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

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

Zacks categorizes PRDMX as Mid Cap Growth, a segment packed with options. Mid Cap Growth mutual funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. A firm is typically considered to be a growth stock if it consistently posts impressive sales and/or earnings growth.

T. Rowe Price is based in Baltimore, MD, and is the manager of PRDMX. Since T. Rowe Price Diversified Mid-Cap Growth made its debut in January of 2004, PRDMX has garnered more than $1.56 billion in assets. Donald J. Peters is the fund’s current manager and has held that role since January of 2004.

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 6.87%, and it sits 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 16.13%, 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. The standard deviation of PRDMX over the past three years is 16.95% compared to the category average of 14.05%. The standard deviation of the fund over the past 5 years is 18.88% compared to the category average of 16.17%. This makes the fund more volatile than its peers over the past half-decade.

With a 5-year beta of 1.1, the fund is likely to be more volatile than 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. Over the past 5 years, the fund has a negative alpha of -6.92. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.