Is T. Rowe Price Blue Chip Growth Adviser (PABGX) a Strong Mutual Fund Pick Right Now?
If you’ve been stuck searching for Large Cap Growth funds, consider T. Rowe Price Blue Chip Growth Adviser (PABGX) as a possibility. PABGX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
PABGX 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 PABGX, and the company is based out of Baltimore, MD. T. Rowe Price Blue Chip Growth Adviser made its debut in June of 1993, and since then, PABGX has accumulated about $1.20 billion in assets, per the most up-to-date date available. The fund is currently managed by Paul Greene who has been in charge of the fund since October of 2021.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 9.75%, 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 26.16%, 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. Compared to the category average of 11.9%, the standard deviation of PABGX over the past three years is 16.04%. Over the past 5 years, the standard deviation of the fund is 19.94% compared to the category average of 14.04%. This makes the fund more 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. PABGX has a 5-year beta of 1.19, which means it is likely to be more volatile than the market average. 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. PABGX has generated a negative alpha over the past five years of -3.95, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Exploring 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 primarily on equities that are traded in the United States.
The mutual fund currently has 75.87% of its holdings in stocks, with an average market capitalization of $916.95 billion. The fund has the heaviest exposure to the following market sectors:
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Technology
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Retail Trade
Turnover is 18.3%, which means 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, PABGX is a no load fund. It has an expense ratio of 0.96% compared to the category average of 0.93%. From a cost perspective, PABGX is actually more expensive than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively similar performance, worse downside risk, and higher fees, T. Rowe Price Blue Chip Growth Adviser ( PABGX ) has a high Zacks Mutual Fund rank, and therefore looks a good potential choice for investors right now.
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This article originally published on Zacks Investment Research (zacks.com).