THOMAS ROWE PRICE, WHO founded his eponymous investment firm in 1937, is considered by many to be the father of growth investing. It’s little surprise, then, that the company is home to many dazzling actively managed funds that focus on fast-growing stocks. Five such funds rank among the 100 most popular choices in 401(k) plans.
In this article, the third of a four-part series, we analyze those five T. Rowe Price funds, plus the firm’s target-date series, T. Rowe Price Retirement (as a single entry), and rate each fund “buy,” “sell” or “hold.” The list of funds, ranked by 401(k) assets, comes courtesy of BrightScope, a financial data firm that rates workplace retirement-savings plans. (For our review of Vanguard funds, see “Best 401(k) Funds From Vanguard,” Jan.; for our take on Fidelity funds, see “Best 401(k) Funds From Fidelity,” Feb.)
The symbol and the information on fees and performance relate to the investor share class of each fund (with one exception, which we’ve noted); your 401(k) plan may offer a different share class. Returns and data are through January 8.
T. ROWE PRICE BLUE CHIP GROWTH (SYMBOL TRBCX, EXPENSE RATIO 0.69%) BUY We’re big fans of Blue Chip Growth, which has been a member of the Kiplinger 25, the list of our favorite noload funds, since 2016. Larry Puglia has managed the large-company stock fund since its 1993 launch, earning a 12.1% annualized return over the past 27 years, which outpaced the 10.2% gain in the S&P 500 index.
Puglia has a knack for finding good, well-managed, fast-growing companies. That has worked in his favor of late, as those types of businesses have led the stock market’s gains in recent years. Facebook, Amazon.com, Alphabet and Microsoft all figure prominently in Blue Chip’s 120-stock portfolio. Amazon, the fund’s top holding, accounted for nearly 12% of assets at last report; Facebook, almost 7%. Foreign stocks, mostly two Chinese firms, Alibaba Group Holdings and Tencent Holdings, represent just under 8% of assets.
The firm named Paul Greene associate manager in early 2020, sparking speculation that it’s part of a future succession plan. But Puglia says he has no immediate plans to retire. That said, Greene has promising credentials. During his six-year stint at T. Rowe Price Communications & Technology fund (both sectors are in Blue Chip Growth’s sweet spot), the fund returned 13.8% annualized, an average of 10 percentage points per year ahead of other funds that invest in communications services stocks.
T. ROWE PRICE GROWTH STOCK (PRGFX, 0.65%) BUY T. Rowe Price Growth Stock, like other Price funds highlighted in this story, focuses on large, growing companies. But with nearly 34% of its assets in tech companies, it has the heftiest tech-stock stake of all of the T. Rowe Price funds discussed here. Firms that make or provide nonessential goods or services and communications-services companies make up another 40% of the fund.
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