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Is T. Rowe Price Blue Chip Growth Fund (TRBCX) a Strong Mutual Fund Pick Right Now?

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Have you been searching for a Large Cap Growth fund? You might want to begin with T. Rowe Price Blue Chip Growth Fund (TRBCX - Free Report) . TRBCX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

TRBCX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.

History of Fund/Manager

T. Rowe Price is based in Baltimore, MD, and is the manager of TRBCX. Since T. Rowe Price Blue Chip Growth Fund made its debut in June of 1993, TRBCX has garnered more than $34.94 billion in assets. The fund is currently managed by Larry J. Puglia who has been in charge of the fund since June of 1993.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 16.32%, and is 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 21.65%, which places it in the top 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. The standard deviation of TRBCX over the past three years is 13.6% compared to the category average of 9.82%. Over the past 5 years, the standard deviation of the fund is 13.67% compared to the category average of 10.14%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In TRBCX's case, the fund lost 50.09% in the most recent bear market and underperformed comparable funds by 1.23%. This means that the fund could possibly be a worse choice than its peers during a down market environment.

Even still, the fund has a 5-year beta of 1.1, so investors should note that it is hypothetically more volatile than 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 positive alpha of 3.4, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Examining 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 80.42% of its assets in stocks, which have an average market capitalization of $263.05 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Retail Trade
Turnover is 27.2%, which means, on average, the fund makes 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, TRBCX is a no load fund. It has an expense ratio of 0.70% compared to the category average of 1.06%. From a cost perspective, TRBCX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.

Bottom Line

Overall, T. Rowe Price Blue Chip Growth Fund ( TRBCX ) has a neutral Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.

This could just be the start of your research on TRBCXin the Large Cap Growth category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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