Mutual Fund Equity Report fund seekers should not consider taking a look at T. Rowe Price Spectrum Diversified Equity (PRSGX) at this time. PRSGX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRSGX. Since T. Rowe Price Spectrum Diversified Equity made its debut in June of 1990, PRSGX has garnered more than $1.90 billion in assets. The fund’s current manager, Charles Shriver, has been in charge of the fund since May of 2011.
Investors naturally seek funds with strong performance. PRSGX has a 5-year annualized total return of 6.26% and is in the bottom 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 7.59%, 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. PRSGX’s standard deviation over the past three years is 20.86% compared to the category average of 21.25%. The standard deviation of the fund over the past 5 years is 18.17% compared to the category average of 18.85%. This makes the fund less volatile than its peers over the past half-decade.
Investors should note that the fund has a 5-year beta of 0.95, so it is likely going to be less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. With a negative alpha of -2.64, 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 mostly on equities that are traded in the United States.
Right now, 87.97% of this mutual fund’s holdings are stocks and it has a negligible amount of assets in foreign securities. This fund’s turnover is about 8.2%, so the fund managers are making fewer trades than its comparable peers.
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, PRSGX is a no load fund. It has an expense ratio of 0.73% compared to the category average of 0.86%. So, PRSGX is actually cheaper than its peers from a cost perspective.
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.
Overall, T. Rowe Price Spectrum Diversified Equity ( PRSGX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, T. Rowe Price Spectrum Diversified Equity ( PRSGX ) looks like a somewhat weak choice for investors right now.
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