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T. Rowe Price, one of the biggest fund families of the U.S., posted a strong mutual fund performance and upbeat earnings results in the third-quarter reporting cycle. The company also experienced stable growth in its income, revenue and assets. During the quarter, the company did suffer outflows in equity funds, but managed to register inflows in fixed income and money market funds.
T. Rowe Price aims to provide low-cost, high quality mutual funds, which are expected to lead to strong performance in the long run. According to Lipper Inc., based on fiscal year-end data available as of September 30, 2016, out of 217 mutual funds, 170 have expense ratio lower than category averages. Moreover, out of its 102 rated funds, 73 have received 4 or 5 star ratings from Morningstar.
The fund family aims to provide a large number of no-load funds. As per its founder, Thomas Rowe Price Jr., the company focuses on charging fees on the basis of assets under management (AUM) and not as front or backend sales load. The company also offers direct investment access to its customers which will help in avoiding payment of any brokerage charge like transaction fees. With its investor-friendly approach and strong quarterly performance, investing in T. Rowe Price funds could be a sensible option.
Quarterly Income Up 18% Y-O-Y
In the third quarter, the company reported net income of $327.8 million, up 18% year over year and 68% from the previous quarter. Although its adjusted earnings per share of $1.17 missed the Zacks Consensus Estimate of $1.20, the bottom line improved 10% from the year ago quarter.
Moreover, net revenue rose 4% from the year-ago quarter and 10% from the prior quarter to $1.09 billion. Net revenue also outpaced the Zacks Consensus Estimate of $1.07 billion. The rise in revenue was primarily due to 5% year-on-year growth in investment advisory fees to $970.5 million. Also, an increase in AUM drove revenues.
Strong Assets Position
During the quarter, total AUM increased 12% year over year to $812.9 billion. Further, T. Rowe's mutual funds have around $517 billion in AUM, reflecting an increase of 11% from the year-ago quarter. During the quarter, net market appreciation and income came in at $36.5 billion, while net cash outflow was $0.2 billion after client transfers.
Moreover, outflows were significantly narrower than the previous quarter’s outflows of $2.7 billion. Additionally, outflows of the company’s mutual funds were $400 million. While equity funds witnessed major outflows of $3.5 billion, fixed income funds and money market funds experienced inflows of $2.7 billion and $400 million, respectively.
5 Best T. Rowe Price Mutual Funds to Consider
T. Rowe Price claims that more than 75% of its mutual funds carry a lower expense ratio than their respective categories. This renowned publicly owned investment management firm offers a variety of mutual funds and operates worldwide from 16 offices. Recently, T. Rowe held the third rank in Fortune Magazine’s “WORLD’S MOST ADMIRED COMPANIES” 2016 list.
We have selected five mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). These funds have encouraging one-year return and its minimum initial investment is within $5000. Also, these funds have low expense ratios.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
T. Rowe Price Global Multi-Sector Bond Advisor (PRSAX - Free Report) invests the majority of its assets in bonds. PRSAX may invest a maximum half of its assets in non-U.S. dollar-denominated foreign debt securities. The fund may also invest up to 65% of its assets in securities and other holdings that are rated noninvestment-grade. PRSAX has an annual expense ratio of 0.89%, lower than the category average of 0.95%. The fund has one-year returns of 7.3%.
T. Rowe Price Japan (PRJPX - Free Report) seeks capital appreciation for the long run by investing the majority of its assets in securities of companies which are based in Japan. PRJPX invests in a variety of Japanese companies and industries, irrespective of their size. The fund has an annual expense ratio of 1.05%, lower than the category average of 1.48%. PRJPX has one-year returns of 18.7%.
T. Rowe Price Capital Opportunity (PRCOX - Free Report) invests a large chunk of its assets in companies that are listed on the S&P 500 Index. PRCOX seeks U.S. common stocks, which are believed to be well positioned for capital appreciation. The fund is expected to maintain company weights similar to the index.PRCOX has an annual expense ratio of 0.70%, lower than the category average of 1.06%. The fund has one-year returns of 4.4%.
T. Rowe Price International Bond (RPIBX - Free Report) seeks appreciation of capital and income. The fund invests the lion’s share of its assets in foreign bonds. RPIBX also invests more than 65% of its assets in investment-grade foreign bonds. It is a non-diversified mutual fund. RPIBX has an annual expense ratio of 0.83%, lower than the category average of 0.95%. The fund has one-year returns of 7.8%.
T. Rowe Price Tax-Free High Yield (PRFHX - Free Report) invests a large share of its assets in municipal debt securities that are rated non-investment grade and believed to provide return exempted from federal income tax. PRFHX has an annual expense ratio of 0.69%, lower than the category average of 0.96%. The fund has one-year returns of 6.3%.
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5 Best Performing T. Rowe Mutual Funds in Q3
T. Rowe Price, one of the biggest fund families of the U.S., posted a strong mutual fund performance and upbeat earnings results in the third-quarter reporting cycle. The company also experienced stable growth in its income, revenue and assets. During the quarter, the company did suffer outflows in equity funds, but managed to register inflows in fixed income and money market funds.
T. Rowe Price aims to provide low-cost, high quality mutual funds, which are expected to lead to strong performance in the long run. According to Lipper Inc., based on fiscal year-end data available as of September 30, 2016, out of 217 mutual funds, 170 have expense ratio lower than category averages. Moreover, out of its 102 rated funds, 73 have received 4 or 5 star ratings from Morningstar.
The fund family aims to provide a large number of no-load funds. As per its founder, Thomas Rowe Price Jr., the company focuses on charging fees on the basis of assets under management (AUM) and not as front or backend sales load. The company also offers direct investment access to its customers which will help in avoiding payment of any brokerage charge like transaction fees. With its investor-friendly approach and strong quarterly performance, investing in T. Rowe Price funds could be a sensible option.
Quarterly Income Up 18% Y-O-Y
In the third quarter, the company reported net income of $327.8 million, up 18% year over year and 68% from the previous quarter. Although its adjusted earnings per share of $1.17 missed the Zacks Consensus Estimate of $1.20, the bottom line improved 10% from the year ago quarter.
Moreover, net revenue rose 4% from the year-ago quarter and 10% from the prior quarter to $1.09 billion. Net revenue also outpaced the Zacks Consensus Estimate of $1.07 billion. The rise in revenue was primarily due to 5% year-on-year growth in investment advisory fees to $970.5 million. Also, an increase in AUM drove revenues.
Strong Assets Position
During the quarter, total AUM increased 12% year over year to $812.9 billion. Further, T. Rowe's mutual funds have around $517 billion in AUM, reflecting an increase of 11% from the year-ago quarter. During the quarter, net market appreciation and income came in at $36.5 billion, while net cash outflow was $0.2 billion after client transfers.
Moreover, outflows were significantly narrower than the previous quarter’s outflows of $2.7 billion. Additionally, outflows of the company’s mutual funds were $400 million. While equity funds witnessed major outflows of $3.5 billion, fixed income funds and money market funds experienced inflows of $2.7 billion and $400 million, respectively.
5 Best T. Rowe Price Mutual Funds to Consider
T. Rowe Price claims that more than 75% of its mutual funds carry a lower expense ratio than their respective categories. This renowned publicly owned investment management firm offers a variety of mutual funds and operates worldwide from 16 offices. Recently, T. Rowe held the third rank in Fortune Magazine’s “WORLD’S MOST ADMIRED COMPANIES” 2016 list.
We have selected five mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). These funds have encouraging one-year return and its minimum initial investment is within $5000. Also, these funds have low expense ratios.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
T. Rowe Price Global Multi-Sector Bond Advisor (PRSAX - Free Report) invests the majority of its assets in bonds. PRSAX may invest a maximum half of its assets in non-U.S. dollar-denominated foreign debt securities. The fund may also invest up to 65% of its assets in securities and other holdings that are rated noninvestment-grade. PRSAX has an annual expense ratio of 0.89%, lower than the category average of 0.95%. The fund has one-year returns of 7.3%.
T. Rowe Price Japan (PRJPX - Free Report) seeks capital appreciation for the long run by investing the majority of its assets in securities of companies which are based in Japan. PRJPX invests in a variety of Japanese companies and industries, irrespective of their size. The fund has an annual expense ratio of 1.05%, lower than the category average of 1.48%. PRJPX has one-year returns of 18.7%.
T. Rowe Price Capital Opportunity (PRCOX - Free Report) invests a large chunk of its assets in companies that are listed on the S&P 500 Index. PRCOX seeks U.S. common stocks, which are believed to be well positioned for capital appreciation. The fund is expected to maintain company weights similar to the index.PRCOX has an annual expense ratio of 0.70%, lower than the category average of 1.06%. The fund has one-year returns of 4.4%.
T. Rowe Price International Bond (RPIBX - Free Report) seeks appreciation of capital and income. The fund invests the lion’s share of its assets in foreign bonds. RPIBX also invests more than 65% of its assets in investment-grade foreign bonds. It is a non-diversified mutual fund. RPIBX has an annual expense ratio of 0.83%, lower than the category average of 0.95%. The fund has one-year returns of 7.8%.
T. Rowe Price Tax-Free High Yield (PRFHX - Free Report) invests a large share of its assets in municipal debt securities that are rated non-investment grade and believed to provide return exempted from federal income tax. PRFHX has an annual expense ratio of 0.69%, lower than the category average of 0.96%. The fund has one-year returns of 6.3%.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>