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Fund Openings, Closings, Manager Moves: Manager Change at T. Rowe Price Dividend Fund

William Stromberg, original manager of the

(PRDGX) - Get Report

T. Rowe Price Dividend Growth fund, is dropping his portfolio manager duties to devote himself full time to running the firm's equity research department.

Thomas J. Huber will take over the $890 million fund at the end of this month.

Huber, who has worked on the fund as an analyst since 1994, inherits an underachiever. The large-cap blend fund, which focuses on companies that post dividends, was once a solid offering but has recently fallen on hard times along with the rest of the value bunch. Plus, it's one of a dwindling number of equity funds to maintain a focus on income.

Dividend Growth is coming off two years of subpar returns, landing it in the bottom quartile among large-blend funds for both years, a pretty significant fall for a fund that had consistently beaten most other peers.

In 1999 it lost 2.8%, well below even the downtrodden blend (a combination of growth and value investing styles) lot. The average large-cap blend fund returned 21.1% by comparison. Dividend Growth still has a decent five-year annualized record of 15.79%, but it lags the

S&P 500

index by a wide margin.

The fund has continued to trail the index this year, and is down 9.5%, according to



Looking at its top holdings, it's no wonder the portfolio has struggled. The dividend requirement has kept it almost entirely out of the steamy technology sector. Instead, Dividend Growth has loaded up on interest rate-sensitive financial issues, pharmaceutical laggards and energy stocks -- some of the worst performers of the last 18 months.

Among its favorites: guaranteed-loan maker,

Fannie Mae

, down 20.44% year-to-date, and financial giant


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, off 9.8%.

Among the top-20 holdings, only

Hewlett Packard


falls into the technology group, and it's one of the fund's best performers, up 33.5%

"It really begs the question if they're going to still stick to the strategy," says Morningstar analyst Sarah Bush.

See Thursday's

Fund Openings, Closings, Manager Moves.

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Fund Openings, Closings, Manager Moves.

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Fund Openings, Closings, Manager Moves.

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Fund Openings, Closings, Manager Moves.