T. Rowe Price Media & Telecom Fund: Spanning The Globe For Telecom Holdings Pays Off
Sector funds are always dicey. When they are hot, they soar. When they're not, they can sour investors to the very opportunities they offer. After coming out of a multi-year slump, the telecommunications fund sector has rebounded nicely this year. Here's a fund that's having a great year---plus, comes with a long-term track record that beats the averages quite handsomely.
T.Rowe Price's Media & Telecom fund (800-638-5660) has been around since 1993 and has racked up some pretty nice total returns over the past decade. For example, year-to-date, through Dec. 11, the fund was up over 49 percent while the average telecommunications fund that Lipper tracks was up 32 percent.
Look back three years and you'll find the average fund it this category down nearly 22 percent and this fund off less than 3 percent. Go back five years and the average telecommunications fund's total return was a minus 8 percent while the T.Rowe Price Media & Telecom fund was up over 10 percent. Since inception, the fund's average annual total return is a plus 13.60 percent. (The last two figures based on Lipper data through 11/30/03.)
Robert Gensler has been the fund's portfolio manager since January of 2000 guiding it though some tough and now prosperous times. The management edge he says he has over others is way he manages the fund's money. "In a sense, what I am doing is running the money like it was my own---which may sound odd, but everyone doesn't do that," says Gensler.
He also spans the globe looking for investment opportunities and in the past two months has been to companies in cities in Europe, Latin America and Asia. "A lot of my competitors don't have passports, " says Gensler. "But visiting (companies) gives certain advantages you wouldn't otherwise get."
With around 60 stocks in this multi-cap blend portfolio, here's more from Gensler about the T.Rowe Price Media & Telecom fund (PRMTX):
Q: Tell me more about how you manage the fund?
A: When I'm looking at various companies, I look out a year or two and ask, what are the opportunities for things like growth and earnings----and go from there.
The stocks I own in the fund are divided into three buckets: my media bucket, my telecom services bucket and then my technology bucket.
The technology bucket is really technology that enables technology for media telecom. Cisco or Nokia are examples of stocks that do that.
Q: How much of the assets in this fund are invested globally?
A: About 35 to 40 percent and that's been pretty stable for a few years now. When I took over the fund four years ago, only about 12 or 13 percent was invested globally. But my approach is to look within the telecom space and ask, where do I see the best opportunity?
Within telecom services bucket, for instance, anything international is almost better than anything domestic. One of the reasons for that is, in the United States you've got a fierce competitive environment in fixed-line operators and in cable. In other parts of the world, there's less competition, better regulation and more opportunity for growth.
Q: What are the names of some of the companies currently in the fund's portfolio?
A: Vodafone is actually the largest position, about 7.5 percent of the fund. It's the safe steady-Eddy and a top-line company. I own Sogecable, it's a satellite vender in Spain; Deutche Telecom; and 6 percent of the fund is also in gaming equipment providers. Stocks there include Alliance Gaming and Multimedia Games. They are all versions of the same story and make gaming devices like slot machines.
Q: What are the biggest risks to investing in this fund?
A: The broad market risk. You have long cycles in the global economy and you can never get away from market risk. So for the long-term investor, he or she shouldn't own this fund unless--- in the long run---they think it will do better than the broad market.
Q: Do you have some of your own money invested in this fund?
A: I have 100 percent of my 401(k) in this fund and my kid's college money in it, too.
For more information about The T.Rowe Price Media & Telecom Fund, including minimum investment requirements and comments about where the fund stands on market-timing and late-trading issues, visit their visit their web site at: www.troweprice.com.
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