Q. I have had shares of T. Rowe Price International Stock Fund for more than a decade. What is your opinion of this fund?
J.D., Chicago
A. Don’t expect anything flashy from this conservative growth-oriented fund that invests in stocks of companies from around the globe. Its personality has been firmly set during its 21 years in existence.
The $9.7 billion T. Rowe Price International Stock Fund (PRITX) declined 21 percent in value over the past 12 months and had a three-year annualized return of 0.82 percent. Both results rank at around the midpoint of foreign stock funds.
“This fund is a steady offering that seldom shoots the lights out, but does nicely over time with moderate risk and low expenses,” explained William Rocco of the Morningstar Mutual Funds investment advisory. “If you’re young and bold, this wouldn’t be the best choice, but it is a good choice for those seeking international exposure that lets them sleep at night.”
Furthermore, John Ford and his co-managers have an annual portfolio turnover rate less than half that of their peers. They’re based in London but receive input from T. Rowe Price analysts and managers worldwide.
More than half of T. Rowe Price International Stock Fund’s holdings are currently from Europe, which is common for a foreign fund, with Japan the next largest area of exposure. Top stock holdings recently included Vodafone Group, Nokia, Glaxo Wellcome and Sony.
This “no-load” (no sales charge) fund requires a $2,500 minimum initial investment and has a low annual expense ratio of 0.84 percent.
Q. How difficult is it to borrow from a 401(k) plan and what are the pros and cons of doing this? How does it work?
J.H., via the Internet.
A. It’s not difficult. More than 80 percent of 401(k) retirement plans have a loan provision that permits you to borrow up to one-half of your account’s vested balance or $50,000, whichever is less.
This loan capability is a strong incentive for younger and lower-income workers in deciding whether to contribute to a 401(k). They want to feel confident they can tap into the plan if they need money in a pinch.
You’re borrowing money from yourself and paying interest back into your account. This is a distribution with no income tax or penalty tax so long as you put the money back in. Loan interest is generally set by the plan at slightly higher than the prime lending rate.
“You must repay the money in level payments that run no longer than five years,” explained Ed Ferrigno, vice president with the Profit Sharing/401(k) Council of America in Washington, D.C. “If you miss a payment, the loan is treated as a distribution and, for most people, in addition to income tax it will be subject to a 10 percent penalty.” Since the goal of your 401(k) is to save for retirement, don’t borrow indiscriminately. It’s better to leave it alone and let it grow.
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Andrew Leckey answers questions Sunday in Business and Tuesday in Your Money. Address inquiries to Andrew Leckey, P.M.B. 184, 369-B Third St., San Rafael, Calif. 94901-3581, or by e-mail at andrewinv@aol.com.
