Top T. Rowe Price Mutual Funds: 2021 Performance & Analysis

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If you've made even the smallest of efforts to research high-quality, low-cost fund products, chances are good that you've run across at least a few T. Rowe Price mutual funds.

T. Rowe's association with affordable but adept investing goes back several decades to 1937, when Thomas Rowe Price founded his investment company on a "reputation for the highest character and the soundest investment philosophy."

Today, T. Rowe Price is known for their no-load mutual funds, which have grown in count to nearly 140. Many of these are actively managed portfolios with below-average expenses and above-average returns.

To get an idea of the quality of these mutual fund offerings, 70% of the firm's equity and fixed-income funds earn a four- or five-star rating with independent research firm CFRA. These ratings are based upon their forward-looking risk, reward and cost analysis.

But recently, Todd Rosenbluth, CFRA's Head of ETF & Mutual Fund Research, has put the spotlight on a pair of T. Rowe Price mutual funds he considers at the top of the firm's product offerings. Let's take a look.

Data is as of Feb. 23.

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 T. Rowe Price Equity Income Fund

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• Fund category: Large value
• Assets under management: $17.8 billion
• Dividend yield: 2.20%
• Expenses: 0.64%

T. Rowe Price Equity Income Fund (PRFDX, $33.76) is a low-cost, actively managed, large-cap value index fund that could do well in a 2021 environment that's expected to benefit value stocks.

 "John Linehan, who has managed PRFDX for five years, owns what he thinks are undervalued, higher-quality dividend paying stocks and aims to hold them for the long term," Rosenbluth says, adding that "the fund's recently turnover rate of 31% is well below its Equity Income peers' 80%."

In other words, Linehan offers a steady hand for buy-and-holders, and keeps trading costs low.

Financial stocks are the largest sector weighting at 21% of the fund, followed by healthcare (13%) and industrials (11%). Indeed, the majority of PRFDX's weight is in sectors and industries expected to benefit from a long-anticipated rotation into value.

It's not entirely tech-free – chipmaker Qualcomm (QCOM) is currently the top holding at just more than 3% of assets. But other top weights such as Southern Co. (SO), DuPont (DD) and MetLife (MET) are a classic blend of defensive and value plays.

The 2.2% yield feels modest, but it's much better than the S&P 500's 1.5% at present.

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T. Rowe Price Global Multisector Bond

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• Fund category: World Bond – USD Hedged
• Assets under management: $1.4 billion
• SEC yield: 2.4%*
• Expenses: 0.67%

One of the best T. Rowe Price mutual funds to hold in the fixed-income space now is T. Rowe Price Global Multisector Bond (PRSNX, $11.88).

In simple terms, there might be more price risk in the bond market now than in the stock market. Interest rates had little room to go but up to start the year, and indeed, heightened expectations for inflation have helped rates bounce up off the bottom. Looking forward, rates' likeliest directions are sideways to higher … and since bond prices move in the opposite direction as interest rates, that means a flat-to-negative environment for bond prices.

It's the kind of environment in which skilled managers who can go anywhere to find bonds can really display their worth.

T. Rowe Price Global Multisector Bond balances risk and reward well with a diversified blend of global sovereign bonds and higher-yield international corporate securities.

"PRSNX provides exposure to various bond sectors found in the Bloomberg Barclays Global Aggregate Index," Rosenbluth says, "but also owns high exposure to global high yield and emerging market corporate bonds that are largely absent from the benchmark."

Manager Kenneth Orchard is relatively fresh, managing the fund since Jan. 31, 2018. But he has done great things with PRSNX so far, putting it in the 86th percentile by performance over the trailing three years, and in the 96th percentile over the past year. That helps it earn a five-star rating from CFRA.

* SEC yield reflects the interest earned after deducting fund expenses for the most recent 30-day period and is a standard measure for bond and preferred-stock funds.

Kent Thune did not hold positions in any of these bond funds as of this writing. This article is for information purposes only, thus under no circumstances does this information represent a specific recommendation to buy or sell securities.