uploads///T Rowe Price Blue Chip Growth Fund

Why 2016 Has Not Been Kind to the T. Rowe Price Blue Chip Growth Fund


Jul. 22 2016, Published 7:56 p.m. ET

Performance evaluation

The T. Rowe Price Blue Chip Growth Fund (TRBCX) has fallen by 2.2% YTD (year-to-date) in 2016. This places it among the bottom three funds in the pack of 12 funds we’ve chosen for this review. The fund has struggled in 2016 as well as in the one-year period until July 15, 2016.

We have graphed its performance against two ETFs: the iShares S&P 500 Growth ETF (IVW) and the iShares Russell 1000 Growth ETF (IWF). Let’s look at what has contributed to this poor performance by the fund YTD in 2016.

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Portfolio composition and contribution to returns

Healthcare has been primarily responsible for driving down the returns of TRBCX YTD in 2016. Alexion Pharmaceuticals (ALXN) has been the biggest negative contributor to the fund’s returns. Valeant Pharmaceuticals International (VRX) and Allergan (AGN), among others, have worsened the returns from the sector. However, Danaher (DHR) and UnitedHealth Group (UNH) have helped reduce the drag from the sector.

Industrials have also contributed negatively in the year so far. American Airlines Group (AAL) has led decliners, which include Boeing (BA) and United Continental Holdings (UAL).

The second-most invested sector, consumer discretionary, has been a positive contributor and has helped reduce the decline of the fund. Amazon.com (AMZN) has nearly single-handedly powered the sector ahead. Meanwhile, Royal Caribbean Cruises (RCL) and Norwegian Cruise Line Holdings (NCLH) have dragged on the sector a little.

Investor takeaways

TRBCX has been a below-average performer in the year so far because information technology—the biggest invested sector—has been almost flat. Positive contributions from Facebook (FB) has been nullified by negative contributions from LinkedIn (LNKD) and the Class C shares of Alphabet (GOOG). The fund has done well in the past, and existing investors would do well to be patient with their investments. Potential investors should consider other funds in this review before shortlisting TRBCX.

In the next article, we’ll take a look at the Invesco American Franchise Fund Class A (VAFAX).


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