Is T. Rowe Price Blue Chip Growth Fund (TRBCX) a Strong Mutual Fund Pick Right Now?

If investors are looking at the Large Cap Growth fund category, T. Rowe Price Blue Chip Growth Fund (TRBCX) could be a potential option. TRBCX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify TRBCX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.

History of Fund/Manager

T. Rowe Price is based in Baltimore, MD, and is the manager of TRBCX. T. Rowe Price Blue Chip Growth Fund debuted in June of 1993. Since then, TRBCX has accumulated assets of about $28.31 billion, according to the most recently available information. The fund is currently managed by Paul Greene who has been in charge of the fund since October of 2021.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 11.38%, and is in the bottom 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 3.08%, which places it in the bottom 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. Compared to the category average of 15.62%, the standard deviation of TRBCX over the past three years is 22.31%. Over the past 5 years, the standard deviation of the fund is 21.39% compared to the category average of 16.37%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.06, so investors should note that 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. TRBCX has generated a negative alpha over the past five years of -1.72, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

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 principally on equities that are traded in the United States.

The mutual fund currently has 78.34% of its holdings in stocks, with an average market capitalization of $698.03 billion. The fund has the heaviest exposure to the following market sectors:

  • Technology
  • Retail Trade
  • Finance
This fund's turnover is about 9.8%, so the fund managers are making fewer trades than the average comparable fund.

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, TRBCX is a no load fund. It has an expense ratio of 0.70% compared to the category average of 0.95%. From a cost perspective, TRBCX 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

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively weak performance, worse downside risk, and lower fees, T. Rowe Price Blue Chip Growth Fund ( TRBCX ) has a high Zacks Mutual Fund rank, and therefore looks a great potential choice for investors right now.

Don't stop here for your research on Large Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare TRBCX to its peers as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.

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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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