Is T. Rowe Price Spectrum Growth (PRSGX) a Strong Mutual Fund Pick Right Now?
On the lookout for an Allocation Balanced fund? Starting with T. Rowe Price Spectrum Growth (PRSGX) is one possibility. PRSGX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
The world of Zacks' Allocation Balanced funds is an area filled with options, such as PRSGX. These funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. For investors, Allocation Balanced funds can provide an entry point into diversified mutual funds, and present core holding options for a portfolio of funds.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRSGX. T. Rowe Price Spectrum Growth made its debut in June of 1990, and since then, PRSGX has accumulated about $3.35 billion in assets, per the most up-to-date date available. The fund is currently managed by Charles Shriver who has been in charge of the fund since May of 2011.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 14.64%, and is in the middle 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 8.79%, 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, PRSGX's standard deviation comes in at 18.72%, compared to the category average of 19.23%. The fund's standard deviation over the past 5 years is 15.15% compared to the category average of 15.67%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
With a 5-year beta of 0.98, the fund is likely to be as volatile as the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. PRSGX's 5-year performance has produced a negative alpha of -1.02, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Exploring 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.
As of the last filing date, the mutual fund has 83.25% of its assets in stocks and it has a negligible amount of assets in foreign securities. This fund's turnover is about 16.8%, so the fund managers are making fewer trades than comparable funds.
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, PRSGX is a no load fund. It has an expense ratio of 0.74% compared to the category average of 0.89%. So, PRSGX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Bottom Line
Overall, T. Rowe Price Spectrum Growth ( PRSGX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, T. Rowe Price Spectrum Growth ( PRSGX ) looks like a good potential choice for investors right now.
Don't stop here for your research on Allocation Balanced funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare PRSGX to its peers as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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