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Is T. Rowe Price Diversified Mid-Cap Growth (PRDMX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding a Mid Cap Growth fund? T. Rowe Price Diversified Mid-Cap Growth (PRDMX - Free Report) is a potential starting point. PRDMX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

PRDMX is part of the Mid Cap Growth section, a segment that boasts a wide array of possible selections. While Mid Cap Growth mutual funds choose companies with a stock market valuation between $2 billion and $10 billion, stocks in these funds are also expected to show broad considerable growth opportunities for investors compared to their peers. To be considered a growth stock, companies must consistently report impressive sales and/or earnings growth.

History of Fund/Manager

PRDMX is a part of the T. Rowe Price family of funds, a company based out of Baltimore, MD. T. Rowe Price Diversified Mid-Cap Growth made its debut in January of 2004, and since then, PRDMX has accumulated about $1.37 billion in assets, per the most up-to-date date available. The fund's current manager, Donald J. Peters, has been in charge of the fund since January of 2004.

Performance

Of course, investors look for strong performance in funds. PRDMX has a 5-year annualized total return of 11.42%, and it sits 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 18.14%, which places it in the top 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. Compared to the category average of 17.65%, the standard deviation of PRDMX over the past three years is 18.98%. Over the past 5 years, the standard deviation of the fund is 19.76% compared to the category average of 17.26%. 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. PRDMX has a 5-year beta of 1.1, which means it is likely to be more volatile than the market average. 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. The fund has produced a negative alpha over the past 5 years of -3.38, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, PRDMX is a no load fund. It has an expense ratio of 0.85% compared to the category average of 1.00%. From a cost perspective, PRDMX 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.

Fees charged by investment advisors have not been taken into consideration. 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 strong performance, average downside risk, and lower fees, T. Rowe Price Diversified Mid-Cap Growth ( PRDMX ) looks like a good potential choice for investors right now.

This could just be the start of your research on PRDMX in the Mid 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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