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Behind T. Rowe Price Capital Appreciation's Gold Rating

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The following is an excerpt from Morningstar's Premium Analyst Report for T. Rowe Price Capital Appreciation (PRWCX), a moderate allocation fund that receives a Gold Fund Analyst Rating from Morningstar analysts. Morningstar.com Premium Members can  click here to see the full Analyst Report. Not a Premium Member? Take a free Premium trial to access this and hundreds more reports.

Process Pillar: Positive |  04/17/2014
In the equity portfolio, David Giroux typically looks for blue chips selling at a discount based on their P/E or price/book ratios; he values more-cyclical companies on their earnings across a full market cycle. The fund typically owns 65 to 80 stocks, and individual positions rarely get much above 3% of assets. Equities have typically been held around two years, on average, but holding periods are expected to lengthen now: Some higher-quality picks were sold too soon in recent years, so he's developed a longer internal rate of return measure that extends to six to seven years. That shift has resulted in some portfolio changes as the new measure has been implemented over the past two years. Sector weightings can vary significantly from those of the S&P 500 Index, but big bets are infrequent.

Greg Carlson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.