There are plenty of choices in the Large Cap Value category, but where should you start your research? Well, one fund that might be worth investigating is T. Rowe Price Value Fund (TRVLX). TRVLX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
TRVLX is classified in the Large Cap Value segment by Zacks, which is an area full of possibilities. Investors interested in a stable income stream fund these mutual funds very appealing because they have a unique investing strategy. Large Cap Value funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This tactic often leads to low P/E ratios and high dividend yields; however, these funds’high growth opportunity are often slowed, as large-cap securities are generally in stable industries with low to moderate growth prospects.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of TRVLX. T. Rowe Price Value Fund made its debut in September of 1994, and since then, TRVLX has accumulated about $4.56 billion in assets, per the most up-to-date date available. Mark Finn is the fund’s current manager and has held that role since December of 2009.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. TRVLX has a 5-year annualized total return of 13.5% and is 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 10.46%, 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, TRVLX’s standard deviation comes in at 18.65%, compared to the category average of 16.63%. Over the past 5 years, the standard deviation of the fund is 15.19% compared to the category average of 13.88%. This makes the fund more volatile than its peers over the past half-decade.
Investors should note that the fund has a 5-year beta of 0.96, which means it is hypothetically 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. The fund has produced a negative alpha over the past 5 years of -2.19, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 primarily on equities that are traded in the United States.
Right now, 92.04% of this mutual fund’s holdings are stocks, with an average market capitalization of $217.44 billion. The fund has the heaviest exposure to the following market sectors:
Turnover is 114.6%, which means, on average, the fund makes more traders than comparable funds in a given year.
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, TRVLX is a no load fund. It has an expense ratio of 0.77% compared to the category average of 1%. Looking at the fund from a cost perspective, TRVLX 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.
Overall, T. Rowe Price Value Fund ( TRVLX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price Value Fund ( TRVLX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Large 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.