The T. Rowe Price Blue Chip Growth Fund [NASDAQMUTFUND: TRBCX] invests in common stocks of large and medium-sized well-established blue-chip companies with above-average potential for earnings growth.
The Fund invests at least 80% of its net assets (including any borrowings for investment purposes) in the common stocks of large and medium-sized blue-chip growth companies, well-positioned towards long-term growth.
It is more inclined towards long-term capital growth, placing income at the second pedestal.
The fund’s 135 to 145 holdings have leading market positions, seasoned management teams, sustainable earnings, and free cash flow which allow for strong performance over time and across market cycles.
With a good performance record and reasonable fees, this is an ideal option for retirement savers who are looking forward to a comfortable life post retirement.
Investment Strategy
T Rowe Price Blue Chip Growth Fund invests in well-established companies possessing high-growth potential.
As is the case with most growth funds, the focus is on long-term capital growth as opposed to current income.
Because the focus is on long-term appreciation, majority of the fund’s stocks don’t pay dividends, or make regular distributions to investors.
TBRCX Holdings
Examining the equity holdings of a mutual fund is also important. As far as this fund is concerned, the focus is mostly on equities that are traded in the United States. The fund owns around 145 different stocks, and the 10 largest holdings represent approximately 48.06% of its total assets.
| Company | Symbol | Percentage of Total Assets |
| Amazon.com Inc | AMZN | 10.79% |
| Facebook Inc | FB | 6.14% |
| Microsoft Corp | MSFT | 5.79% |
| Alphabet Inc Class C | GOOG | 5.55% |
| Alibaba Group Holding Ltd ADR | BABA | 4.68% |
| Visa Inc Class A | V | 3.70% |
| Apple Inc | AAPL | 3.17% |
| Mastercard Inc A | MA | 3.00% |
| Tencent Holdings Ltd ADR | TCEHY | 2.81% |
| Netflix Inc | NFLX | 2.19% |
Overall Portfolio Composition (%)
Cash 0.09%
Stocks 99.91%
Sector Weightings (%)
Sector TRBCX
Basic Materials 0.49%
Consumer_Cyclical 19.22%
Financial Services 12.42%
Real Estate 0.60%
Consumer Defensive 1.43%
Healthcare 16.29%
Utilities 0.12%
Communication Services 19.19%
Energy 0.03%
Industrials 5.12%
Technology 25.10%
The performance of a large-cap stock mutual fund is best judged by comparing it with the performance of a broad market index, such as the S&P 500. Investors obviously are interested in knowing how the fund performs in comparison to its peers.
As we can see, this fund carries a 5-year annualized total return of 10.74%, as compared to 6.73% returned by S&P 500, and 7.64% returned by its peers. If you’re interested in shorter time-frames, do not forget to pay attention to the fund’s 3-year annualized total return of 12.51%, which again places it above S&P 500 and other Large Growth firms.
It’s though important to mention that a mutual fund’s past performance is no guarantor of its future results. However, T. Rowe Price Blue Chip Growth Fund has been delivering strong results over the past couple of decades, which serves as an assurance to investors that it’s likely to produce good results going forward.
Calendar-Year Total
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How Much Does It Cost?
The fund has an overall expense ratio of 0.70%, while the average expense ratio for growth-stock funds is 0.80%. An expense ratio represents the amount an investment company charges to manage your funds.
This expense ratio of 0.70% means your total annual expenses or cost will be $70, if you invest $10,000 in the fund.
From a cost perspective, TRBCX is actually cheaper than its peers. Also, investors need to be aware that the minimum initial investment for this fund is $2,500, and each subsequent investment needs to be at least $100.
The overall cost, though less than the expense ratio of growth-stock funds, is more than the index stock funds, such as a mutual fund that simply tracks the S&P 500.
The average for this group is just 0.11%. However, investors have little to fret about the slightly higher costs for the simple reason that T. Rowe Price Blue Chip Growth Fund enjoys a good track record of beating the market.
Risks
The fund’s return has been negative following the current market turmoil and panic induced by Covid-19 pandemic, however, this should not come as a surprise as growth stocks are always considered to be more volatile than cyclical stocks.
Growth stocks can perform differently from the market as a whole, and generally demonstrate more volatility than other types of stocks. They can witness a slide in their value in response to downbeat investor sentiments, or adverse market, economic, or other developments.
When looking at a fund’s performance, you also need to pay attention to the standard deviation of the returns. It is important as a lower number indicates lower volatility.
The standard deviation of TRBCX currently stands at 16.15 compared to the category average of 16.10 which is more or less the name. This makes the fund at par with its peers when it comes to volatility.
Additionally, the fund has current beta of 0.99, which makes it slightly less volatile than the market at large.
Another factor to consider is alpha, as it echoes a portfolio’s performance on a risk-adjusted basis in comparison to the S&P 500 benchmark.
The fund has a positive alpha of 7.01, which attests to the fund’s ability to pick securities that generate better-than-benchmark returns.
All in all, TRBCX is considerably less suitable for people with short investment time frames and/or a current need for their savings.
However, for investors with time on their side and looking forward to build up on their retirement savings so that they can enjoy a financially secure post-retirement life, the fund with its solid performance record is a good choice.
TRBCX Review: Is It a Buy or a Sell?
The T. Rowe Price Blue Chip Growth fund invests in blue chip stock funds. The fund seeks large-cap and medium-cap U.S. stocks that are well-established in their industries, and possess the potential to generate good return over a period of time.
The focus of the fund is long-term capital appreciation rather than short-term income. The fund has assets totaling almost over $61 billion invested in over 120 different holdings. The fund launched in June 1993 enjoys a respectable track record of generating good return for investors.
TRBCX has been in existence for over 75 years and is one of the largest domestic mutual fund companies. The fund, which also offers an array of other investment options and services, has consistently proven its ability to beat the market.
A good rank, large asset base, above-average performance, low downside risk, and lower expense ratio compared to its peers helps it reward investors with strong investment performance.
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