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

Any investors hoping to find a All Cap Value fund could think about starting with T. Rowe Price Capital Appreciation Fund (PRWCX). PRWCX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify PRWCX in the All Cap Value category, an area rife with potential choices. Like the name suggests, All Cap Value mutual funds invest in small, medium, and large-cap companies, though they end up focusing on bigger firms due to percentage of assets. These funds look for key value characteristics, targeting stocks that boast low P/E ratios, high dividend yields, and whose share prices do not reflect their worth.

History of Fund/Manager

T. Rowe Price is responsible for PRWCX, and the company is based out of Baltimore, MD. T. Rowe Price Capital Appreciation Fund made its debut in June of 1986, and since then, PRWCX has accumulated about $37.42 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.

Performance

Investors naturally seek funds with strong performance. PRWCX has a 5-year annualized total return of 8.34%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 12.24%, 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. PRWCX's standard deviation over the past three years is 7.74% compared to the category average of 10.28%. The standard deviation of the fund over the past 5 years is 10.57% compared to the category average of 12.17%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.66, so it is likely going to be less volatile than the market at large. 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. PRWCX's 5-year performance has produced a negative alpha of -1.66, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, PRWCX is a no load fund. It has an expense ratio of 0.70% compared to the category average of 0.90%. From a cost perspective, PRWCX 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.

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, T. Rowe Price Capital Appreciation Fund ( PRWCX ) looks like a good potential choice for investors right now.

This could just be the start of your research on PRWCX in the All Cap Value category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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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