Is T. Rowe Price New Era (PRNEX) A Strong Mutual Fund Pick Right Now?

If you've been stuck searching for Sector - Energy funds, consider T. Rowe Price New Era PRNEX as a possibility. PRNEX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes PRNEX as Sector - Energy, a segment packed with options. Sector - Energy mutual funds encompass a wide range of vastly changing and vitally important industries throughout this massive global sector. Oil and gas comprise the bulk of the exposure here, and carbon-based fuels are going to be the majority of assets in these funds. However, clean energy is starting to pick up steam.

History of Fund/Manager

T. Rowe Price is based in Baltimore, MD, and is the manager of PRNEX. Since T. Rowe Price New Era made its debut in January of 1969, PRNEX has garnered more than $2.45 billion in assets. Shawn T. Driscoll is the fund's current manager and has held that role since September of 2013.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 3.1%, and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 5.32%, 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. Over the past three years, PRNEX's standard deviation comes in at 15.17%, compared to the category average of 15.08%. The fund's standard deviation over the past 5 years is 14.37% compared to the category average of 19.03%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In the most recent bear market, PRNEX lost 54.94% and outperformed its peer group by 0.38%. This might suggest that the fund is a better choice than its peers during a bear market.

Nevertheless, investors should also note that the fund has a 5-year beta of 0.94, which means it is hypothetically 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. PRNEX has generated a negative alpha over the past five years of -9.8, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

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, PRNEX is a no load fund. It has an expense ratio of 0.69% compared to the category average of 1.44%. PRNEX is actually cheaper than its peers when you consider factors like cost.

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.

Bottom Line

Overall, T. Rowe Price New Era has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price New Era looks like a good potential choice for investors right now.

Want even more information about PRNEX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.