T. Rowe Price Small Cap Stock Fund

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

U.S. News evaluated 215 Small Growth 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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Note: Profile written for different share class.

Performance

The fund has returned 30.02 percent over the past year, 16.10 percent over the past three years, 29.55 percent over the past five years, and 10.57 percent over the past decade. 

Trailing Returns Updated 02.28.2014
Year to date 2.5%
1 Year 30.0%
3 Years (Annualized) 16.1%
5 Years (Annualized) 29.6%
10 Years (Annualized) 10.6%

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Summary

T. Rowe Price Small-Cap Stock has long done a fine job of finding winners among some of the smallest companies on the market. 

As of March 05, 2014, the fund has assets totaling almost $10.06 billion invested in 328 different holdings. Its portfolio consists primarily of shares of small companies. 

This fund had a stellar 2010, returning nearly 33 percent. Some of the fund's big winners last  year included Ann Taylor Stores Corporation and the oil and gas company Concho Resources. But in this broadly diversified fund, no single holding comes close to doing all the legwork. Instead, management relies on its ability to pick a whole array of winners, and recently it has shown that it can do just that. Lately, the fund has also shown an ability to perform well in all market environments. In 2008, for instance, when many small-cap funds bled far more than the broader market, this fund still managed to beat the S&P 500 by upwards of 3 percentage points. And in 2009, as evidenced by its 38 percent return, it came out in full force during smaller stocks' heated rally. The fund has returned 30.02 percent over the past year and 16.10 percent over the past three years. 

Historically, this fund has capably outmaneuvered both its peer group and the broader market. Morningstar attributes this outperformance to management's unique approach. Says analyst Harry Milling in a recent report on the fund: "At first blush this fund has the traits of a growth offering, with an average forward price/earnings ratio and earnings growth rate above peers in its small-blend category. But shooting through the portfolio is always a swath of holdings that are in a profit downturn for temporary reasons, and it is the fund's ability to buy the most promising of these stocks in their dark hours that accounts for its long-term success." The fund has returned 29.55 percent over the past five years and 10.57 percent over the past decade.  

Investment Strategy

According to the fund's summary prospectus: "Holdings will be widely diversified by industry and company; under most circumstances, the fund will invest less than 1.5% of its total assets in any single company. Stock selection may reflect either a growth or value investment approach. For example, we may look for a company whose price/earnings ratio is attractive relative to the underlying earnings growth rate. A value stock would be one where the stock price appears undervalued in relation to earnings, projected cash flow, or asset value per share."

Role in Portfolio

Morningstar calls this fund a "core" holding.

Management

Gregory McCrickard manages the fund.

Fees

T. Rowe Price Small Cap Stock Fund has an expense ratio of 1.19 percent. 

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Risk

Like all stock funds, this one comes with some risks.

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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 1 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-03-12

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

Value Line 2014-03-12

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 2014-03-12

This fund received the Silver award for the Small Cap Domestic Equity category in Standard & Poor’s 2010 Mutual Fund Excellence Awards. 

Standard & Poor's 2010-11-01

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, moderate fees, and a spotless regulatory history. If management invested more and if the fund had a more-independent board of directors, it would score even more highly."

Morningstar 2010-10-24

In the annual Lipper/Barron's Fund Families Survey of 2009, T. Rowe Price ranks 2 out of 61 fund families surveyed.  

2010-10-24

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, moderate fees, and a spotless regulatory history. If management invested more and if the fund had a more-independent board of directors, it would score even more highly."

Morningstar 2010-10-24

In the annual Lipper/Barron's Fund Families Survey of 2009, T. Rowe Price ranks 2 out of 61 fund families surveyed.  

2010-10-24