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Is T. Rowe Price New America Growth (PRWAX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Large Cap Growth fund category, T. Rowe Price New America Growth (PRWAX - Free Report) could be a potential option. PRWAX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

PRWAX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.

History of Fund/Manager

T. Rowe Price is based in Baltimore, MD, and is the manager of PRWAX. Since T. Rowe Price New America Growth made its debut in September of 1985, PRWAX has garnered more than $3.29 billion in assets. The fund's current manager, Justin P. White, has been in charge of the fund since April of 2016.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 17.48%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 14.08%, 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, PRWAX's standard deviation comes in at 13%, compared to the category average of 9.54%. Looking at the past 5 years, the fund's standard deviation is 11.98% compared to the category average of 10.92%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

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 PRWAX's case, the fund lost 45.49% in the most recent bear market and outperformed its peer group by 3.4%. This might suggest that the fund is a better choice than its peers during a bear market.

Nevertheless, with a 5-year beta of 1.1, the fund is likely to be more volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. PRWAX's 5-year performance has produced a positive alpha of 0.24, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Examining 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.

This fund is currently holding about 92.84% stock in stocks, and these companies have an average market capitalization of $193.20 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Other

Turnover is 63.2%, which means, on average, the fund makes fewer trades than its comparable peers.

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, PRWAX is a no load fund. It has an expense ratio of 0.79% compared to the category average of 1.12%. So, PRWAX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $100.

Bottom Line

Overall, T. Rowe Price New America Growth has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price New America Growth looks like a good potential choice for investors right now.

Want even more information about PRWAX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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