‘The equity market is rich here at more than 20 times earnings for the next year and we have pulled back.’
— David Giroux
David Giroux, who has run T. Rowe Price’s Capital Appreciation fund since 2006, told the Financial Times (paywall) in a recent interview that he is cutting exposure to equities because he sees valuations as too rich.
The publication said the fund has cut its exposure from 70% in equities at the market nadir near the spring of 2020 to around 55%, presently, as stocks are aggressively bid higher and the S&P 500 index
has produced its largest number of record closes a this point in a calendar year at 51, as of Wednesday, since 1995.
Giroux’s fund is up 13.5% so far in 2021, outstripping a number of peer investment funds.
By comparison, the S&P 500 has risen more than 19% so far this year, the Nasdaq Composite Index
has gained nearly 17% and the Dow Jones Industrial Average
has climbed over 15% in the year to date.
Meanwhile, shares of publicly traded T. Rowe Price Group
have outperformed the broader market, up nearly 45% so far this year, with a 7.5% gain in August thus far. That performance is better than the Financial Select Sector SPDR Fund
of which T. Rowe is a component.