The first thing to understand about sector-fund investing is that it can be a roller coaster ride: Sometimes, total returns are way up; other times, they're in the tank. Here's one that's shown well in the short and long term: The T. Rowe Price Media & Telecommunications Fund (PRMTX) has been around since 1993 and, like all telecom-sector funds, has seen its share of market volatility. Unlike many, however, it has weathered the storm; and since inception, the fund's average annual total return-through the end of 2003-was 14.16 percent. And at the end of 2003, it was up 55.99 percent, while the average telecommunications fund was ahead 39 percent, says Lipper.
Robert Gensler has been the fund's portfolio manager since 2000. One change he's made since taking over is to add more global stocks. "I keep about 40 percent [invested] outside the U.S.," he says.
Part of Gensler's investment style is to tour the world looking for telecom investment trends and opportunities. The companies he owns are then divided into buckets-currently he's got media, telecom services and technology buckets. And finally, he manages the money as if it were his own.
With about 60 stocks in its portfolio, the T. Rowe Price Media & Telecommunications Fund isn't for the tax-sensitive (portfolio turnover can be high) or those who can't roll with the sector's punches. Then again, the telecom industry has never been for the faint of heart.
Dian Vujovich is an author, syndicated columnist and publisher of fund investing site www.fundfreebies.com.