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5 Best T. Rowe Mutual Funds to Buy Ahead of 2018

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T. Rowe Price Group witnessed an inflow of more than $750 million in U.S. mutual funds in the third quarter alone. The publicly owned investment management firm also reported strong earnings during the same quarter on the back of higher revenues. Higher investment advisory revenues earned from T. Rowe Price mutual funds boosted the company’s total revenues in the quarter.

Also, the company’s assets under management (AUM) increased significantly in the third quarter. The trend continued even during the first month of the ongoing quarter (October).  Steady inflows into its mutual funds and the ability to offer low cost investment options consistently make mutual funds from T. Rowe a wise investment choice.

T. Rowe Price’s Performance in Q3

In the third quarter, T. Rowe Price reported earnings per share (EPS) of $1.45, which jumped 23.9% from the year-ago figure. Additionally, net revenues increased 11.8% to $1.17 billion from the year-ago quarter. The rise was prompted mainly by higher investment advisory fees that increased 13% year over year to $1.10 billion.

Further, investment advisory revenues earned from T. Rowe Price mutual funds, distributed in the United States, were up 11.4% year over year to $783.9 million. Investment advisory revenues earned from other investment portfolios, managed by the company, increased 17.2% from the prior-year quarter to $312.8 million. (Read More: T. Rowe Price's Q3 Earnings Beat, Revenues In Line)

As of Sep 30, 2017, total AUM jumped 16.6% year over year to $947.9 billion. Further, the company announced preliminary assets under management of $971 billion for October 2017, indicating an increase of 2.4% from September. The company is expected to witness strong growth in its AUM and investment advisory revenues in November and December as well.

T. Rowe Price Funds at a Glance

T. Rowe Price is a renowned mutual fund family focused on fulfilling the needs of its investors. The fund family is set to maintain the momentum gained in the third quarter during the ongoing quarter on the back of effective investment approach, low expenses and strong investment objective guidance.

At present, out of its 213 mutual funds (excluding all types of institutional funds), 168 have below average expense ratios. Moreover, out of all the key T. Rowe mutual funds, 98.2% of them have no front or back end sales load. In the last twelve months, the fund family has delivered total return of 23%, exceeding the category average of 20.5%. Also, its trailing returns for the year-to-date (YTD) period is 18%.

T. Rowe Price invests in a variety of sectors that are sensitive, cyclical and defensive. Among the sensitive sectors, maximum investments have been made in technology. In the cyclical sectors, it invests in the financial sector. The fund family also gained from investing in defensive sectors like healthcare.

Buy These 5 Best-Ranked T. Rowe Mutual Funds

Low costs and strong returns have attracted investors’ attention toward T. Rowe Price mutual funds. Here, we have selected five mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). These funds have encouraging three months and YTD returns. Also, these funds have low expense ratios and minimum initial investment within $5000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.

T. Rowe Price Value TRVLX seeks growth of capital over the long run by investing mainly in undervalued common stocks. TRVLX invests more than 65% of its assets in companies from different market-cap range, but focuses mainly on large-cap companies.

TRVLX returned 8.5% and 18.1% in the three-month and YTD time frame, respectively. It has an expense ratio of 0.82% compared with the category average of 1.10%.

T. Rowe Price Mid-Cap Growth Advisor PAMCX maintains a diversified portfolio by investing in common stocks of mid-cap companies, earnings of which are expected to have above-average growth prospects. Companies that fall within the range of the Russell Midcap Growth Index or S&P MidCap 400 Index are considered mid cap. PAMCX seeks appreciation of capital in the long run.

PAMCX has returned 7.5% and 23.8% in the last three months and year to date, respectively. It has an expense ratio of 1.02% compared with the category average of 1.22%.

T. Rowe Price Blue Chip Growth Advisor PABGX seeks appreciation of capital for the long run. PABGX invests a huge portion of its assets in common stocks of large- and mid-cap blue-chip companies, which are expected to have strong growth prospects.

PABGX has returned 8.7% and 34.8% in the last three months and on a year-to-date basis, respectively. It has an expense ratio of 0.98% compared with the category average of 1.19%.

T. Rowe Price Capital Opportunity PRCOX invests the majority of its assets in companies that are listed on the S&P 500. Though PRCOX invests in companies throughout the globe irrespective of market cap, it primarily focuses on acquiring common stocks of domestic large-cap firms.

The fund has returned 8.1% and 21.8% in the three-month and year-to-date time frame, respectively. It has an expense ratio of 0.70% compared with the category average of 1.03%.

T. Rowe Price New Horizons (PRNHX - Free Report) seeks capital appreciation over the long term. PRNHX maintains a diversified portfolio by investing in emerging growth small-cap companies. The fund invests in companies that have above-average growth potential.

PRNHX has returned 8.7% and 29.5% in the last three months and year to date, respectively. It has an expense ratio of 0.79% compared with the category average of 1.34%.

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