Any investors hoping to find a Mid Cap Growth fund could think about starting with T. Rowe Price Institutional Mid-Cap Equity Growth (PMEGX - Free Report) . PMEGX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes PMEGX 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 PMEGX. Since T. Rowe Price Institutional Mid-Cap Equity Growth made its debut in July of 1996, PMEGX has garnered more than $6.53 billion in assets. The fund's current manager, Brian W. H. Berghuis, has been in charge of the fund since July of 1996.
Of course, investors look for strong performance in funds. PMEGX has a 5-year annualized total return of 17.73% and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 12.96%, 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. Over the past three years, PMEGX's standard deviation comes in at 11.08%, compared to the category average of 11.5%. The fund's standard deviation over the past 5 years is 10.82% compared to the category average of 11.46%. This makes the fund less volatile than its peers over the past half-decade.
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In PMEGX's case, the fund lost 49.22% in the most recent bear market and outperformed its peer group by 2.12%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 1.01, so it is likely going to be as volatile as 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. PMEGX has generated a positive alpha over the past five years of 1.73, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, PMEGX is a no load fund. It has an expense ratio of 0.61% compared to the category average of 1.20%. From a cost perspective, PMEGX is actually cheaper than its peers.
While the minimum initial investment for the product is $1 million, investors should also note that there is no minimum for each subsequent investment.
Overall, T. Rowe Price Institutional Mid-Cap Equity Growth 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.
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