2 Top-Tier T. Rowe Price Mutual Funds for 2021

T. Rowe Price Equity Income Fund

• Fund category: Large value
• Assets under management: $17.8 billion
• Dividend yield: 2.20%
• Expenses: 0.64%

T. Rowe Price Equity Income Fund (PRFDX (opens in new tab), $33.76) is a low-cost, actively managed, large-cap value index fund that could do well in a 2021 environment that's expected to benefit value stocks.

"John Linehan, who has managed PRFDX for five years, owns what he thinks are undervalued, higher-quality dividend paying stocks and aims to hold them for the long term," Rosenbluth says, adding that "the fund's recently turnover rate of 31% is well below its Equity Income peers' 80%."

In other words, Linehan offers a steady hand for buy-and-holders, and keeps trading costs low.

Financial stocks are the largest sector weighting at 21% of the fund, followed by healthcare (13%) and industrials (11%). Indeed, the majority of PRFDX's weight is in sectors and industries expected to benefit from a long-anticipated rotation into value.

It's not entirely tech-free – chipmaker Qualcomm (QCOM (opens in new tab)) is currently the top holding at just more than 3% of assets. But other top weights such as Southern Co. (SO (opens in new tab)), DuPont (DD (opens in new tab)) and MetLife (MET (opens in new tab)) are a classic blend of defensive and value plays.

The 2.2% yield feels modest, but it's much better than the S&P 500's 1.5% at present.

T. Rowe Price Global Multisector Bond

• Fund category: World Bond – USD Hedged
• Assets under management: $1.4 billion
• SEC yield: 2.4%*
• Expenses: 0.67%

One of the best T. Rowe Price mutual funds to hold in the fixed-income space now is T. Rowe Price Global Multisector Bond (PRSNX (opens in new tab), $11.88).

In simple terms, there might be more price risk in the bond market now than in the stock market. Interest rates had little room to go but up to start the year, and indeed, heightened expectations for inflation have helped rates bounce up off the bottom. Looking forward, rates' likeliest directions are sideways to higher … and since bond prices move in the opposite direction as interest rates, that means a flat-to-negative environment for bond prices.

It's the kind of environment in which skilled managers who can go anywhere to find bonds can really display their worth.

T. Rowe Price Global Multisector Bond balances risk and reward well with a diversified blend of global sovereign bonds and higher-yield international corporate securities.

"PRSNX provides exposure to various bond sectors found in the Bloomberg Barclays Global Aggregate Index," Rosenbluth says, "but also owns high exposure to global high yield and emerging market corporate bonds that are largely absent from the benchmark."

Manager Kenneth Orchard is relatively fresh, managing the fund since Jan. 31, 2018. But he has done great things with PRSNX so far, putting it in the 86th percentile by performance over the trailing three years, and in the 96th percentile over the past year. That helps it earn a five-star rating from CFRA.

* SEC yield reflects the interest earned after deducting fund expenses for the most recent 30-day period and is a standard measure for bond and preferred-stock funds.