Bond quality in Price Capital Appreciation PRWCX portfolio

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Retired1809
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Location: North Carolina, USA

Bond quality in Price Capital Appreciation PRWCX portfolio

Post by Retired1809 »

How would you describe the quality of the bonds in PRWCX (T R Price Capital Appreciation fund)?

To me, it looks like they have a bond portfolio of high income (aka junk) bonds compared to the category average percentages. Should that be a worry to an investor?


Grades Fund % Cat %
AAA 0.00 50.34
AA 1.96 8.21
A 7.35 11.69
BBB 21.35 15.96
BB 24.48 3.79
B 39.94 3.88
Below B 4.05 0.75
Not Rated 0.87 5.37
As of Dec 31, 2019 |
Category: Allocation--50% to 70% Equity | Credit Quality Data is based on the long position of the holdings.
0%306
Last edited by Retired1809 on Fri Feb 28, 2020 2:55 pm, edited 1 time in total.
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sometimesinvestor
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Re: Bond quality in Price Capital Appreciation PRWCX portfolio

Post by sometimesinvestor »

Can't help you with your question but its hard to find a balanced fund with a better record. Price is a large firm with lots of analysts so I would tend to believe they know what they are doing;.It is possible that the economic climate has changed since the data you have was released so maybe they have made changes. I would stay the course(The usual advice on this site)
cegibbs
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Joined: Sun Jan 25, 2015 7:27 am

Re: Bond quality in Price Capital Appreciation PRWCX portfolio

Post by cegibbs »

TRP Capital Appreciation institutional class shares has been my largest position for decades. Currently it is approximately 83% of my investable assets. Easy to hold through all markets. Stay the course.
Valuethinker
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Joined: Fri May 11, 2007 11:07 am

Re: Bond quality in Price Capital Appreciation PRWCX portfolio

Post by Valuethinker »

Retired1809 wrote: Fri Feb 28, 2020 2:42 pm How would you describe the quality of the bonds in PRWCX (T R Price Capital Appreciation fund)?

To me, it looks like they have a bond portfolio of high income (aka junk) bonds compared to the category average percentages. Should that be a worry to an investor?


Grades Fund % Cat %
AAA 0.00 50.34
AA 1.96 8.21
A 7.35 11.69
BBB 21.35 15.96
BB 24.48 3.79
B 39.94 3.88
Below B 4.05 0.75
Not Rated 0.87 5.37
As of Dec 31, 2019 |
Category: Allocation--50% to 70% Equity | Credit Quality Data is based on the long position of the holdings.
0%306
Yes that it a junk bond portfolio. BBB is the bottom of the investment grade.

They have taken a view on credit risk (that it is overstated). As they also have a lot of equities, this will raise the equity risk of the portfolio as credit risk is correlated with investment grade. To the extent that markets go up, this is a good thing.

The problem with actively managed funds like this is that you don't know what they are doing about risk - they can be shifting risk and you won't see it, and then if a "black swan" like Covid-19 (or something worse) comes along, you find out about that risk.

If this is 10% of your investable assets that is probably OK. If it is 50% then you might want to think about risk vs a conventional S&P500 index fund and an Intermediate Term US Treasury bond fund - where the risk is pretty much determined by the percentage you put in bonds.
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KEotSK66
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Re: Bond quality in Price Capital Appreciation PRWCX portfolio

Post by KEotSK66 »

if i felt i needed the performance prwcx cranks out i wouldn't have any problem investing in it

i would go to m* and check its chart to get an idea on its loss potential over time, iirc it lost between 40 and 45% between late 2007 and early 2009

it's a darn good aggressive fund
"i just got fluctuated out of $1,500", jerry
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KEotSK66
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Re: Bond quality in Price Capital Appreciation PRWCX portfolio

Post by KEotSK66 »

dupe post
"i just got fluctuated out of $1,500", jerry
crefwatch
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Re: Bond quality in Price Capital Appreciation PRWCX portfolio

Post by crefwatch »

This OP is welcome, because the November 5, 2019 analysis on Morningstar is evidently sadly out of date:

"The remainder of the portfolio shifts mostly between investment-grade and government bonds (0% to 20%), high-yield bonds (5% to 25%), and cash (2% to 20%), and Giroux writes call options on some stock holdings. "

I'm a satisfied long-term holder of this fund, since when it was NOT a (hybrid) junk-bond portfolio, and now I have to consider a change.
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