T Rowe Price has launched the Global Allocation Fund (RPGAX), broadening the firm’s line-up of asset allocation products, which currently have over USD138bn in assets as of 31 March 2013.
The new mutual fund is the firm’s most broadly diversified asset allocation fund. It seeks long-term total return from investments in US and international stocks, bonds, cash, and alternative investments. The fund may serve as a core holding or complementary portfolio.
Typically, the fund will invest 60 per cent of assets in stocks, 30 per cent in bonds and cash, and 10 per cent in alternative investments including hedge funds. Approximately 40 per cent of the fund’s total assets will be invested in international stocks and bonds across both developed and emerging markets.
The fund’s strategic investment design incorporates nearly 20 asset classes and strategies, including:
International equities: Approximately 50 per cent of the equity allocation will be international equities, including developed small-cap and large-cap equities; developed growth, core, and value equities; and emerging market equities.
Diversified fixed income: The fixed income allocation will include approximately 30 per cent in international bonds, as well as exposure to short-duration TIPS, high yield, floating rate, and emerging market local currency bonds.
Strategic diversifying asset classes: Approximately 10 per cent of the fund’s assets will be directly invested in externally managed hedge funds with an absolute return-oriented profile. Additionally, currency hedging and index call writing will also be used to moderate risk and provide alternative sources of uncorrelated returns and income.
The fund will employ T Rowe Price’s 23 years of experience managing asset allocation portfolios and will tactically weight some asset classes and sectors over others, based on where the firm’s investment professionals see the best opportunities.
Active security selection by the underlying sector portfolio managers allows the fund to leverage the firm’s global research platform of more than 200 investment professionals globally.
Charles Shriver, who has 13 years of investment experience and has been with T. Rowe Price for 21 years, manages the fund. He also manages T. Rowe Price’s Balanced Fund, Personal Strategy Funds, and Spectrum Funds.
Stefan Hubrich, who is also the director of asset allocation research, will act as the associate portfolio manager. Hubrich has nine years of investment experience, seven of which have been with T. Rowe Price.
The minimum initial investment in the Global Allocation Fund is USD2,500 or USD1,000 for retirement plans or gifts or transfers to minors (UGMA/UTMA) accounts.
Investors can access the strategy through Investor Class shares of the fund or Advisor Class shares (PAFGX).
The net expense ratio is estimated to be 1.05 per cent for Investor Class shares and 1.15 per cent for Advisor Class shares.
Shriver says: “As investors increasingly look beyond US stocks and bonds to meet their long-term investment objectives, we designed the Global Allocation Fund to more fully benefit from investment opportunities around the world, both across asset classes and investment strategies."
"The fund is a natural extension of several of T Rowe Price’s key strengths. These include our global research capabilities and our asset allocation experience, where we’ve been designing solutions to help investors meet their goals since 1990."
