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Is T. Rowe Price Blue Chip Growth Fund (TRBCX) a Strong Mutual Fund Pick Right Now?

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On the lookout for a Large Cap Growth fund? Starting with T. Rowe Price Blue Chip Growth Fund (TRBCX - Free Report) is one possibility. TRBCX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

TRBCX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.

History of Fund/Manager

T. Rowe Price is responsible for TRBCX, and the company is based out of Baltimore, MD. Since T. Rowe Price Blue Chip Growth Fund made its debut in June of 1993, TRBCX has garnered more than $33.35 billion in assets. Larry J. Puglia is the fund's current manager and has held that role since June of 1993.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 18.39%, 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 16.05%, 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. TRBCX's standard deviation over the past three years is 13.34% compared to the category average of 9.5%. Over the past 5 years, the standard deviation of the fund is 12.55% compared to the category average of 9.32%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. TRBCX lost 50.09% in the most recent bear market and underperformed comparable funds by 1.1%. This might suggest that the fund is a worse choice than its peers during a bear market.

Investors should note that the fund has a 5-year beta of 1.1, so it is likely going to be more volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. With a positive alpha of 3.94, 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.

Currently, this mutual fund is holding 98.31% stock in stocks, which have an average market capitalization of $256.65 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance

With turnover at about 34.5%, this fund makes fewer trades than comparable funds.

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, TRBCX is a no load fund. It has an expense ratio of 0.70% compared to the category average of 1.11%. TRBCX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.

Bottom Line

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

For additional information on this product, or to compare it to other mutual funds in the Large Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


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