Oak Ridge Dynamic Small Cap I (ORSIX) — launched in September 2015 — seeks to capitalize...
The Right "Price" for Mid-Caps
08/01/2017 2:52 am EST
Instead of focusing solely on the largest growth companies, you also should consider mid-cap growth stocks , notes Mark Salzinger, editor of The No-Load Fund Investor.
These are the stocks that are large and exciting enough to catch the attention of senior executives at the biggest growth stocks with the wherewithal to buy them out, often at hefty premiums to the current stock price.
The number of no-load, actively managed mid-cap-growth funds with good records is surprisingly low. We include one such product in Best Buys that is currently open to new no-load investors: T. Rowe Price Diversified Mid Cap Growth (PRDMX).
Co-managers Don Peters and Don Easley, running the fund since 2003 and 2009, respectively, invest in faster-growing midsize companies than many of their peers, but in a lower-risk manner. They combine quantitative analysis with fundamental analysis.
Peters and Easley favor quality companies with favorable attributes, such as a demonstrated ability to increase revenues, earnings, and cash flow consistently; capable management; and a sustainable competitive advantage.
They particularly like steady, reliable growth companies that have low earnings variability and can be held for long periods, since they can sustain their high profitability.
In fact, compared to most other actively managed growth funds—and actively managed stock funds in general — Price Diversified Mid Cap Growth has experienced minimal portfolio turnover, in the range of 20% annually over the past five years. This decreases commission costs within the fund and increases the tax efficiency of its gains.
The four top sectors were consumer discretionary, information technology, industrials & business services and health care, which combined for more than 70% of assets.
Peters and Easley take the word “Diversified” in the fund’s name very seriously.As of the end ofMay, DiversifiedMid Cap Growth included 328 holdings, with the top 10 accounting for less than a combined 10% of assets.
Nevertheless, despite a higher expense ratio (0.87%, vs. 0.25%) the fund’s returns have outpaced those of the passive iShares Russell Midcap Growth ETF (IWP): 12.8% vs. 11.2% year to date through June 30; 19.1% versus 16.7% for the latest 12 months; 9.7% annually versus 7.6% annually over the past 36 months; and 14.5% annually versus 14.0% for the past five years.
Related Articles on FUNDS
One of the areas of the investment world that has been gaining in popularity in the last five years ...
On August 1, Fidelity took direct aim at index fund competitors Vanguard, Blackrock’s iShares ...
Investors often ask me how to build a portfolio that holds its own in down times but hands them soli...