Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

A fund with big bets on banks

By Carla Fried


(Money Magazine) -- Manager Brian Rogers's knack for spotting promising but beaten-down stocks has helped T. Rowe Price Equity Income outpace more than 75% of its peers over the past 10 and 15 years. And since the March 2009 market lows, this $17.6 billion portfolio has soared 80%, vs. 56% for the S&P 500 index.

That was partly due to the fund's big -- and some would say risky -- bets on problem-plagued financial shares. But now that those stocks have rebounded, can Rogers continue his remarkable run?

A long record of success

An investment in Equity Income has trounced other market bets over the long run.

Brian Rogers, 55, has been calling the shots at Equity Income longer than some of his firm's employees have been alive. His 25-year tenure is nearly five times as long as his average peer's, and it includes three recessions, four bear markets, and an epic financial crisis that is still playing out. Throughout that stretch, Rogers -- who is also chairman and chief investment officer of T. Rowe Price -- has managed to beat most large-cap value funds as well as the S&P 500.

"He cycles in and out of companies he has followed for years," says Morningstar fund analyst Harry Milling. "He knows the managements so well. That's experience you can't buy."

Still big on banks

Despite the huge gains financial shares have enjoyed, this fund isn't ready to sell yet.

During the depths of the mortgage meltdown, when shares of a number of blue-chip financial companies lost two-thirds or more in value, Rogers was adding to Equity Income's stake in names like Bank of America (BAC, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500), and American Express (AXP, Fortune 500). Since then, his dark-day bets have more than tripled. Despite that, Rogers isn't looking to trim his financial stake just yet.

"Financials have gone from severely depressed to just somewhat depressed," says Rogers. "We are still early in the game."

Isn't he concerned that Europe's debt crisis could trigger another global credit panic? "The magnitude of what we are seeing now," he says, "is far less than what we just came through."

A broad view of value

At times Equity Income ventures into sectors that its peers often avoid.

Rogers is a classic value manager, who seeks out stocks that are trading below what he thinks the underlying companies are actually worth. But unlike some of his peers, who tend to stick to traditional value sectors such as financials and energy, Rogers is willing to go wherever he thinks the opportunities are.

That means his portfolio can at times be a bit eclectic. For example, after the Internet bubble burst in 2000, Equity Income made some bets on technology stocks (like Hewlett-Packard (HPQ, Fortune 500)) that were beaten down.

Today his fund has small positions in tech stocks including Applied Materials (AMAT, Fortune 500) and eBay (EBAY, Fortune 500). That's classic Rogers: being willing to go where most of his value peers fear to tread.  To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.63%3.67%
15 yr fixed2.77%2.78%
5/1 ARM2.97%3.05%
30 yr refi3.67%3.71%
15 yr refi2.83%2.84%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,773.64 -57.12 -0.32%
Nasdaq 4,775.36 -29.93 -0.62%
S&P 500 2,065.30 -10.51 -0.51%
Treasuries 1.82 -0.02 -1.03%
Data as of 7:10am ET
Company Price Change % Change
Bank of America Corp... 14.56 -0.23 -1.56%
Freeport-McMoRan Inc... 14.00 1.34 10.58%
Ford Motor Co 13.56 -0.53 -3.76%
Apple Inc 93.74 -1.09 -1.15%
Microsoft Corp 49.87 -0.03 -0.06%
Data as of Apr 29

Sections

Stacy Pincus has filed a class action lawsuit against Starbucks for misrepresenting the amount of liquid is in its cold drinks. More

The Dow is down 300 points over the past two days, leaving the index on track for its worst week since early February. Blame fumbled earnings reports from the likes of Apple and Google as well as concerns about the Bank of Japan. More

The ride-hailing company offers two options for people with disabilities, but very few cars are actual on the road to pick these passengers up. More

Visa says new software will allow consumers to check out with chip cards as fast as swiping a card with magnetic strip. More