Is T. Rowe Price Growth Stock I (PRUFX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Large Cap Growth funds, consider T. Rowe Price Growth Stock I (PRUFX) as a possibility. PRUFX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
PRUFX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRUFX. T. Rowe Price Growth Stock I debuted in September of 2015. Since then, PRUFX has accumulated assets of about $14.96 billion, according to the most recently available information. The fund's current manager, Joseph Fath, has been in charge of the fund since September of 2015.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 21.26%, and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 20.68%, which places it in the middle third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, PRUFX's standard deviation comes in at 19.47%, compared to the category average of 16.13%. The fund's standard deviation over the past 5 years is 16.21% compared to the category average of 13.5%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
The fund has a 5-year beta of 1.01, so investors should note that it is hypothetically as volatile as the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. PRUFX has generated a positive alpha over the past five years of 4.3, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Holdings
Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is largely on equities that are traded in the United States.
The mutual fund currently has 79.72% of its holdings in stocks, which have an average market capitalization of $423.33 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Retail Trade
With turnover at about 33%, this fund makes fewer trades than the average comparable fund.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, PRUFX is a no load fund. It has an expense ratio of 0.52% compared to the category average of 1.03%. From a cost perspective, PRUFX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment has no minimum amount.
Bottom Line
Overall, T. Rowe Price Growth Stock I ( PRUFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Large Cap Growth area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PRUFX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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