, has helmed the fund for more than 20 years. Bolanos includes this emerging-market bond fund in clients’ portfolios because of the higher yields and the exposure to growing economies. He says PREMX gives investors income along with the opportunity for appreciation. “Those are the two components of why the emerging-market bond fund fits a part of someone’s portfolio,” Bolanos says. PREMX has a yield of 4.76% and an effective duration of 8.35 years. PREMX has the highest expense ratio among the funds on this list, at 0.87%.
T. Rowe Price Summit Municipal Intermediate Fund (PRSMX)
This fund has delivered compelling risk-adjusted returns since its inception, Bolanos says. The management team has multiple municipal credit analysts and delivers value by finding mispriced credits. Although T. Rowe Price Summit Municipal Intermediate Fund may not score at the top of the performance rankings during strong bond bull markets, the research-intensive approach cushions the fund in market downturns. “For those looking for a core fixed-income holding with a preference for tax-free munis, this remains a solid choice for those that view bonds as the ballast in their portfolio,” he says. The fund has a 12-month yield of 2.1% and a 0.5% expense ratio.
The seven best T. Rowe Price retirement funds:
— T. Rowe Price Blue Chip Growth Fund (TRBCX)
— T. Rowe Price Growth Stock Fund (PRGFX)
— T. Rowe Price All-Cap Opportunities Fund (PRWAX)
— T. Rowe Price Global Stock Fund (PRGSX)
— T. Rowe Price High Yield Fund (PRHYX)
— T. Rowe Price Emerging Markets Bond Fund (PREMX)
— T. Rowe Price Summit Municipal Intermediate Fund (PRSMX)
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Update 12/20/21: This story was previously published at an earlier date and has been updated with new information.