Is T. Rowe Price Communications & Technology Fund (PRMTX) a Strong Mutual Fund Pick Right Now?

If you have been looking for Sector – Tech funds, a place to start could be T. Rowe Price Communications & Technology Fund (PRMTX). PRMTX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

We note that PRMTX is a Sector – Tech option, and this area is loaded with many options. Found in a wide number of industries such as semiconductors, software, internet, and networking, tech companies are everywhere. Thus, Sector – Tech mutual funds that invest in technology let investors own a stake in a notoriously volatile sector, but with a much more diversifies approach.

T. Rowe Price is based in Baltimore, MD, and is the manager of PRMTX. T. Rowe Price Communications & Technology Fund made its debut in July of 1997, and since then, PRMTX has accumulated about $5.25 billion in assets, per the most up-to-date date available. James Stillwagon is the fund’s current manager and has held that role since November of 2019.

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 14.55%, and is in the top 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 11.1%, which places it in the middle 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 17.28%, the standard deviation of PRMTX over the past three years is 20.62%. Over the past 5 years, the standard deviation of the fund is 20.65% compared to the category average of 17.83%. This makes the fund more volatile than its peers over the past half-decade.

Investors should note that the fund has a 5-year beta of 0.98, so it is likely going to be as volatile as 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. PRMTX has generated a positive alpha over the past five years of 0.24, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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