T. Rowe Price has entered into an agreement to acquire the High Yield Opportunities fund from Henderson Global Investors.
The transaction will be concluded through the reorganization of that fund into a newly formed mutual fund, the T. Rowe Price US High Yield fund. The transaction is expected to close in late May 2017, subject to shareholder approvals.
The new T. Rowe Price fund will have an investment program substantially similar to the existing Henderson fund, which focuses on total return through investments in US high yield bonds. It will also complement T. Rowe Price existing high yield strategy, which focuses on high current income and invests in both domestic and international bonds.
The previous global high yield strategy of T. Rowe Price, with $29.4bn in assets as of December 31, 2016 and led by industry veteran Mark Vaselkiv, has been closed to new investors since 2012.
The Henderson fund is managed by Kevin Loome, a former T. Rowe Price high yield investment professional who worked for T. Rowe Price for 11 years before leaving the firm in 2007 to lead the high yield team at another investment management firm. Loome will have a team of four analysts and a trader.
Upon completion of the transaction, Loome will report to Ted Wiese, head of fixed income for T. Rowe Price. The portfolio management team will remain in a separate office, based in Philadelphia, PA, and trading and research will remain fully separate and distinct from T. Rowe Price’s existing platforms.
“Client demand for high yield strategies remains strong, so this acquisition provides an additional high yield investment opportunity for our clients, while further strengthening our global fixed income franchise. In acquiring the Henderson fund, we are also gaining a strategy with an exceptional performance record that has been managed by the same portfolio management team since its inception,” said Ted Wiese, head of Fixed Income for T. Rowe Price.