Is T. Rowe Price Science & Tech Fund (PRSCX) a Strong Mutual Fund Pick Right Now?
If you're looking for a Sector - Tech fund category, then a potential option is T. Rowe Price Science & Tech Fund PRSCX. PRSCX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
PRSCX is part of the Sector - Tech category, which boasts an array of different possible selections. With a much more diversified approach, Sector - Tech mutual funds give investors a way to own a stake in a notoriously risky sector. Tech companies are in various industries like semiconductors, software, internet, and networking, among others.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRSCX. The T. Rowe Price Science & Tech Fund made its debut in September of 1987 and PRSCX has managed to accumulate roughly $5.44 billion in assets, as of the most recently available information. Kennard W. Allen is the fund's current manager and has held that role since January of 2009.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. PRSCX has a 5-year annualized total return of 22.96% and it sits 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 17.66%, which places it in the middle 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. Compared to the category average of 12%, the standard deviation of PRSCX over the past three years is 14.44%. The fund's standard deviation over the past 5 years is 12.97% compared to the category average of 13.69%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. PRSCX lost 51.66% in the most recent bear market and outperformed comparable funds by 1.15%. This might suggest that the fund is a better choice than its peers during a bear market.
Nevertheless, investors should also note that the fund has a 5-year beta of 1.12, which means it is hypothetically more 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. Over the past 5 years, the fund has a positive alpha of 5.41. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Holdings
Exploring 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 principally on equities that are traded in the United States.
The mutual fund currently has 89.76% of its holdings in stocks, with an average market capitalization of $161.64 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Other
With turnover at about 58.4%, this fund makes fewer trades than the average comparable fund.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, PRSCX is a no load fund. It has an expense ratio of 0.81% compared to the category average of 1.41%. So, PRSCX 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.
Bottom Line
Overall, T. Rowe Price Science & Tech Fund has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price Science & Tech Fund looks like a somewhat average choice for investors right now.
This could just be the start of your research on PRSCX in the Sector - Tech category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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