T. Rowe Price New Income Fund

Scorecard
4 / 5 Stars
Lipper
3 3 4 4 2
Zacks Investment Research
3 (Hold)
Standard & Poor's
3 / 5 Stars
TheStreet.com
C+ (Hold)

#78 in Intermediate-Term Bond

U.S. News evaluated 273 Intermediate-Term Bond Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Performance

The fund has returned 5.04 percent over the past year, 3.90 percent over the past three years, 5.40 percent over the past five years, and 5.25 percent over the past decade. 

Trailing Returns Updated 06.30.2014
Year to date 4.3%
1 Year 5.0%
3 Years (Annualized) 3.9%
5 Years (Annualized) 5.4%
10 Years (Annualized) 5.2%

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Summary

T. Rowe Price New Income is a conservative fund with a steady approach. 

As of July 03, 2014, the fund has assets totaling almost $24.93 billion invested in 1,676 different holdings. Its portfolio consists of a mix of fixed-income investments, including treasuries, mortgage-backed securities, and corporate bonds.

Since 2009, this intermediate-term bond fund has stayed close to the middle of the pack. Within corporate bonds, the fund has shown a preference for the financial sector, and its top holdings include debt from JPMorgan Chase, Morgan Stanley, and Goldman Sachs. Going forward, one of the biggest risks for this fund and others like it is the potential for rising interest rates. As interest rates creep up, bond prices will suffer. The fund has returned 5.04 percent over the past year and 3.90 percent over the past three years. 

This fund, which has been around since 1973, is unlikely to jump to the front of the pack in strong markets, but it's equally unlikely to lag far behind its peers at any point in time. Over time, this consistency has paid off. As of the end of the second quarter, the fund's three-, five-, and 10-year returns each landed it in the top 20 percent of Morningstar's intermediate-term bond category. Perhaps more importantly, the fund doesn't often lose money. The last time it was in the red for the year was in 1999. The fund has returned 5.40 percent over the past five years and 5.25 percent over the past decade. 

Investment Strategy

According to the fund's prospectus: "In seeking income and capital preservation, the fund pursues a total return strategy. Active management of the portfolio can result in bonds being sold at gains or losses. However, over the long term, the fund seeks to achieve its objective by investing primarily in income-producing securities that possess what the fund believes are favorable total return (income plus changes in principal) characteristics. ... Eighty percent (80%) of the debt securities purchased by the fund will be rated investment grade (AAA, AA, A, BBB, or equivalent) by each of the major credit rating agencies (Standard & Poor's, Moody's, and Fitch IBCA, Inc.) that have assigned a rating to the security."

Role in Portfolio

Morningstar calls this fund a "core" holding.

Management

Daniel Shackelford, together with T. Rowe Price's seasoned fixed-income team, manages the fund. 

Fees

T. Rowe Price New Income Fund has an expense ratio of 0.58 percent. 

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Risk

One of the biggest risks is rising interest rates. As interest rates go up, bond prices decline.    

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Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 3 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 3 for one year, 3 for five years, and 4 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Risk Rank, a measure of volatility, is 3 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-06-11

This fund received the Silver award for the Taxable Fixed Income category in Standard & Poor’s 2010 Mutual Fund Excellence Awards.

Standard & Poor's 2010-11-01

In the annual Lipper/Barron's Fund Families Survey of 2009, T. Rowe Price ranks second out of 61 fund families surveyed.   

2011-01-30

Morningstar gives this fund a stewardship rating of B on a scale of A to F, saying: "On most fronts, this fund is strong, benefiting from a top-rate investment culture and a spotless regulatory history. If management invested more, the fund was a bit cheaper, and if the fund had a more-independent board of directors, it would score even more highly."

Morningstar 2011-01-30

In the annual Lipper/Barron's Fund Families Survey of 2009, T. Rowe Price ranks second out of 61 fund families surveyed.   

2011-01-30

Morningstar gives this fund a stewardship rating of B on a scale of A to F, saying: "On most fronts, this fund is strong, benefiting from a top-rate investment culture and a spotless regulatory history. If management invested more, the fund was a bit cheaper, and if the fund had a more-independent board of directors, it would score even more highly."

Morningstar 2011-01-30