* Shuts High Yield Fund and Institutional High Yield Fund
* Cites strong demand, in line with Morningstar trend data
May 1 T. Rowe Price Group Inc said it
has closed a pair of high-yield bond funds to new investors as
flows soar into the sector amid low interest rates.
The Baltimore asset manager said on Tuesday that its High
Yield Fund and its Institutional High Yield Fund will not accept
money from new investors, though they will accept money from
The company said it took the step to protect current
investors. In a statement, the portfolio manager of High Yield
Fund and head of the company's taxable high-yield bond team,
Mark Vaselkiv, said too much extra cash could make it hard for
the funds to invest efficiently and could lead to too much
"The low interest rate environment has ... prompted
income-seeking investors to consider this sector, and some of
the strong flows into our high-yield funds reflect their
increased appetite for yield," he said.
Between them, the two funds had inflows of $627 million in
the first three months of 2012. They had $11.7 billion in
combined total assets at March 31.
T. Rowe Price manages $21 billion in high-yield portfolios
overall, and other funds remain open, including its Tax-Free
High Yield Fund and Floating Rate Fund, which invests in bank
The high-yield sector has provided investors a chance for
good yields amid low interest rates -- but also more risk, given
the low-grade "junk" bonds held in the funds.
Over the three years ended April 30, high-yield bond funds
have gained 17.3 percent annually, according to Chicago fund
research firm Morningstar Inc, the most of any bond fund
In the 2012 first quarter, investors added $14.7 billion to
the funds, Morningstar found.