Any investors hoping to find a Large Cap Growth fund could think about starting with T. Rowe Price Tax-Efficient Equity (PREFX - Free Report) . PREFX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
PREFX 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 responsible for PREFX, and the company is based out of Baltimore, MD. Since T. Rowe Price Tax-Efficient Equity made its debut in December of 2000, PREFX has garnered more than $324.98 million in assets. The fund is currently managed by Donald J. Peters who has been in charge of the fund since December of 2000.
Investors naturally seek funds with strong performance. PREFX has a 5-year annualized total return of 11.58% and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 12.32%, which places it in the middle 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. PREFX's standard deviation over the past three years is 11.73% compared to the category average of 11.77%. Looking at the past 5 years, the fund's standard deviation is 11.89% compared to the category average of 11.85%. This makes the fund more volatile than its peers over the past half-decade.
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. In PREFX's case, the fund lost 51.82% in the most recent bear market and underperformed comparable funds by 3.04%. This could mean that the fund is a worse choice than comparable funds during a bear market.
Even still, the fund has a 5-year beta of 1.09, so investors should note that it is hypothetically more volatile than the market at large. 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. PREFX has generated a negative alpha over the past five years of -0.26, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Investigating 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 mostly on equities that are traded in the United States.
As of the last filing date, the mutual fund has 78.6% of its assets in stocks, with an average market capitalization of $154.25 billion. The fund has the heaviest exposure to the following market sectors:
- Retail Trade
Turnover is about 11.7%, so those in charge of the fund make fewer trades than the average comparable fund.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, PREFX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 1.10%. PREFX 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.
Overall, T. Rowe Price Tax-Efficient Equity ( PREFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, T. Rowe Price Tax-Efficient Equity ( PREFX ) looks like a good potential choice for investors right now.
For additional information on the Large Cap Growth area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PREFX too 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.