Brian Rogers: T. Rowe Price Equity Income Fund

While Brian Rogers was studying for his MBA at Harvard, he was also working as a newspaper deliveryman, a bartender, and an intern. "When both your parents are public school teachers, there's not a lot of money flying around the kitchen table," says the 50-year-old portfolio manager of the $21-billion T. Rowe Price Equity Income Fund (PRFDX). "So I had to help pay for my tuition." The experience taught him to be careful with money. "I tend to be more risk-averse than most managers," he says. "The cardinal rule for me is 'don't lose money'."

Rogers' cautious approach has paid off. The fund has experienced only two down years in his 20-year tenure, 1990 and 2002, and has beaten 80% of its peers in the large-cap value category over the past decade. It's no wonder that his fund has been awarded the Standard & Poor's/BusinessWeek Excellence in Fund Management Award for the second year in a row.


  Rogers says he likes to buy "good companies under a cloud" from some short-term problem. He also prefers those with dividend yields higher than the average stock in the S&P 500-stock index. He says the yield, currently 2% for the fund, acts as a cushion during downturns, but he doesn't just look for high payouts. "There are high yields and then there are attractive yields," he says. "A 2% yield on a growing consumer-staples company might be more attractive than a 4.5% one from a staid electrical utility."

Sometimes Rogers gets the best of both worlds. He recently sold his stake in utility Constellation Energy (CEG), which had rallied hard after a merger announcement, and purchased shares of drugmaker Pfizer (PFE). Pfizer has a higher yield, lower valuation, and better growth prospects, Rogers says.

"One of the world's leading health-care companies has fallen by half in recent years," he says. "There's no assurance buying it will be a home run but it represents the combination I like -- good growth with not much downside risk."

Apparently, Rogers' talents haven't gone unnoticed. T. Rowe Price recently announced that he will become chairman of the entire fund family near the end of 2006. Luckily for this fund's investors, he will keep trying to save their pennies here.

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