Is T. Rowe Price New Horizons (PRNHX) a Strong Mutual Fund Pick Right Now?

If investors are looking at the Small Cap Growth fund category, T. Rowe Price New Horizons (PRNHX) could be a potential option. PRNHX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Small Cap Growth funds is an area filled with options, such as PRNHX. These funds tend to create their portfolios around stocks that sport large growth opportunities and market capitalization of less than $2 billion. The companies in these portfolios are usually on the smaller side, and are in up-and-coming industries and markets.

History of Fund/Manager

PRNHX is a part of the T. Rowe Price family of funds, a company based out of Baltimore, MD. The T. Rowe Price New Horizons made its debut in June of 1960 and PRNHX has managed to accumulate roughly $20.63 billion in assets, as of the most recently available information. The fund's current manager, Joshua K. Spencer, has been in charge of the fund since March of 2019.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 16.24%, 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 23.51%, 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. PRNHX's standard deviation over the past three years is 14.17% compared to the category average of 13.04%. Looking at the past 5 years, the fund's standard deviation is 14.19% compared to the category average of 13.2%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In PRNHX's case, the fund lost 49.91% in the most recent bear market and outperformed its peer group by 3%. 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 1.01, which means it is hypothetically as volatile as 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 positive alpha of 4.28, managers in this portfolio are skilled in picking 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, PRNHX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 1.23%. Looking at the fund from a cost perspective, PRNHX is actually cheaper than its peers.

This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.

Bottom Line

Overall, T. Rowe Price New Horizons ( PRNHX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price New Horizons ( PRNHX ) looks like a good potential choice for investors right now.

Don't stop here for your research on Small Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare PRNHX to its peers as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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