T. Rowe Price Offers New Credit-Related Fund

T. Rowe Price, a provider of investment management services, has launched the new Credit Opportunities Fund.

The ongoing evolution and increasing complexity of capital markets have created opportunities in credit that extend beyond traditional fixed-rate bonds, the firm says. To this end, T. Rowe Price has constructed the new fund to take advantage of an array of credit instruments that offer compelling risk/return trade-offs. It will also take a total return approach that balances capital appreciation and income.

Paul Karpers, who has 19 years of investment experience, will manage the fund. He also serves as portfolio manager for the T. Rowe Price Institutional High Yield Fund for U.S. institutional investors and the T. Rowe Price Funds SICAV–Global High Yield Bond Fund for non-U.S. institutions domiciled in qualifying jurisdictions.

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“The Credit Opportunities Fund was designed on the premise that credit markets have grown increasingly large and complex, and the best way to capture opportunities is through a less-constrained approach that’s not arbitrarily limited by security type or benchmark considerations,” says Karpers, who is based in Baltimore.

He adds, “For years, our high yield strategies have incorporated a range of instruments—including loans, equities, and credit default swaps—in seeking to provide high current income for investors. The new fund takes this a step further, with greater latitude to pursue capital appreciation and income-oriented ideas across the full range of fixed income opportunities, bringing together the breadth of our research insights to offer what we believe to be the best of what we do in credit-themed investing.”

Karpers will rely on research by T. Rowe Price’s global fixed income analysts, as well as the firm’s equity division, to identify compelling investment opportunities across the credit landscape and capital structure. The portfolio of the fund will be relatively concentrated, consisting of the investment team’s highest-conviction ideas for generating total return. The fund also offers exposure to areas of the credit markets that may not be closely followed by many participants in the traditional asset management industry and, therefore, may be mispriced.

According to T. Rowe Price, Karpers will have latitude to invest across a range of securities and credit situations according to the following themes:

  • No limits on below investment-grade or unrated bonds;
  • Up to 50% of assets in bank loans;
  • Up to 20% in securitized instruments backed by a pool of assets;
  • Up to 10% in equities or equity-like securities;
  • Up to 10% in trade claims or outstanding obligations of companies in bankruptcy;
  • May purchase both U.S. and non-U.S. issuers;
  • Up to 50% in nondollar-denominated securities; and
  • May use derivatives to express a positive or negative view of an issuer's credit quality.

The fund is expected to be volatile, with greater risk than a typical high yield fund, according to T. Rowe Price. In addition to significant credit risk, the portfolio will be less diversified and may hold more illiquid assets, potentially resulting in elevated price volatility. Any foreign holdings could be affected by adverse political or economic events.

Investors can access the fund strategy through Investor Class shares of the fund, Advisor Class shares, or through the Institutional Credit Opportunities Fund. The net expense ratio is estimated to be 0.90% for the Investor Class shares, 1.00% for the Advisor Class shares, and 0.65% for the institutional fund.

The minimum initial investment in the Credit Opportunities Fund is $2,500, or $1,000 for retirement accounts or gifts or transfers to minors (UGMA/UTMA) accounts. The Institutional Credit Opportunities Fund generally requires a $1 million minimum initial investment.

To obtain a prospectus, call 800-541-8803 or click here. The prospectus includes investment objectives, risks, fees, expenses and other fund-related information.

MMI and Wheelhouse Team on eLearning Initiative

A new program from the Money Management Institute (MMI) and Wheelhouse Analytics provides broad-based training on managed account solutions to the employees of financial services firms.

The program was developed in response to requests from MMI member firms for a scalable, cost-effective way to deliver enhanced employee education on all facets of the managed accounts business. Phase one of the platform launch includes seven modules developed by industry subject matter experts, designed to provide a well-rounded and fast-paced overview of managed solutions.

The initial modules also cover the following:

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  • An introduction to the investment advisory industry;
  • The evolution and growth of managed products;
  • Investing basics;
  • The sales process and client interviews;
  • Baby Boomer investing;
  • Data technology supporting managed solutions; and
  • A close-up look at unified managed accounts.

The online platform allows advisers and their staff to cover these materials at their own pace and provides administrative tools that allow management personnel to monitor and track employee progress.

Marc Brookman, co-chair of MMI’s educational outreach committee and a managing director at Morgan Stanley Consulting Group, predicts the eLearning Initiative will reach thousands of advisers and employees in a much more efficient and cost-effective manner than many existing education programs.

The managed account education initiative is being rolled out to MMI member firms this month. Among its first students will be the incoming class of interns from the Gateway to Leadership Program, a partnership between MMI and the UNCF that places students from historically black colleges and universities in summer internships with MMI member firms.

For more information, visit www.MMInst.org or www.WheelhouseAnalytics.com.

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