Is T. Rowe Price Emerging Markets Stock (PRMSX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Non US – Equity category, but where should you start your research? Well, one fund that might be worth investigating is T. Rowe Price Emerging Markets Stock PRMSX. PRMSX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes PRMSX as Non US – Equity, a segment stacked high with options. Non US – Equity mutual funds like to invest in companies outside of the United States, an important characteristic since global mutual funds are known to keep a good portion of their portfolio stateside. These kinds of funds can often extend across all cap levels, and will typically allocate their investments between emerging and developed markets.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRMSX. T. Rowe Price Emerging Markets Stock made its debut in March of 1995, and since then, PRMSX has accumulated about $6.74 billion in assets, per the most up-to-date date available. The fund’s current manager, Gonzalo Pangaro, has been in charge of the fund since September of 2008.
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 6.47%, and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 12.27%, 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 10.57%, the standard deviation of PRMSX over the past three years is 14.96%. The standard deviation of the fund over the past 5 years is 14.55% compared to the category average of 11.95%. This makes the fund more volatile than its peers over the past half-decade.
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market, PRMSX lost 68.19% and underperformed its peer group by 9.81%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 0.9, so it is likely going to be less volatile than 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. The fund has produced a negative alpha over the past 5 years of -6.24, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, PRMSX is a no load fund. It has an expense ratio of 1.24% compared to the category average of 1.29%. From a cost perspective, PRMSX 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.
Overall, T. Rowe Price Emerging Markets Stock has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, T. Rowe Price Emerging Markets Stock looks like a great potential choice for investors right now.
This could just be the start of your research on PRMSX in the Non US – Equity 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. Zacks provides a full suite of tools to help you analyze your portfolio – both funds and stocks – in the most efficient way possible.
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