T. Rowe Price ranked No. 1 Overall: A respected mutual funds rating company ranks T. Rowe Price the best in the country for domestic equity funds.

December 20, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

The mutual fund business has thousands of high-performing domestic stock funds, but no company beats T. Rowe Price Associates Inc.

Morningstar, the respected mutual fund ratings firm, this week named Baltimore-based T. Rowe Price the best in the country when it comes to offering funds based on domestic stocks.

Price beat out 19 of the nation's largest fund families, including Fidelity Investments Inc., the Vanguard Group, Putnam Investment and Janus Capital Corp.

Morningstar's study shows that Price's family of funds, which have been in business for at least three years, offer investors higher returns and lower risk than the competition.

"The study is saying that T. Rowe funds have been looking really great over the last three years," said Pat Regnier, an associate editor with Morningstar. "They pay attention to cost, they pay attention to risk, they pay attention to style and consistency. What is remarkable about T. Rowe is that they were beating their 19 largest peers on risk and return hands down."

Company executives say they've stuck to a game plan formed in the mid-1980s of maintaining diversified portfolios, buying stocks when the prices are low, and exhaustive research and analysis.

"A lot of people want to know if we have discovered a secret," said M. David Testa, director of Price's equity division. "It isn't traceable to a single secret. The trick is that there isn't a trick."

Morningstar grouped funds into "stylistic" categories, meaning that all of the blue chip funds offered by the companies were compared with each other, while funds that invest in small

companies were placed in another category and compared.

The funds were rated on the amount of risk and total return over the last three years. Each fund received a rating from one through five. Morningstar tallied the ratings for each fund and came up with an average rating for the companies.

Price, which had 13 funds in the survey, earned the highest rating, 4.25, compared with No. 2 Putnam's 4.07, Vanguard's 3.69, Fidelity's 3.53 and Franklin Templeton's 3.48.

"T. Rowe Price had a few major strengths," Regnier said. "One of them is that they just had no ones and no twos. Fidelity has more four and five rated funds than T. Rowe Price, but Fidelity also has a ton of funds with low ratings."

All but one of Price's funds received five and four ratings. Spectrum Growth Fund received a three.

New Horizons Fund led Price's attack with an average return of 24.24 percent over the three-year period. It has returned 17.51 percent from the beginning of the year to Nov. 30.

Price's Mid-Cap Growth Fund returned an annualized 22.61 percent for the last three years, and it is up 23.15 percent year-to-date.

"This is no black magic, we are not casting spells," said Brain Berghuis, the Mid-Cap Growth Fund's manager. "We are simply doing the hard, fundamental research. I think very few people are doing that these days."

Mid-Cap Growth's assets have soared to $980 million, up nearly fourfold since the beginning of the year.

Three years ago, Morningstar produced a similar but not as sophisticated survey. In that one, T. Rowe Price ranked fourth. The company's performance improved because it has more domestic equity funds that were considered for this survey, and all of them are performing well.

It has helped that some competitors have stumbled. Fidelity's mega-fund Magellan, which has $53 billion in assets under management, returned 13.9 percent for the first 11 months of the year. It received a 3 rating in the Morningstar survey.

"Our work has gotten better and better," Testa said. "We keep working hard to improve what we do time and time again. We make everything we are offering the public work as well as we possibly can. I don't feel we have anything to apologize for in any of the funds."

This isn't the first award Price has received from Morningstar. Price's John H. Laporte, who manages New Horizons, was named stock fund manager of the year in 1995 over thousands of others.

"Times are good at our firm," Testa said. "Everybody is in a good frame of mind. This is sort of a capstone for a very fine year."

Price funds: Top returns, low risk

Here are Price's 13 domestic equity funds that Morningstar considered in assessing the performance of 20 fund companies, and how it ranked them. Category ratings are from 1 to 5, with 5 the highest.

Jund name .............Category ........Rating ....3-yr ...3-yr

........................................within ..ot ret ...risk

......................................category ..annlzd .rating*

Blue Chip Growth ...large blend .............5 ...22.80 ....0.61

ACapital Apprec'n ...mid-cap val. ............4 ...14.56 ....0.39

Dividend Growth ....large blend .............5 ...20.15 ....0.47

Equity Index .......large blend .............4 ...20.61 ....0.72

Equity Income ......large blend .............5 ...19.63 ....0.50

Growth & Income ....large blend .............4 ...19.09 ....0.58

AGrowth Stock .......large blend .............4 ...19.31 ....0.70

Mid-Cap Growth ..mid-cap growth .............5 ...22.61 ....0.88

New Am. Growth ..mid-cap growth .............4 ...18.96 ....1.02

ANew Horizons ....mid-cap growth .............5 ...24.34 ....1.13

OTC Securities .....small blend .............4 ...18.12 ....0.84

Small Cap. Value ...small value .............4 ...17.04 ....0.66

ASpectrum Growth ....large blend .............3 ...18.62 ....0.72

*The lower the number, the less risky the fund, with average risk equal to one.

Source: Morningstar

Pub Date: 12/20/96

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