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Is T. Rowe Price New Horizons (PRNHX) a Strong Mutual Fund Pick Right Now?
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If investors are looking at the Small Cap Growth fund category, T. Rowe Price New Horizons (PRNHX - Free Report) could be a potential option. PRNHX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
The world of Small Cap Growth funds is an area filled with options, such as PRNHX. These funds tend to create their portfolios around stocks that sport large growth opportunities and market capitalization of less than $2 billion. The companies in these portfolios are usually on the smaller side, and are in up-and-coming industries and markets.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRNHX. T. Rowe Price New Horizons debuted in June of 1960. Since then, PRNHX has accumulated assets of about $10.55 billion, according to the most recently available information. The fund is currently managed by Joshua Spencer who has been in charge of the fund since March of 2019.
Performance
Investors naturally seek funds with strong performance. PRNHX has a 5-year annualized total return of 10.13% and is in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of -5.48%, which places it in the bottom third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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. PRNHX's standard deviation over the past three years is 22.51% compared to the category average of 16.78%. Over the past 5 years, the standard deviation of the fund is 22.56% compared to the category average of 17.89%. 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 0.99, so it is likely going to be as volatile as the market at large. 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. With a negative alpha of -2.65, 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 largely on equities that are traded in the United States.
The mutual fund currently has 79.49% of its holdings in stocks, which have an average market capitalization of $16.26 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Industrial Cyclical
Services
Health
With turnover at about 57.6%, this fund makes about the same amount of trades as its comparable peers every year.
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, PRNHX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 1%. From a cost perspective, PRNHX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $100
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, T. Rowe Price New Horizons ( PRNHX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, T. Rowe Price New Horizons ( PRNHX ) looks like a good potential choice for investors right now.
For additional information on the Small 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 PRNHX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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Is T. Rowe Price New Horizons (PRNHX) a Strong Mutual Fund Pick Right Now?
If investors are looking at the Small Cap Growth fund category, T. Rowe Price New Horizons (PRNHX - Free Report) could be a potential option. PRNHX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
The world of Small Cap Growth funds is an area filled with options, such as PRNHX. These funds tend to create their portfolios around stocks that sport large growth opportunities and market capitalization of less than $2 billion. The companies in these portfolios are usually on the smaller side, and are in up-and-coming industries and markets.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRNHX. T. Rowe Price New Horizons debuted in June of 1960. Since then, PRNHX has accumulated assets of about $10.55 billion, according to the most recently available information. The fund is currently managed by Joshua Spencer who has been in charge of the fund since March of 2019.
Performance
Investors naturally seek funds with strong performance. PRNHX has a 5-year annualized total return of 10.13% and is in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of -5.48%, which places it in the bottom third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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. PRNHX's standard deviation over the past three years is 22.51% compared to the category average of 16.78%. Over the past 5 years, the standard deviation of the fund is 22.56% compared to the category average of 17.89%. 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 0.99, so it is likely going to be as volatile as the market at large. 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. With a negative alpha of -2.65, 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 largely on equities that are traded in the United States.
The mutual fund currently has 79.49% of its holdings in stocks, which have an average market capitalization of $16.26 billion. The fund has the heaviest exposure to the following market sectors:
- Technology
- Industrial Cyclical
- Services
- Health
With turnover at about 57.6%, this fund makes about the same amount of trades as its comparable peers every year.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, PRNHX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 1%. From a cost perspective, PRNHX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $100
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, T. Rowe Price New Horizons ( PRNHX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, T. Rowe Price New Horizons ( PRNHX ) looks like a good potential choice for investors right now.
For additional information on the Small 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 PRNHX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.