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Is T. Rowe Price Mid-Cap Growth Fund (RPMGX) a Strong Mutual Fund Pick Right Now?

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If you have been looking for Mid Cap Growth funds, a place to start could be T. Rowe Price Mid-Cap Growth Fund (RPMGX - Free Report) . RPMGX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

RPMGX is part of the Mid Cap Growth section, a segment that boasts a wide array of possible selections. While Mid Cap Growth mutual funds choose companies with a stock market valuation between $2 billion and $10 billion, stocks in these funds are also expected to show broad considerable growth opportunities for investors compared to their peers. To be considered a growth stock, companies must consistently report impressive sales and/or earnings growth.

History of Fund/Manager

RPMGX finds itself in the T. Rowe Price family, based out of Baltimore, MD. T. Rowe Price Mid-Cap Growth Fund made its debut in June of 1992, and since then, RPMGX has accumulated about $12.45 billion in assets, per the most up-to-date date available. Brian W. H. Berghuis is the fund's current manager and has held that role since June of 1992.

Performance

Investors naturally seek funds with strong performance. RPMGX has a 5-year annualized total return of 8.11% and is in the middle 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 0.6%, which places it in the top third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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, RPMGX's standard deviation comes in at 18.77%, compared to the category average of 0%. The standard deviation of the fund over the past 5 years is 19.85% compared to the category average of 38%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. RPMGX has a 5-year beta of 1.03, which means it is likely to be as volatile as the market average. 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. With a negative alpha of -6.14, managers in this portfolio find it difficult to pick 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 mostly on equities that are traded in the United States.

As of the last filing date, the mutual fund has 75.54% of its assets in stocks, and these companies have an average market capitalization of $29.27 billion. The fund has the heaviest exposure to the following market sectors:

  • Technology
  • Industrial Cyclical
With turnover at about 21.7%, this fund is making more trades in a given year than the category average.

Expenses

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, RPMGX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 88%. From a cost perspective, RPMGX is actually cheaper than its peers.

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

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, T. Rowe Price Mid-Cap Growth Fund ( RPMGX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, this fund looks like a great potential choice for investors right now.

Don't stop here for your research on Mid Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare RPMGX to its peers as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


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