August 30, 2021 5 min read
This story originally appeared on Zacks
Allocation Balanced fund seekers should consider taking a look at T. Rowe Price Spectrum Growth (PRSGX). PRSGX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
PRSGX is one of many Zacks’ Allocation Balanced mutual funds to pick from. Allocation Balanced funds seek to invest in a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. Investors utilize Allocation Balanced funds as a way to get a good start with diversified mutual funds, as well as for core holdings in a portfolio of funds.
History of Fund/Manager
PRSGX finds itself in the T. Rowe Price family, based out of Baltimore, MD. Since T. Rowe Price Spectrum Growth made its debut in June of 1990, PRSGX has garnered more than $3.99 billion in assets. Charles Shriver is the fund’s current manager and has held that role since May of 2011.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 15.41%, and it sits 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 14.93%, which places it in the bottom 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. PRSGX’s standard deviation over the past three years is 18.71% compared to the category average of 19.15%. Looking at the past 5 years, the fund’s standard deviation is 14.97% compared to the category average of 15.6%. This makes the fund less volatile than its peers over the past half-decade.
Investors should note that the fund has a 5-year beta of 0.97, 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. The fund has produced a negative alpha over the past 5 years of -1.23, which shows 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.
Right now, 85.89% of this mutual fund’s holdings are stocks and it has a negligible amount of assets in foreign securities. With turnover at about 12.9%, this fund is making fewer trades than its comparable peers.
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, PRSGX is a no load fund. It has an expense ratio of 0.73% compared to the category average of 0.89%. Looking at the fund from a cost perspective, PRSGX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $100.
Overall, T. Rowe Price Spectrum Growth ( PRSGX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, T. Rowe Price Spectrum Growth ( PRSGX ) looks like a great potential choice for investors right now.
Want even more information about PRSGX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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