Is T. Rowe Price Growth Stock Fund (PRGFX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research
·4-min read

There are plenty of choices in the Large Cap Growth category, but where should you start your research? Well, one fund that might be worth investigating is T. Rowe Price Growth Stock Fund (PRGFX). PRGFX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify PRGFX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.

History of Fund/Manager

PRGFX is a part of the T. Rowe Price family of funds, a company based out of Baltimore, MD. T. Rowe Price Growth Stock Fund debuted in April of 1950. Since then, PRGFX has accumulated assets of about $22.27 billion, according to the most recently available information. The fund's current manager, Joseph Fath, has been in charge of the fund since January of 2014.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 21.54%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.67%, 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. Compared to the category average of 16.21%, the standard deviation of PRGFX over the past three years is 19.76%. Over the past 5 years, the standard deviation of the fund is 16.36% compared to the category average of 13.48%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.02, which means 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. Over the past 5 years, the fund has a positive alpha of 4.54. This means 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 mostly on equities that are traded in the United States.

This fund is currently holding about 85.92% stock in stocks, which have an average market capitalization of $401.01 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Retail Trade

Turnover is 46.8%, which means this fund makes fewer trades than its comparable peers.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, PRGFX is a no load fund. It has an expense ratio of 0.65% compared to the category average of 1.03%. PRGFX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.

Bottom Line

Overall, T. Rowe Price Growth Stock Fund ( PRGFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price Growth Stock Fund ( PRGFX ) looks like a good potential choice for investors right now.

Want even more information about PRGFX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
To read this article on Zacks.com click here.