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3 Top-Tier T. Rowe Price Funds to Buy Today

Active isn't dead. T. Rowe Price funds are prime examples of how the human touch can still do better than the algos.

By Aaron Levitt, InvestorPlace Contributor

http://bit.ly/2tCR8Es

There’s a big debate on the fate of active investing. Most managers underperform passive indices, sending investors out of active mutual funds in spades. But the truth is, active isn’t dead — managers worth their salt are still piling up assets while doing right by their shareholders.

3 Top-Tier T. Rowe Price Funds to Buy TodayOne of the best places to get that active management? T. Rowe Price Group Inc (NASDAQ:TROW).

Created by the father of growth investing, many T. Rowe Price funds continue to provide market-beating returns. The key is the firm’s stock selection methods combined with low overall costs.

As one of the largest asset managers and 401k/IRA providers, T. Rowe Price is able to use its scale to lower costs for its investors. High fees, after all, are one of the biggest hurdles for active managers to overcome when competing with passive indexing.

With those low fees in check, many T. Rowe Price funds are the top of their Lipper averages and feature great long-term returns.

Investors looking to add some oomph to their returns should consider using one or more actively managed T. Rowe Price mutual funds in their portfolios. Here are three great options:

T. Rowe Price Funds to Buy: Diversified Mid-Cap Growth (PRDMX)

Expenses: 0.87%, or $87 annually on every $10,000 invested
Minimum Initial Investment: $2,500/$1,000 for IRAs.

Considering that Thomas Rowe Price is considered the father of “growth” investing, many T. Rowe Price funds follow his philosophy of searching for stocks that are earning more or the potential to earn more than market/sector averages. Mid-cap stocks — which are small enough to boast outstanding upside potential, but big enough to enjoy some financial stability — are a fertile hunting ground for growth investors.

The four-star rated T. Rowe Price Diversified Mid-Cap Growth Fund (MUTF:PRDMX) is a great example of a quality fund manager’s methods in action.

Two, actually.

PRDMX managers Donald Peters and Donald Easley focus their attention on U.S. stocks in the middle of the market capitalization back that are quickly growing revenues and earnings. But Peters and Easley aren’t momentum traders — they hold stocks for years until they realize their true potential. Turnover is a mere 21%.

Additionally, as the name suggests, PRDMX is a “diversified” fund. Currently, it holds 328 different mid-cap stocks, led at the top right now by Intuitive Surgical, Inc. (NASDAQ:ISRG) and Fiserv Inc (NASDAQ:FISV) — neither one weighted more than 1%. That breadth and lack of single-stock heft helps reduce risk in this growthy portfolio.

PRDMX boasts a great long-term history that includes an average annual five-year return of 14.92%, beating its benchmark — the Russell Mid-Cap Growth Index — by a decent margin.

This is one T. Rowe Price fund that delivers on its active objectives.

T. Rowe Price Funds to Buy: Spectrum Income Fund (RPSIX)

T. Rowe Price Funds to Buy: Spectrum Income Fund (RPSIX)
Source: Shutterstock

Expenses: 0.69%
Minimum Initial Investment: $2,500/$1,000 for IRAs.

Bonds are another great place where active management shines. It takes a lot of know-how to navigate various interest rate environments, value propositions and credit types to craft a great portfolio. Thus, indexing isn’t always the best option.

That puts T. Rowe Price Spectrum Income Fund (MUTF:RPSIX) in our crosshairs.

RPSIX is considered a go-anywhere bond fund. That means its manager, Charles Shriver, can invest in any type of bond he wishes. That includes standard fare like Treasuries and corporate bonds to high-yield debt and emerging-market bonds. The trick is that Shriver doesn’t do the individual security selection — he leaves that up to T. Rowe Price specialists in each category.

Spectrum Income invests in other T. Rowe Price funds and adjusts its holdings according to the current environment. What investors get is a diversified portfolio of different bond types, credit quality and durations, as well as active management of those bonds. Thus, RPSIX can serve as a core holding for bond investors.

Income seekers will be pleased with RPSIX’s 3.03% dividend yield as well. And everyone will be pleased with this fund’s 7.11% annual return since its inception in 1990 that crushes its benchmark index.

T. Rowe Price Funds to Buy: International Stock Fund (PRITX)

T. Rowe Price Funds to Buy: International Stock Fund (PRITX)
Source: Shutterstock

Expenses: 0.84%
Minimum Initial Investment: $2,500/$1,000 for IRAs.

T. Rowe Price funds offer expert management across the ponds, too. More than 85% of TROW’s international and global stock funds outperformed their Lipper averages over the past 10-year period. That includes the T. Rowe Price International Stock Fund (MUTF:PRITX).

PRITX’s mission is much like other T. Rowe Price funds — find quality stocks growing at good rates. The beauty for International Stock is that it’s not fenced into just Europe and Japan for its picks — manager Richard Clattenburg is free to roam the world, and he does, adding a dash of emerging-market equities as well.

Japan and the United Kingdom both sit around 15% of the fund each, with Germany and Switzerland the next-largest at about 7% each. Still, China, India and South Korea comprise another 15% of the fund’s equity exposure, so you get a bit more EM than you do in many plain Jane international funds.

That emerging-market presence has helped PRITX to deliver on the performance front. The fund has returned 9.88% annually over the past five years — better than both the Lipper average for international stock funds, as well as International Stock’s benchmark. The picture is similar looking even farther out.

Top holdings at the moment include the likes of Hong Kong-based investment group AIA Group Ltd. (OTCMKTS:AAGIY) and German pharma outfit Bayer AG (ADR) (OTCMKTS:BAYRY).

As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/06/3-top-tier-t-rowe-price-funds-to-buy-today/.

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