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

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If you've been stuck searching for Large Cap Growth funds, consider T. Rowe Price Growth Stock Fund (PRGFX - Free Report) as a possibility. PRGFX carries 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. The T. Rowe Price Growth Stock Fund made its debut in April of 1950 and PRGFX has managed to accumulate roughly $26.59 billion in assets, as of the most recently available information. The fund's current manager, Joseph B. Fath, has been in charge of the fund since January of 2014.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 23.17%, 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 23.16%, 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. PRGFX's standard deviation over the past three years is 20.02% compared to the category average of 16.29%. The standard deviation of the fund over the past 5 years is 16.37% compared to the category average of 13.41%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. PRGFX has a 5-year beta of 1.01, which means it 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. With a positive alpha of 4.99, managers in this portfolio are skilled in picking 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 principally on equities that are traded in the United States.

The mutual fund currently has 89.03% of its holdings in stocks, and these companies have an average market capitalization of $487.25 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
  3. Finance
Turnover is 33%, which means, on average, the fund makes fewer trades than its comparable peers.

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, PRGFX is a no load fund. It has an expense ratio of 0.64% compared to the category average of 1.02%. Looking at the fund from a cost perspective, PRGFX is actually cheaper than its peers.

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, this fund looks like a good potential choice for investors right now.

This could just be the start of your research on PRGFXin 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. 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.


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