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T. Rowe Price Mutual Funds Account Review


T. Rowe Price mutual funds account review. Investing fees, min, pros/cons. PRMTX, PRHSX, PRGTX funds performance, expenses.



T. Rowe Price Mutual Funds Review


T. Rowe Price is one of the largest asset management firms with $903.6 billion in assets under management. The company takes proud in its approach to a disciplined and active asset management principal, with 89% of the funds generated positive excess returns over rolling 5 and 10 year periods. Here we will take a look at its non-retirement mutual fund account. Where does T. Rowe’s mutual fund account stand out? Where does it fall short? Who should invest with T. Rowe Price?


Pros of T. Rowe Price Mutual Fund Account


Low Cost & High Performance Fund Selection: Two of the most important aspects for investors to achieve high investment returns are fund performance and expense. T. Rowe Price stands out amongst its competitors for it’s low-cost, no-load, high-performing mutual funds. Expense ratio includes overall management fees and operating expenses and is expressed as a percentage of the average net asset values. For two funds with the same pre-expense returns, higher expense ratio leads to lower return for the investors. 75% of T. Rowe Price’s mutual funds for individual investors have expense ratios below their Lipper category averages based on fiscal year-end data as of 6/30/17.

T. Rowe Price has a wide selection of high performance mutual funds. 85% of the mutual funds beat their 10-year Lipper average as of 6/30/17. 72 out of 108 T. Rowe Price’s mutual funds earned 4 or 5 star overall Morningstar Ratings as of 6/30/17. The top 32.5% of all funds have rating of 4 star and above by Morningstar. The rating is derived from a weighted average of fund’s 3-, 5-, and 10-year Morningstar Rating metrics.

Below are some of the top-performing T. Rowe Price mutual funds for reference:

T. Rowe Price Media and Telecommunications Fund (PRMTX): The fund is invested in common stocks of media, technology, and telecommunication companies, seeking long-term capital growth through investment in large to mid-cap companies. The fund has achieved 17.44% annualized return for the past 5 years, beating the category average return by 8.6%.

T. Rowe Price Health Science Fund (PRHSX): The fund is mainly invested in common stocks of companies in R&D, production & distribution of health care product, medicine or life sciences. The fund has achieved 19.83% annualized return for the past 5 years, beating the category average return by 3.17%.

T. Rowe Price Global Technology Fund (PRGTX): The fund is mainly invested in common stocks of companies in R&D, advancement & use of technology. The fund has achieved 24.13% annualized return for the past 5 years, beating the category average return by 7.79%.

The web design for the mutual fund account is easy to navigate and performance for the mutual fund investment can be easily tracked.

Investment in T. Rowe Price funds without brokerage: Having a T. Rowe mutual fund account gives you access to a wide-selection of T. Rowe’s own funds without needing a third-party brokerage. For those are who are specifically interested in some of T. Rowe’s top-performing funds, having a mutual fund account direct with them can help the investor avoid paying any commissions or transaction fee to a third-party broker.

Investment Expertise: T. Rowe Price has an experienced, highly-trained group of fund managers. The company has a good reputation of keeping low turnover rate for fund managers, and ensure smooth transitions if turnover does occur. While researching for the fund to invest in, it is crucial to ensure that the fund manager has a good track record of investment performance, is highly experienced and trained. Special research may be needed for funds that recently switched fund managers.

Extensive Planning & Research Tool: T. Rowe’s mutual fund research tool helps investors easily navigate through the wide selection of mutual funds it provides. Investors can research the funds by categories such as target date, domestic, or tax-free, or by Morningstar rankings, or investment objective, whether it is tax-efficient or tax-exempt.


T. Rowe Price Mutual Funds Account Review


Cons of T. Rowe Price Mutual Fund Account


Limited Investment Options: T. Rowe Price thrives on its low-cost and high performing mutual funds, which is the main strength amongst the financial services it provides. However, for investors who would like to have multiple types of investment – stocks, ETF, options etc., T. Rowe’s transaction fees for these investments are not on the best end of the market. For stock and ETF, there is a $19.95 trading cost, and $9.95 for accounts with more than 30 trades in the past 12 months. For options, the fee is $19.95 + $1/contract, and $9.95 + $1/contract for qualifying accounts. The commission charged is on the higher end, especially when comparing with some low-commission online stock brokers (e.g. Options House charges $4.95/trade for stocks and ETFs, and $4.95 + $0.5/contract for options; TD Ameritrade charges $6.95/trade for stocks and ETFs, and $6.95 + $0.75/contract for options). Therefore, for investors who would also prefer investment in stocks, ETFs, and options, etc., T. Rowe might not be the best choice.

Potential Disadvantage in Expense Ratio for Index Funds: As discussed previously, T. Rowe shines in its low cost and high performing funds compared to competitors. However, compared to a major competitor Vanguard, T. Rowe may not have as low of an expense ratio. For example, Vanguard 500 Index Fund (VFINX) has an expense ratio of 0.14%, while T. Rowe (PREIX) has a net expense ratio of 0.21%. This is mainly due to Vanguard is structured as a mutual company, which means the company is owned by customers. This allows Vanguard to include only the pure expense, without any additional margin. Keep in mind, however, lower expense ratio does not translate to higher return since performance of the fund is also a deciding factor. For investors who are solely interested in Index Fund, it may worth considering Vanguard over T. Rowe.

Account Service Fee: There is an annual account service fee of $20 if the mutual fund balance is below $10,000. However, this could be eliminated relatively easily by signing up for electronic delivery of statements, or maintain combined balance of $50,000 from all T. Rowe Price accounts, including mutual funds, retirement, etc.

Minimum Requirement: The minimum requirement to open a non-retirement mutual fund account is $2500, and an incremental minimum of $100 to add to existing accounts. The minimums, however, are quite standard amongst its competitors, with Vanguard having $3000 minimum for non-retirement funds.


T. Rowe Price Mutual Funds Review

Mutual Fund Trading Policy


Most mutual fund providers have an excessive trading policy to avoid excessive and short-term trading that may hurt mutual funds’ performance, which is targeting towards long-term returns. Subject to some certain exceptions, T. Rowe Price enforces a “30-day Purchase Block”, meaning that purchase or exchange into a fund is restricted for 30 days after an investor sold or exchanged out of the fund. Additionally, certain T. Rowe Price funds charge a redemption fee, which is a charge used to discourage short-term trading of mutual funds. The charge goes directly to the fund and is used to compensate any costs associated with short-term share redemptions. For several of T. Rowe’s funds that charge redemption fee, the fee varies between 0.5% to 2% of the amount redeemed, if redemption occurs within the minimum holding period, which is mostly 90 days with couple of funds being 1 year.


T. Rowe Price Mutual Funds Account Review Summary


In summary, T. Rowe Price provides high performance, low cost, and a wide selection of mutual funds. For investors who are interested in fund-only investment, want direct access to T. Rowe’s own funds, or already have IRA accounts with T. Rowe and would like non-retirement mutual fund investment, T. Rowe Price mutual fund account is a top option to consider.


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T. Rowe Price Mutual Fund Account reviewed by Brokerage-Review.com on . Rating: 3



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