dirk
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Post by dirk on Apr 24, 2021 22:39:34 GMT
There are a lot of T. Rowe Price Capital Appreciation fans out there (and for good reason). I am one of them. I am also a bit of a pack rat, and have assorted investing publications and files going back to the early 1990s. So I decided to dive into them and share some snippets of info they provide about Cap App.
Examples: As far back as my lists go (1995), the fund has been no-load. Early publications list it as a Large Cap Value fund; only later would Allocation Fund become a norm. Fund fees have come down over the years: 1.10% in 1995; reduced to .97% in 1997; .87% in 2002; .78% in 2006; .71% in 2013; now .70%. Closed to new investors c.2014, but accessible (still) via rollover to a new IRA at T. Rowe only from a 401k/403b/457...no rollovers from other types of retirement accounts permitted to initiate a new holding. Once it is established, money from other IRAs may then be transferred to PRWCX. The fund's volatility has always been kept low: rated "Very Low" risk by Mutual Fund Forecaster, 1996; given an 8.9 (out of 10) "Safety Rating" by Mutual Fund Buyer's Guide Feb. 1996; rated 1 in volatility by Kiplinger's (1-10 range) all through the 1990s and early 2000s; bumped to 2 in 2006-8, then back down after that. Current M* rating is Avg. Risk with High Return. The fund's managers have never been afraid to let cash build up when they feel the market's too dicey. In 1998, a Kiplinger's style chart shows that PRWCX's holdings consisted of 13% large growth; 13% large value; 0% midcap growth; 15% midcap value; 4% small growth; 0% small value; 4% international; 15% bonds; and 37% cash (!).
Unknowns: The big question is the true origin, before it was reconfigured into the allocation fund it is today (and essentially has been since at least the early 1990s). I've read somewhere that the fund letters (PRWCX) were originally given to a fund with a different mandate...I think the "WC" may stand for "world capitalization" but would like someone with true knowledge to confirm or deny...and elucidate! Seems to me that it may have been invested largely in utilities to start...but that's another thing I can't personally confirm. There are people on this forum who claim to be holders of the fund "since inception" and their input would be very welcome here!
The Big Attraction: Winning by not losing. I've personally been aware of PRWCX since the mid/late 1990s and an investor since c.2004. At that time, I had inherited my dad's estate and was looking for a reliable place to stash the proceeds. Yes, this meant that I was using it for a taxable account (I was not as tax-sensitive nor as savvy as I'm sure I should have been), but the fund had one thing going for it that I couldn't ignore: consistently positive returns. Having just gone through the tech wreck era (2000-2003), I was mainly concerned with not losing money. Thus PRWCX was definitely on my radar. At the time, it was run by Stephen Boesel (a 34+ year veteran at TRP) and was already considered a stalwart fund in almost every advisory available to the average investor. Boesel would continue as manager until 2006, when replaced by relative newbie David Giroux.
In a publication called "Safe Investing" (put out by Kiplinger's in 2005...so pre-Giroux), I found this info (and praise) for Cap App as a "balanced" fund: "The T. Rowe Price family of mutual funds has two funds with "balanced" in their names. But before considering them, take a look at T. Rowe Price Capital Appreciation. This fund isn't technically a balanced fund - it isn't mandated to keep so much in stocks and so much in bonds - but in practice it keeps 60% to 65% in stocks and the rest in bonds and cash. And its record is terrific. The fund has two twists - one for its stocks and one for its bonds. On the bond side, it invests almost exclusively in convertibles. These are bonds that pay interest but that can be converted into stock at the holder's discretion. Such a feature allows the holder to cash in if the company's stock price rises significantly. The conversion option usually lessens an investment's volatility. On the stock side the fund can invest one-fourth of its assets overseas - a practice that tends to dampen volatility. At last word, however, only a very small portion of assets was invested abroad. the fund returned an annualized 13% over the most recent three years and 14% over the past five years. What's remarkable about its return is the consistency. Every year except one starting 2000, Capital Appreciation has ranked in the top 10% of balanced funds. (In that other year, 2003, it finished among the top 20%.) Big bets on energy and industrial stocks by Steve Boesel, who became manager in 2001, account for much of the strength behind those numbers. Boesel says his mandate is to manage the fund defensively, or "to win by not losing." This fund is slightly more volatile than the average balanced fund. The expense ratio is a modest 078%."
Kiplinger's would later tout this consistent performance (in their early 2008 "Mutual Funds" publication) this way:
"The positive return champ is T. Rowe Price Capital Appreciation (PRWCX). Including the first 11 months of 2007, the fund has produced black ink for 17 consecutive years. Most of that record was attained under previous managers: Current captain David Giroux has been with the fund only since July 2006. Capital Appreciation typically keeps a little more than half of its assets in undervalued stocks of established companies and the rest in preferred stocks, regular bonds, convertible bonds and cash. Its only negative year was 1990, when it lost 1%; it even eked out a 0.5% gain in 2002. Capital Appreciation's annualized return of 11% over the past decade beat the S&P 500's return by an average of five percentage points per year."
Observant readers will note that PRWCX would lose a good bit more during fiscal year 2008, just months after this was written, as did the entire market...but under Giroux regained its mojo soon afterward. I have no regrets about being in the fund, even with taxable money. But I did make another mistake in not setting it up earlier as my primary IRA fund. I corrected this about five years back by doing a partial ($1,000) rollover to establish a new T-IRA at T. Rowe invested in Cap App. (So yes, I can confirm that the rollover "back door" into otherwise closed funds really works.) I did a subsequent rollover last year to close out my 401k upon retirement and got into PRNHX. Today, my T-IRA consists of PRWCX, PRNHX and a small holding in PRGTX. Happy camper here.
Remember that other things have changed over the years, not least of which is the way bonds are handled. But I'll let others speak to that, if they wish.
Hope some of this has been of interest to Cap App holders...and those who wish they were. As I've hinted above, I'd love for others with personal anecdotes, more detailed historical information, or just opinions about PRWCX to pipe up and add your two cents to this thread.
Cheers, Dirk
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Post by anitya on Apr 25, 2021 2:49:40 GMT
It is one of my large and long term holdings - I got into it by rolling over a 401(k). David Giroux's attention is currently divided between this fund and his leadership responsibilities at TRP. I am looking forward to PRWCX getting separated into a new company so I can get more of David Giroux's attention to PRWCX. The separation is already announced and forgot if the effective date is in 2021 or 2022.
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Post by johntaylor on May 2, 2021 14:24:52 GMT
Owned since inception. Stephen Boesel used to say he sought value across the capital structure.
When Giroux (young and MBA-less) came in, I was skeptical. Fortunately, I was wrong.
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dirk
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Posts: 42
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Post by dirk on May 4, 2021 16:16:48 GMT
NEWLY REVISED due to additional information found: There are a lot of T. Rowe Price Capital Appreciation fans out there (and for good reason). I am one of them. I am also a bit of a pack rat, and have assorted investing publications and files going back to the early 1990s. So I decided to dive into them and share some snippets of info they provide about Cap App. Examples: - As far back as my lists go (1995), the fund has been no-load.
- Early publications list it as a Large Cap Value fund; only later would Allocation Fund become a norm.
- Fund fees have come down over the years: 1.10% in 1995; reduced to .97% in 1997; .87% in 2002; .78% in 2006; .71% in 2013; now .70%.
- Closed to new investors c.2014, but accessible (still) via rollover to a new IRA at T. Rowe only from a 401k/403b/457...no rollovers from other types of retirement accounts permitted to initiate a new holding. Once it is established, money from other IRAs may then be transferred to PRWCX.
- The fund's volatility has always been kept low: rated "Very Low" risk by Mutual Fund Forecaster, 1996; given an 8.9 (out of 10) "Safety Rating" by Mutual Fund Buyer's Guide Feb. 1996; rated 1 in volatility by Kiplinger's (1-10 range) all through the 1990s and early 2000s; bumped to 2 in 2006-8, then back down after that. Current M* rating is Avg. Risk with High Return.
- The fund's managers have never been afraid to let cash build up when they feel the market's too dicey. In 1998, a Kiplinger's style chart shows that PRWCX's holdings consisted of 13% large growth; 13% large value; 0% midcap growth; 15% midcap value; 4% small growth; 0% small value; 4% international; 15% bonds; and 37% cash (!).
Managers: - From inception in 1986 to 1989: ? (Could not find this...anyone know?)
- 1989-2001: Richard Howard
- 2001-2006: Stephen Boesel
- 2006-present: David Giroux.
NOTE that in 2006 T. Rowe announced that Boesel would be handing over the reins to two managers - Giroux and Jeff Arricale, who is actually listed first in the PR article I found (seniority? Because he had an MBA and Giroux just had a bachelor's? Unsure). Arricale apparently comanaged for a year (until 2007) when he segued to leading TRP Financial Services (PRSX), then left the firm in 2010. Giroux has headed the PRWCX management team straight through to today. Unknowns: The big questions are (1) who was the first manager and (2) what was the true origin, before it was reconfigured into the allocation fund it is today (and essentially has been since at least the early 1990s). I've read somewhere that the fund letters (PRWCX) were originally given to a fund with a different mandate...I think the "WC" may stand for "world capitalization" but would like someone with true knowledge to confirm or deny...and elucidate! Seems to me that it may have been invested largely in utilities to start...but that's another thing I "think I've read" but can't personally confirm. There are people on this forum who claim to be holders of the fund "since inception" (johntaylor, jump in here!) and their input would be very welcome! The Big Attraction: Winning by not losing. I've personally been aware of PRWCX since the mid/late 1990s and an investor since c.2004. At that time, I had inherited my dad's estate and was looking for a reliable place to stash the proceeds. Yes, this meant that I was using it for a taxable account (I was not as tax-sensitive nor as savvy as I'm sure I should have been), but the fund had one thing going for it that I couldn't ignore: consistently positive returns. Having just gone through the tech wreck era (2000-2003), I was mainly concerned with not losing money. Thus PRWCX was definitely on my radar. At the time, it was run by Stephen Boesel (a 34+ year veteran at TRP) and was already considered a stalwart fund in almost every advisory available to the average investor. Boesel would continue as manager until 2006, when replaced by relative newbie David Giroux. In a publication called "Safe Investing" (put out by Kiplinger's in 2005...so pre-Giroux), I found this info (and praise) for Cap App as a "balanced" fund: "The T. Rowe Price family of mutual funds has two funds with "balanced" in their names. But before considering them, take a look at T. Rowe Price Capital Appreciation. This fund isn't technically a balanced fund - it isn't mandated to keep so much in stocks and so much in bonds - but in practice it keeps 60% to 65% in stocks and the rest in bonds and cash. And its record is terrific. The fund has two twists - one for its stocks and one for its bonds. On the bond side, it invests almost exclusively in convertibles. These are bonds that pay interest but that can be converted into stock at the holder's discretion. Such a feature allows the holder to cash in if the company's stock price rises significantly. The conversion option usually lessens an investment's volatility. On the stock side the fund can invest one-fourth of its assets overseas - a practice that tends to dampen volatility. At last word, however, only a very small portion of assets was invested abroad. the fund returned an annualized 13% over the most recent three years and 14% over the past five years. What's remarkable about its return is the consistency. Every year except one starting 2000, Capital Appreciation has ranked in the top 10% of balanced funds. (In that other year, 2003, it finished among the top 20%.) Big bets on energy and industrial stocks by Steve Boesel, who became manager in 2001, account for much of the strength behind those numbers. Boesel says his mandate is to manage the fund defensively, or "to win by not losing." This fund is slightly more volatile than the average balanced fund. The expense ratio is a modest 078%." Kiplinger's would later tout this consistent performance (in their early 2008 "Mutual Funds" publication) this way: "The positive return champ is T. Rowe Price Capital Appreciation (PRWCX). Including the first 11 months of 2007, the fund has produced black ink for 17 consecutive years. Most of that record was attained under previous managers: Current captain David Giroux has been with the fund only since July 2006. Capital Appreciation typically keeps a little more than half of its assets in undervalued stocks of established companies and the rest in preferred stocks, regular bonds, convertible bonds and cash. Its only negative year was 1990, when it lost 1%; it even eked out a 0.5% gain in 2002. Capital Appreciation's annualized return of 11% over the past decade beat the S&P 500's return by an average of five percentage points per year." Observant readers will note that PRWCX would lose a good bit more during fiscal year 2008, just months after this was written, as did the entire market...but under Giroux regained its mojo soon afterward. I have no regrets about being in the fund, even with taxable money. But I did make another mistake in not setting it up earlier as my primary IRA fund. I corrected this about five years back by doing a partial ($1,000) rollover to establish a new T-IRA at T. Rowe invested in Cap App. (So yes, I can confirm that the rollover "back door" into otherwise closed funds really works.) I did a subsequent rollover last year to close out my 401k upon retirement and got into PRNHX. Today, my T-IRA consists of PRWCX, PRNHX and a small holding in PRGTX. Happy camper here. Remember that other things have changed over the years, not least of which is the way bonds are handled. But I'll let others speak to that, if they wish. Hope some of this has been of interest to Cap App holders...and those who wish they were. As I've hinted above, I'd love for others with personal anecdotes, more detailed historical information, or just opinions about PRWCX to pipe up and add your two cents to this thread. Cheers, Dirk
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dirk
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Posts: 42
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Post by dirk on May 4, 2021 16:34:08 GMT
Apologies for taking up so much space, folks. I tried to simply edit my first post, but the programming here timed me out and only allowed me the option of creating a new post when I was ready.
Johntaylor...do you happen to recall the original manager of PRWCX? Also, did its mandate (primary investment goal) change from when it first opened?
Cheers, Dirk
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Post by johntaylor on May 5, 2021 18:20:07 GMT
My recollection was some involvement too by Richard Whitney (later head global alloc, the job S. Page has now), but T. Rowe said today Howard 1986 to 2001.
Cap Apprec opened in summer, and was hunting for value over the cap structure and bought about Sept 86 (added every month since). Back then, there was no star mgr because the fund had not yet built its long streak, and it was a busy year due to jt military exercises in Somalia.
Long ago on M*, people were calling it a bal fund, but that was a conceptual error based on trying to pigeonhole something sui generis. People used to think it was getting more risky by jumping into this or that, but it was altering where it found value whether in converts, leveraged loans, whatever.
Going back to Howard, goals stated in reports : 1) good risk-adj returns annually; 2) preserve capital over 3 yrs; 3) equity-esque return over a full cycle with about 70 percent of the risk.
Encompass even the mess of 2008, it delivered 108 percent of the market's return while taking on just 69 percent of the risk (Semiannual Report, June 30, 2020, p 4).
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Post by shipwreckedandalone on Jul 20, 2021 21:55:24 GMT
Giroux gave an interview on CNBC on 7/15/21 discussing 2022/2023 earnings challenges and comparisons.
Google search : David Giroux CNBC filter with last week.
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Post by FD1000 on Jul 21, 2021 21:00:20 GMT
One of the best funds of all time for an easy buy and hold. See below how an allocation fund beat 100% stocks (SP500) since inception. This fund is the exception to the rule why only several funds can beat indexes in performance but also on volatility, Sharpe. Attachments:
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Post by racqueteer on Jul 21, 2021 21:29:16 GMT
Just a comment on the chart FD provided... I note three additional things:
VFINX 'wins' if we start in mid-2016; PRWCX had a smaller drawdown late 2018 and early 2020; VFINX 'wins' big after that point. I think all of that reflects the greater stake in tech and equities of VFINX - More volatile generally. PRWCX is clearly a great fund and is more forgiving.
Attachments:
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Post by FD1000 on Jul 21, 2021 22:46:18 GMT
Raq: in my world PRWCX still wins since 2016. PV( link) shows PRWCX Sharpe+Sortino is better. But, they are not similar PRWCX is an allocation fund but over long periods it performed as well as stocks. I call this "a free lunch". FREE LUNCH funds are the exception to the rule and what I'm looking for. I was very difficult to beat the SPY per risk-adjusted performance since 2010. QQQ is another one. I don't know many funds as PRWCX that ranks 1-4 for 3-5-10-15 years in their category.
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Post by shipwreckedandalone on Jul 22, 2021 15:17:39 GMT
PRWCX is a great fund with a great track record but runs hot for an averaged balanced fund. Since 3/2009: QQQ +1500% and SPY +717%.
$100k invested into PRWCX at inception grew to $1.295M 10/2007 and fell to $822k by 2/2009 a loss of $473k. Some investors in retirement cannot stomach that emotionally. The fund recovered to $4.8M at present.
My point of this post is a reminder to rebalance your portfolio if you are a buy and hold investor to maintain your desired risk tolerance after prolonged bull markets. Using percentages in PV doesn't always give you the perspective a dollar balance will give (as example shown above). Be safe and be aware of the potential downside of the funds you own. For some, this prolonged bull market has increased net worth and allows for adjustments to SWR plans and risk tolerance/allocations. Sometimes the window to make changes are short lived for those who desire to do so.
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Post by johntaylor on Aug 20, 2021 23:38:51 GMT
The fund delivered 98% of the S&P 500's return over the 15 yrs ended June 2021, while taking on 69% of the risk.
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Post by jongaltiii on Aug 20, 2021 23:43:54 GMT
johntaylor … now if they will only open the fund to those of us who weren’t so fortunate to get in. Perhaps the impending changes will allow the, to open it? Until they do, I’ll carry on with FBALX and FMSDX. 😃
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Post by johntaylor on Aug 21, 2021 1:17:32 GMT
New setup kicks off early March, but no reopening info so far.
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dirk
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Post by dirk on Aug 23, 2021 0:50:40 GMT
johntaylor … now if they will only open the fund to those of us who weren’t so fortunate to get in. Jongaltiii…do you not have a 401(k) or 403(b) from which to do even a partial rollover to a traditional IRA? Last I checked that back door was still open. Dirk
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Deleted
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Post by Deleted on Aug 23, 2021 1:45:29 GMT
As per M*, in second quarter, PRWCX meaningfully added to MSFT, AMZN, Thermo Fisher Scientific Inc etc.
Does any one look at what PRWCX or other MF managers are buying or selling as ideas for stock purchases?
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Post by jongaltiii on Aug 23, 2021 11:54:22 GMT
dirk - I do have a 401K and IRA's but do not own any shares of PRWCX in any type of account. From what I understand, there is no backdoor option unless some sort of gift from a relative who is already in the fund. Cheers.
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Post by nobhead on Aug 23, 2021 13:31:31 GMT
dirk - I do have a 401K and IRA's but do not own any shares of PRWCX in any type of account. From what I understand, there is no backdoor option unless some sort of gift from a relative who is already in the fund. Cheers. jongaltiii, dirk, My spouse has PRWCX in personal non-IRA account at Vanguard. I also have a non-IRA personal account at Vanguard. I think she can gift me shares but the question is, can I add shares to it after it has been gifted?
TIA Nob
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dirk
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Posts: 42
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Post by dirk on Aug 23, 2021 14:50:24 GMT
dirk - I do have a 401K and IRA's but do not own any shares of PRWCX in any type of account. From what I understand, there is no backdoor option unless some sort of gift from a relative who is already in the fund. Cheers. Nope. Check my revised original long post above. You can rollover a modest amount (I did it with $1,000) from your 401k to initiate a new T-IRA at T. Rowe with PRWCX as the receiving fund. This is the ONLY easy back door that I know works. But don’t try doing it on your own online. Call T. Rowe and talk to a rep, set up a 3-way call with a rep from your 401k administrator, and have them help you with the rollover. Tell the T. Rowe rep what you want and let him/her tell you what online forms you need to fill out. Once that small amount is actually embedded, THEN you can do in-kind transfers from other old IRAs or add new money to PRWCX. Remember: the rollover HAS to be from your 401lk and it can ONLY go to a new IRA ( no taxable acct). Editing this post just to be clear: the new IRA must be housed at T. Rowe Price, as well...at least initially. No exceptions. You can't do this backdoor way to get into PRWCX and expect to hold the fund at a different broker or mutual fund house. Me, I've never worried much about having holdings at multiple places, but I know that some folks on the board absolutely insist on having all investments housed at Schwab or Fido or wherever...just one financial house; this is a case where you can NOT insist, because they're doing you a favor letting you in. Hey...their fund, their rules...but at least you can get into PRWCX if you really want to. (Yes, later you can transfer the account if you simply must, but I wouldn't do it until you've got it well established and know how the rules apply to deposits and withdrawals.) BTW, T. Rowe will designate your new account as a "Rollover IRA" and when I did it, the form was a T-IRA...I do NOT know if they allow this backdoor into a new Roth IRA (you'll have to ask). Good luck. Dirk
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dirk
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Posts: 42
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Post by dirk on Aug 23, 2021 20:23:08 GMT
dirk - I do have a 401K and IRA's but do not own any shares of PRWCX in any type of account. From what I understand, there is no backdoor option unless some sort of gift from a relative who is already in the fund. Cheers. jongaltiii , dirk , My spouse has PRWCX in personal non-IRA account at Vanguard. I also have a non-IRA personal account at Vanguard. I think she can gift me shares but the question is, can I add shares to it after it has been gifted?
TIA Nob
Hi Nob. Short answer: don't know...it's a question for T. Rowe. Also possibly Vanguard. Holding shares of one company's mutual fund at a different mutual fund company or broker? It often involves added fees or convoluted rules about access/additions (on both sides) that either confuse me or annoy the heck out of me. Over the years, I've noted major examples of "turf-fight silliness" about Vanguard funds held at Fidelity and vice versa. T. Rowe doesn't seem as crazy, but we're also talking about access to a closed fund here, and as I note...their fund, their rules. Get them to explain. This is one of the reasons I edited the post above to emphasize that, if you're doing my suggested back door (401k rollover -> new IRA invested in PRWCX), you expect to hold and grow the IRA at T. Rowe and keep it there until you understand all THEIR rules about what you can and can't do. However, if your spouse owns PRWCX in a taxable account, I'm sure gifting of shares is possible. But my first question would be...are you keeping all your finances separate for reasons of personal independence? Maybe a prenup agreement? Or because she inherited the account and needs to keep the funds isolated from shared ownership (say, to protect them from legal attack if you are sued)? Yes, these ARE valid reasons to keep things separate. But assuming they don't apply to your personal situation, consider talking to your spouse about redesignating her Vanguard taxable account as Joint Tenancy with Right of Survivorship. This makes you a co-equal owner and allows you to add to or withdraw funds from PRWCX (again, according to the rules set out by Vanguard and T. Rowe). Ergo, no "gifting" of shares required. (Also gives the survivor continuous access to the funds, before and during probate of any will...my wife and I have all our joint holdings designated JTWROS.) Remember, too, that PRWCX isn't exactly ideal for taxable investments...better for tax-advantaged (IRA, SEP, 401k if available) accounts. Yes, I was being tax-silly when I invested taxable money in it back in 2004 or so -- read my long post again. Consider that aspect before you jump through a lot of gifting and transfer hoops. Just sayin'. If you want PRWCX as an IRA (solo or component) fund, the rollover backdoor is so-o-o-o much easier. Good luck, however you decide to proceed. Dirk
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dirk
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Posts: 42
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Post by dirk on Aug 23, 2021 22:00:14 GMT
CLOSED FUNDS AT T. ROWE PRICE ARE NOT QUITE AS CLOSED AS YOU THINK
OK, I did two long posts above to explain "backdoor access" to the otherwise closed Capital Appreciation PRWCX. The reason I know this works is that I used the trick to get into PRWCX for my IRA five+ years ago. I used the same trick last year (when I retired) to get into another closed TRP fund, New Horizons PRNHX. But it occurred to me that the reason I knew about the "backdoor access" rule is because I'm reminded of it every time I receive a copy of T. Rowe Price Investor...an actual printed magazine published by TRP and mailed out every season to old farts like me who've had one or more TRP funds since way back in the 1990s. If you are an all-online investor, there's a good chance that you do NOT receive this publication, so let me give you a hint of what you've been missing.
Inside the back cover of every issue is a list of named T. Rowe Price mutual funds, including those that are technically closed to new investors (some have been closed for many, many years). The list of just the closed funds: Capital Appreciation PRWCX, Mid-Cap Growth RPMGX, New Horizons PRNHX, Small-Cap Stock OTCFX, Emerging Markets Stock PRMSX, International Discovery PRIDX, and High Yield taxable bond fund PRHYX. Health Care, Mid-Cap Value and Global Technology (and perhaps others) used to be closed, but were reopened at some point. On the full list as published in the Summer 2021 issue, each currently-closed fund is marked with a superscript "1" taking you to this footnote at the bottom of the page:
1 Closed to new investors except for a direct rollover from a retirement plan into a T. Rowe Price IRA invested in this fund.
And there it is. You can literally get into ANY "closed" fund if you follow their rule. But here are some other hints about this rule that I've had clarified by talking to helpful reps at T. Rowe. First, the smoothest way if you want into more than one closed fund is: make a partial rollover this year to get into Closed Fund 1, make another partial rollover next year to get into Closed Fund 2, and so on; apparently, they run into programming/computer issues internally if they try to get one person into several closed funds at one time...so get what you want, but make it easy on the person helping you out and stretch out your rollovers if you want into several of these funds, Second, when they say rollover from a retirement plan, the ONLY retirement plans that qualify are a 401k, a 403b, or a 457; I KNOW that they cannot do a rollover from an old IRA or SEP-IRA...ain't gonna happen., no matter how much you beg, so don't bother. Third, you are NOT going to get into a taxable-account, so again...don't try.
Remember, however, that once you have your Rollover IRA established, you can treat each fund as if it's fully open...but only in the tax-advantaged IRA environment: you can do in-kind transfers from other old T-IRAs (I transferred over $100K from three old funds after I set up my $1,000 rollover to PRWCX), you can add new money to it (up to your yearly IRA max contribution), and you can do future rollovers of whatever you have left in your 401k.
This is just food for thought. But I thought this might be a good place to clarify the process as I've come to understand it...and possibly give some hope to those who were unsure about HOW the "backdoor access" trick worked and believed that they were permanently shut out. Not so. You CAN get in. But follow the rules and BE NICE to the reps you call to help you get in. Also, do your homework with your 401k administrator...rollovers aren't treated the same way as withdrawals from 401k accounts, so even people younger than 59-1/2 should be able to do rollovers without penalty (there may be a fee, however), but talk to someone about how it works under your plan...and ask if they'll smooth the way to this rollover by getting on a 3-way phone patch with you and the T. Rowe rep you work with. That's how I did it both times I did rollovers and everything went smoothly.
OK...enough for now. Hope this has been helpful to some of you. And BTW, if you want to use this trick, I suggest you try soon. I do NOT know how rules might change once the corporate "split" thing happens at T. Rowe.
Dirk
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dily
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Post by dily on Aug 24, 2021 0:58:24 GMT
Lots of great information from Dirk about the process of rolling over from a 401(k) into closed T. Rowe Price funds.
I just want to add that when I left my previous employer in 2016, I was able to roll half of my 401(k) balance into four closed (at the time) TRP funds in one easy transaction. I was able to get into Capital Appreciation (PRWCX), New Horizons (PRNHX), Mid-Cap Growth (RPMGX) and Mid-Cap Value (TRMCX). Like Dirk, I faciliated a 3-way phone conversation between myself, the TRP rep and the Prudential rep from my former 401(k). It was quick and painless.
Not sure if the programming/computer issues that Dirk alluded to are a recent phenomenon, but my one experience five years ago was seamless.
I rolled the other half of my 401(k) balance into Vanguard funds to hedge my bets, but the T. Rowe Price portfolio has blown the doors off the Vanguard portfolio, both in terms of absolute and risk-adjusted returns.
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dirk
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Post by dirk on Aug 24, 2021 3:21:32 GMT
Not sure if the programming/computer issues that Dirk alluded to are a recent phenomenon, but my one experience five years ago was seamless. Hi dily. Five+ years ago when I did the $1,000 rollover just into PRWCX, the rep told me multiple placements would be no problem at all. Your experience confirms it. Last year, it was my intent to rollover the remainder of my 401k into New Horizons and Mid-Cap Growth (and I was wavering on Small-Cap Stock)...but the story had changed. When I discussed my preference with my rep (not the one from my Cap App rollover), I got a lot of hemming and hawing, but finally his "explanation" came out something approximating what I put in my post above. The guy blamed it on computer issues and, who knows, there may have been factors stemming from all the strangeness surrounding the pandemic lockdown (the rep WAS working from home already...another thing that may have been problematic). In any case, he seemed very relieved when I finally caved instead of insisting on trying for my true druthers. In every other way he was most helpful and the rollover itself went through easily and actually faster than the first one did. In the end I wound up with large portions of Cap App and New Horizons and a small stake in Global Tech. Honestly, I couldn't be happier with the performance outcome. Still, I don't want to spread inaccurate information, and I haven't had occasion to question TRP reps recently about the protocols they now follow and limitations on the number of "closed" funds they allow. But I do know that the footnote wording I referred to hasn't changed, so I encourage anyone wanting to get into PRWCX (or any of the closed funds) to pursue the rollover option. And let us know what TRP reps are saying now! Good luck to everyone, Dirk
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Post by yogibearbull on Aug 25, 2021 12:58:41 GMT
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Post by shipwreckedandalone on Aug 25, 2021 13:04:52 GMT
See my post from 7/20 on this thread. Do we think VLAAX's allocation & risk avoidance decisions look so bad now?
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Post by yogibearbull on Aug 25, 2021 13:22:53 GMT
shipwreckedandalone , I like to read and not watch videos. So, I may have missed this info if it was there.
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Post by shipwreckedandalone on Aug 25, 2021 13:34:16 GMT
shipwreckedandalone , I like to read and not watch videos. So, I may have missed this info it was there. sure, I understand. This video really got my attention b/c I respect his skill. I remember it well and factors into my risk assumptions over next 6 mos.
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Post by nobhead on Aug 25, 2021 13:40:48 GMT
dirk Thanks. We have been keeping them separate for estate reasons. I really do not want to create a separate account at T. Rowe. I am trying to simplify things so that would not be an option. Have many other more important things to do before I pursue this. I appreciate your time and information.
Nob
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Post by jongaltiii on Aug 25, 2021 14:52:05 GMT
See my post from 7/20 on this thread. Do we think VLAAX's allocation & risk avoidance decisions look so bad now? shipwreckedandalone - for me (previously invested in VLAAX) - my issue was with the performance against it's peers. YTD, VLAAX still trails popular peers by 5% and during 1 year time period - trails by 11%. So, I'm happy to be in different AA funds. yogibearbull good share with the FT story. “The equity market is rich here at more than 20 times earnings for the next year and we have pulled back,” Giroux told the Financial Times." <--Interesting.
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dirk
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Post by dirk on Aug 25, 2021 15:15:15 GMT
dirk Thanks. We have been keeping them separate for estate reasons. I really do not want to create a separate account at T. Rowe. I am trying to simplify things so that would not be an option. Have many other more important things to do before I pursue this. I appreciate your time and information.
Nob
Understand completely. Is it just me, or have you noticed that "simplifying things" can be a lot of (frequently complex) work? In the past half dozen years, I've taken our family investments down from over a dozen providers (mutual fund companies and brokers) to three: Fidelity, Vanguard and T. Rowe. Lots of tax factors, calls to our CPA, etc. during that time. BUT finally feels like something my wife can handle if anything happens to me; she's a brilliant woman but just doesn't grok investing and has been happy for me to do it over the past several decades. Dirk
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