Is T. Rowe Price Balanced Fund (RPBAX) a Strong Mutual Fund Pick Right Now?
Having trouble finding an Allocation Balanced fund? T. Rowe Price Balanced Fund (RPBAX) is a potential starting point. RPBAX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
RPBAX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across 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.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of RPBAX. T. Rowe Price Balanced Fund made its debut in December of 1939, and since then, RPBAX has accumulated about $3.81 billion in assets, per the most up-to-date date available. Charles M. Shriver is the fund's current manager and has held that role since May of 2011.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 6.86%, 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 8.68%, which places it in the top 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. RPBAX's standard deviation over the past three years is 7.63% compared to the category average of 8.61%. Looking at the past 5 years, the fund's standard deviation is 7.77% compared to the category average of 8.78%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In the most recent bear market, RPBAX lost 37.76% and underperformed comparable funds by 2%. This could mean that the fund is a worse choice than comparable funds during a bear market.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.62, which means it is hypothetically less volatile than the market at large. 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. The fund has produced a negative alpha over the past 5 years of -0.25, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, RPBAX is a no load fund. It has an expense ratio of 0.56% compared to the category average of 0.92%. From a cost perspective, RPBAX 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.
Bottom Line
Overall, T. Rowe Price Balanced Fund ( RPBAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
Your research on the Allocation Balanced segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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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