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Is T. Rowe Price Diversified Mid-Cap Growth (PRDMX) a Strong Mutual Fund Pick Right Now?
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On the lookout for a Mid Cap Growth fund? Starting with T. Rowe Price Diversified Mid-Cap Growth (PRDMX - Free Report) is one possibility. PRDMX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes PRDMX as Mid Cap Growth, a segment packed with options. Mid Cap Growth mutual funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. A firm is typically considered to be a growth stock if it consistently posts impressive sales and/or earnings growth.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRDMX. T. Rowe Price Diversified Mid-Cap Growth made its debut in January of 2004, and since then, PRDMX has accumulated about $1 billion in assets, per the most up-to-date date available. Donald J. Peters is the fund's current manager and has held that role since January of 2004.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 11.67%, and it sits 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 3.24%, which places it in the middle 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. The standard deviation of PRDMX over the past three years is 20.67% compared to the category average of 18.02%. The fund's standard deviation over the past 5 years is 21.35% compared to the category average of 18.85%. 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 1.08, so it is likely going to be more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. PRDMX has generated a negative alpha over the past five years of -3.13, demonstrating that managers in this portfolio find it difficult to pick 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 largely on equities that are traded in the United States.
The mutual fund currently has 83.98% of its holdings in stocks, and these companies have an average market capitalization of $29.61 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Retail Trade
Services
This fund's turnover is about 49.7%, so the fund managers are making fewer trades than comparable funds.
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, PRDMX is a no load fund. It has an expense ratio of 0.86% compared to the category average of 1.01%. From a cost perspective, PRDMX 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.
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 Diversified Mid-Cap Growth ( PRDMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Mid 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 PRDMX too 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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Is T. Rowe Price Diversified Mid-Cap Growth (PRDMX) a Strong Mutual Fund Pick Right Now?
On the lookout for a Mid Cap Growth fund? Starting with T. Rowe Price Diversified Mid-Cap Growth (PRDMX - Free Report) is one possibility. PRDMX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes PRDMX as Mid Cap Growth, a segment packed with options. Mid Cap Growth mutual funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. A firm is typically considered to be a growth stock if it consistently posts impressive sales and/or earnings growth.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRDMX. T. Rowe Price Diversified Mid-Cap Growth made its debut in January of 2004, and since then, PRDMX has accumulated about $1 billion in assets, per the most up-to-date date available. Donald J. Peters is the fund's current manager and has held that role since January of 2004.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 11.67%, and it sits 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 3.24%, which places it in the middle 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. The standard deviation of PRDMX over the past three years is 20.67% compared to the category average of 18.02%. The fund's standard deviation over the past 5 years is 21.35% compared to the category average of 18.85%. 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 1.08, so it is likely going to be more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. PRDMX has generated a negative alpha over the past five years of -3.13, demonstrating that managers in this portfolio find it difficult to pick 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 largely on equities that are traded in the United States.
The mutual fund currently has 83.98% of its holdings in stocks, and these companies have an average market capitalization of $29.61 billion. The fund has the heaviest exposure to the following market sectors:
- Technology
- Retail Trade
- Services
This fund's turnover is about 49.7%, so the fund managers are making fewer trades than comparable funds.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, PRDMX is a no load fund. It has an expense ratio of 0.86% compared to the category average of 1.01%. From a cost perspective, PRDMX 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.
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 Diversified Mid-Cap Growth ( PRDMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Mid 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 PRDMX too 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.