Sector – Energy fund seekers should consider taking a look at T. Rowe Price New Era (PRNEX). PRNEX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
PRNEX is one of many Sector – Energy funds to choose from. Sector – Energy mutual funds are comprised of various changing and hugely important industries throughout the massive global energy sector. Even though clean energy is beginning to pick up steam, oil and gas companies have the highest exposure, but carbon-based fuels will be the biggest group of assets in these funds.
History of Fund/Manager
PRNEX finds itself in the T. Rowe Price family, based out of Baltimore, MD. Since T. Rowe Price New Era made its debut in January of 1969, PRNEX has garnered more than $1.45 billion in assets. Shawn Driscoll is the fund’s current manager and has held that role since September of 2013.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 7.29%, 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 2.38%, 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. Compared to the category average of 21.54%, the standard deviation of PRNEX over the past three years is 25.19%. Over the past 5 years, the standard deviation of the fund is 20.85% compared to the category average of 18.1%. This makes the fund more volatile than its peers over the past half-decade.
The fund has a 5-year beta of 1.21, so investors should note that it is hypothetically more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. Over the past 5 years, the fund has a negative alpha of -10.29. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, PRNEX is a no load fund. It has an expense ratio of 0.72% compared to the category average of 1.54%. From a cost perspective, PRNEX 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.
Overall, T. Rowe Price New Era ( PRNEX ) 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 this product, or to compare it to other mutual funds in the Sector – Energy, make sure to go to www.zacks.com/funds/mutual-funds 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.