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Is T. Rowe Price Spectrum Growth (PRSGX) a Strong Mutual Fund Pick Right Now?

Having trouble finding an Allocation Balanced fund? T. Rowe Price Spectrum Growth PRSGX is a potential starting point. PRSGX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

PRSGX is one of many Zacks' Allocation Balanced mutual funds to pick from. Allocation Balanced funds seek to invest in 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. Investors utilize Allocation Balanced funds as a way to get a good start with diversified mutual funds, as well as for core holdings in a portfolio of funds.

History of Fund/Manager

T. Rowe Price is based in Baltimore, MD, and is the manager of PRSGX. T. Rowe Price Spectrum Growth debuted in June of 1990. Since then, PRSGX has accumulated assets of about $3.85 billion, according to the most recently available information. The fund is currently managed by Charles M. Shriver who has been in charge of the fund since May of 2011.

Performance

Investors naturally seek funds with strong performance. PRSGX has a 5-year annualized total return of 11.13% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 10.6%, 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. Over the past three years, PRSGX's standard deviation comes in at 10.52%, compared to the category average of 6.89%. The fund's standard deviation over the past 5 years is 9.9% compared to the category average of 6.76%. This makes the fund more 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. PRSGX lost 52.8% in the most recent bear market and outperformed its peer group by 16.66%. This could mean that the fund is a better choice than comparable funds during a bear market.

Nevertheless, investors should also note that the fund has a 5-year beta of 0.96, which means it is hypothetically 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. PRSGX's 5-year performance has produced a negative alpha of -1.26, which means 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, PRSGX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 0.89%. Looking at the fund from a cost perspective, PRSGX is actually cheaper than its peers.

While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.

Bottom Line

Overall, T. Rowe Price Spectrum Growth 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. 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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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