There are plenty of choices in the Mid Cap Value category, but where should you start your research? Well, one fund that may not be worth investigating is T. Rowe Price Mid-Cap Value Fund (TRMCX). TRMCX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
We classify TRMCX in the Mid Cap Value category, an area rife with potential choices. Mid Cap Value mutual funds aim to target medium-sized companies that possess strong value and income opportunities for investors. A mid-cap company usually holds a market capitalization of between $2 billion and $10 billion.
History of Fund/Manager
TRMCX finds itself in the T. Rowe Price family, based out of Baltimore, MD. Since T. Rowe Price Mid-Cap Value Fund made its debut in June of 1996, TRMCX has garnered more than $9.29 billion in assets. The fund is currently managed by David J. Wallack who has been in charge of the fund since December of 2000.
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 6.44%, and is 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 6.67%, 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. Compared to the category average of 10.92%, the standard deviation of TRMCX over the past three years is 12.78%. The standard deviation of the fund over the past 5 years is 12.11% compared to the category average of 10.75%. This makes the fund more volatile than its peers over the past half-decade.
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In the most recent bear market, TRMCX lost 47.46% and outperformed its peer group by 4%. This makes the fund a possibly better choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 0.91, so it is likely going to be 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. TRMCX's 5-year performance has produced a negative alpha of -3.06, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Examining 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 largely on equities that are traded in the United States.
As of the last filing date, the mutual fund has 95.88% of its assets in stocks, and these companies have an average market capitalization of $14.24 billion. The fund has the heaviest exposure to the following market sectors:
- Industrial Cyclical
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, TRMCX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 1.15%. So, TRMCX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Overall, T. Rowe Price Mid-Cap Value Fund ( TRMCX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, T. Rowe Price Mid-Cap Value Fund ( TRMCX ) looks like a somewhat weak choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Mid Cap Value, make sure to go to www.zacks.com/funds/mutual-funds 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.