If you’ve spent any time looking at boring-but-reliable mutual funds, you’ve probably bumped into the T. Rowe Price Equity Income Fund (PRFDX). It’s one of those "grandfather" funds. It has been around since 1985, which in tech years is basically the Jurassic period. But honestly, even with all the flashier ETFs out there, this fund still manages to sit on about $16 billion in assets.
Why? Because it does one thing very consistently: it hunts for dividends in places where other people are too scared or too bored to look.
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But there is a catch. Most investors treat PRFDX like a high-yield savings account with a few stocks attached. That is a mistake. It is a value fund, first and foremost. If you buy it thinking it’s going to keep pace with the S&P 500 during a massive tech rally, you’re going to be disappointed. We saw that play out in the last few years where growth stocks went to the moon and value-oriented funds like PRFDX felt like they were stuck in the mud.
The John Linehan Era and the "Value" Trap
Since 2015, John Linehan has been the guy at the steering wheel. He’s a veteran. He has been at T. Rowe Price for nearly three decades. His approach isn't about finding the next Nvidia; it’s about finding the companies that are currently "unloved."
Basically, he looks for stocks that have a high dividend yield compared to the rest of the market. But he isn't just yield-chasing. That’s how you end up in a "value trap"—a company that looks cheap but is actually just dying. Linehan looks for firms with the cash flow to actually keep paying those dividends even if the economy hits a rough patch.
Currently, the fund is heavily tilted toward Financials and Health Care. As of early 2026, you'll see big names in the top ten like JPMorgan Chase, MetLife, and Southern Company. It also holds a decent chunk of Alphabet (Google), which might surprise people who think of this as a strictly "old economy" fund. It turns out even tech giants pay out enough to catch a value manager's eye these days.
Performance: Is PRFDX Still Worth the 0.67% Fee?
Let’s talk numbers. PRFDX isn't the cheapest fund on the block. Its expense ratio sits around 0.67%. Compare that to a Vanguard index fund that costs almost nothing, and you have to ask: what am I paying for?
- Downside Protection: Historically, when the market takes a nose-dive, PRFDX tends to hold up better than the broad S&P 500. It’s a "tortoise" strategy.
- Active Management: You're paying for Linehan and his team to avoid the landmines. In 2025, while some speculative sectors were getting crushed, PRFDX delivered a total return of roughly 15.45%. Not world-beating, but solid.
- Income: If you need the quarterly checks, the dividend yield—usually hovering around 1.8% to 2.2%—beats the average S&P 500 yield significantly.
However, the 10-year chart tells a sobering story. If you had just put your money in a total market index fund a decade ago, you’d likely have significantly more money today. PRFDX has lagged the S&P 500 total return by a wide margin over the long haul. That’s the price you pay for "stability."
The Sector Breakdown (Roughly)
| Sector | Weighting |
|---|---|
| Financials | ~22% |
| Health Care | ~13% |
| Industrials | ~12% |
| Technology | ~11% |
| Energy | ~8% |
It’s a very diversified mix. You aren't betting on one single industry to save your portfolio.
The "Secret" Risks Nobody Mentions
Everyone talks about market risk, but with the T. Rowe Price Equity Income Fund, there's a specific kind of risk called "style drift."
Sometimes, value managers get impatient. They start buying growth-adjacent stocks to keep up with the benchmarks. While Linehan has been pretty disciplined, the fund’s inclusion of tech-heavy names like Qualcomm and Alphabet shows that the lines are blurring. If you already own a lot of tech in other parts of your portfolio, PRFDX might not be providing as much diversification as you think.
Also, interest rates. When rates are high, dividend stocks have to compete with "risk-free" Treasury bills. Why buy a utility company for a 3% yield when you can get 4% from the government? This has been a headwind for the fund recently.
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How to Actually Use PRFDX in 2026
If you’re 25 years old and trying to get rich, this probably isn't the fund for you. You need growth.
But if you’re approaching retirement or you just want a "sleep at night" component for your brokerage account, PRFDX makes a lot of sense. It’s a core holding. It’s the "anchor" that keeps your ship from drifting away when the storm hits.
Actionable Next Steps:
- Check your overlap: If you already own the Vanguard Value ETF (VTV) or the Schwab Dividend Equity ETF (SCHD), you probably don't need PRFDX. They do very similar things for a lower fee.
- Reinvest the dividends: Unless you actually need the cash to pay bills, set your account to "DRIP" (Dividend Reinvestment Plan). The real power of this fund comes from compounding those quarterly payouts over decades.
- Watch the manager: John Linehan has been there a long time. If he announces retirement, that’s a signal to re-evaluate. Active funds are only as good as the person picking the stocks.
- Tax Efficiency: Remember that mutual funds like this can trigger capital gains distributions at the end of the year, even if you didn't sell any shares. If you're holding this in a taxable account, be prepared for a potential tax bill in April.