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

Allocation Balanced fund seekers may want to consider taking a look at T. Rowe Price Spectrum Diversified Equity (PRSGX). PRSGX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

PRSGX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across 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.

History of Fund/Manager

T. Rowe Price is based in Baltimore, MD, and is the manager of PRSGX. T. Rowe Price Spectrum Diversified Equity debuted in June of 1990. Since then, PRSGX has accumulated assets of about $1.91 billion, according to the most recently available information. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. PRSGX has a 5-year annualized total return of 10.09%, and is in the bottom 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 15.39%, which places it in the bottom 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. Compared to the category average of 11.31%, the standard deviation of PRSGX over the past three years is 11.24%. Looking at the past 5 years, the fund's standard deviation is 14.06% compared to the category average of 13.81%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.92, the fund is likely to be less volatile than the market average. 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. The fund has produced a negative alpha over the past 5 years of -3.51, 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, PRSGX is a no load fund. It has an expense ratio of 0.69% compared to the category average of 0.82%. Looking at the fund from a cost perspective, PRSGX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.

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

Bottom Line

Overall, even with its comparatively weak performance, average downside risk, and lower fees, T. Rowe Price Spectrum Diversified Equity ( PRSGX ) has a neutral Zacks Mutual Fund rank, and therefore looks a somewhat average choice for investors right now.

Want even more information about PRSGX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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