Market snags Baltimore's other mutual fund streak

ECONOMIC NAVIGATION AND SIGHTSEEING

October 05, 2008|By JAY HANCOCK | JAY HANCOCK,jay.hancock@baltsun.com

Legg Mason's Bill Miller produced the best-known mutual fund streak, beating the Standard & Poor's 500 index for 15 years in a row until his streak ended in 2006. Now Baltimore's other mutual fund streak is at risk, although this isn't necessarily a terrible thing.

T. Rowe Price's Capital Appreciation Fund is the only stock mutual fund that didn't lose money for investors during 2001 or 2002, the worst of the last downturn. Through 2007 it produced positive yearly returns for 17 years in a row.

But so far this year, the fund is down 14 percent and will need a brilliant turnaround to avoid a loss.

Manager David R. Giroux has been cautious for months, putting money in less-risky bonds and cash. But as of the most recent disclosure, he still held about 60 percent stocks and didn't avoid the overall market downdraft.

The fund holds large stakes in AT&T, Exxon and Time Warner, all of which have struggled. Fourteen percent of its assets at the end of August were in financials, the pariah of asset classes, although its biggest financial holding, Bank of America, has held up very well.

It's also invested heavily in consumer discretionary stocks and energy stocks.

But Giroux is still beating most of his peers and plastering the S&P 500, which has fallen 24 percent from the beginning of the year.

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