T. Rowe Price, a Baltimore-based investment company, had a sweet-16 party last week.
One of its most consistent mutual funds, the Price Capital Appreciation Fund, has earned a return on the investments, finishing in the black each of the past 16 years.
Returning 14.5 percent to fund holders in 2006, the Capital Appreciation Fund has become the only stock tracked by both Morningstar and Lipper, two national financial analysis institutions, to accomplish this feat during that period. The Appreciation Fund also has beaten the Standard & Poors Index during the same 16-year span.
“The managers have pointed to a very good risk-reward profile, meaning that they have been able to achieve good rewards with less risk than the S&P 500,” said Robert Benjamin, a T. Rowe Price spokesman.
By making it 16 years and counting, the Appreciation Fund has set a new benchmark in the world of mutual funds.
The T. Rowe Price fund toppled the record held by another Charm City firm, Legg Mason Inc. Its Value Trust fund set records for 15 consecutive years before coming to an end this year.
Both T. Rowe Price and Legg Mason are part of The Examiner Top 10, which follows stocks in the largest publicly held companies located in the Baltimore region.
Made up of carefully selected stocks, bonds, cash and assets, mutual funds are investments that are viewed as more safe than a traditional stock purchase. According to Ed Gilton, a spokesman for the Investment Company Institute, a trade association for the mutual fund industry, there are about $10 trillion invested in mutual funds right now, with around 96 million Americans having a stake in the market. Gilton said mutual funds are popular because of the ease in investing.
Mutual funds “are the avenue into the financial and security market for most Americans,” Gilton said.
“Most [people] find that investing direct in stocks and bonds is somewhat daunting, and they prefer to do it with a professional,” he said.
Financial experts suggest that each investor understand their individual financial needs and willingness to be exposed to monetary risk before choosing a mutual fund.
Investors “should first start with their needs and [understand] what they are trying to accomplish in terms of what they are saving and investing,” Benjamin said.
