If you've been stuck searching for All Cap Value funds, consider T. Rowe Price Capital Appreciation Fund (PRWCX) as a possibility. PRWCX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
PRWCX is one of many All Cap Value funds to choose from. All Cap Value mutual funds buy stakes in companies in all three valuation categories: small, medium, and large-cap. However, they end up focusing on bigger firms due to percentage of assets. Most importantly, these funds look for key value characteristics, targeting stocks that boast low P/E ratios, high dividend yields, and whose share prices do not reflect their worth.
History of Fund/Manager
PRWCX is a part of the T. Rowe Price family of funds, a company based out of Baltimore, MD. T. Rowe Price Capital Appreciation Fund made its debut in June of 1986, and since then, PRWCX has accumulated about $33.73 billion in assets, per the most up-to-date date available. The fund's current manager, David R. Giroux, has been in charge of the fund since June of 2006.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 10.82%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3 -year annualized total return of 8.22%, 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. PRWCX's standard deviation over the past three years is 12.23% compared to the category average of 13.67%. The standard deviation of the fund over the past 5 years is 13.09% compared to the category average of 14.55%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 0.7, so it is likely going to be less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. PRWCX has generated a negative alpha over the past five years of -0.6, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
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, PRWCX is a no load fund. It has an expense ratio of 0.70% compared to the category average of 0.90%. So, PRWCX is actually cheaper than its peers from a cost perspective.
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
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 Capital Appreciation Fund ( PRWCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price Capital Appreciation Fund ( PRWCX ) looks like a good potential choice for investors right now.
For additional information on the All Cap Value area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PRWCX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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