Is T. Rowe Price Capital Appreciation Fund (PRWCX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a All Cap Value fund? T. Rowe Price Capital Appreciation Fund (PRWCX) is a potential starting point. PRWCX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes PRWCX as All Cap Value, which is a segment packed with options. All Cap Value mutual funds, as the name suggests, invest across the cap spectrum in small-cap, mid-cap, and large-cap companies. However, in practice, these funds generally end up focusing on larger companies thanks to their percentage of assets. Regardless, these funds look for value positions, targeting firms whose share prices do not reflect their full worth, as well as low P/E Ratios and high dividend yields.

History of Fund/Manager

T. Rowe Price is based in Baltimore, MD, and is the manager of PRWCX. T. Rowe Price Capital Appreciation Fund debuted in June of 1986. Since then, PRWCX has accumulated assets of about $36.20 billion, according to the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 9.99%, 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 12.89%, which places it in the middle 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. The standard deviation of PRWCX over the past three years is 7.62% compared to the category average of 9.92%. Over the past 5 years, the standard deviation of the fund is 10.63% compared to the category average of 11.9%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. PRWCX has a 5-year beta of 0.68, which means it is likely to be less volatile than the market average. 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 -1.25, which shows that 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, PRWCX is a no load fund. It has an expense ratio of 0.71% compared to the category average of 0.90%. From a cost perspective, PRWCX is actually cheaper than its peers.

Investors should also note, that according to our data, the fund does not have any minimum investment requirements.

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

Bottom Line

Overall, T. Rowe Price Capital Appreciation Fund ( PRWCX ) 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.

For additional information on the All Cap Value area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PRWCX too 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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