PRAFX
TRPrice Real Assets-Inv
Investing in Real Assets for Long-Term Growth
The TRPrice Real Assets-Inv fund (PRAFX) is designed to provide investors with long-term capital growth by focusing on real assets. This fund invests at least 80% of its net assets in real assets and companies that derive significant revenue from such assets. Real assets include physical or tangible assets like real estate, commodities, and infrastructure, which can offer a hedge against inflation and provide diversification benefits. The fund’s strategy is particularly appealing to investors looking for exposure to tangible assets that can perform well in various economic conditions. Managed by T. Rowe Price, a well-respected investment firm, PRAFX aims to leverage its expertise in identifying and investing in undervalued real assets globally.
At A Glance
Executive Summary
PRAFX offers unique exposure to real assets with a focus on global value, featuring a 0.95% expense ratio and 1.43% yield.
Exposure to real assets for diversification Strong 1-year return of 19.89% Managed by T. Rowe Price, a reputable firm
High expense ratio compared to peers Negative alpha indicating underperformance High cash allocation may limit growth
Performance Analysis: A Strong Year Amidst Challenges
PRAFX has demonstrated a robust performance over the past year, with a 1-year return of 19.89%, significantly outperforming its benchmark, the S&P 500 Total Return Index, which returned 37.62%. Despite the challenging market conditions, the fund’s focus on real assets has allowed it to capitalize on opportunities within the real estate and basic materials sectors. However, the fund’s long-term performance metrics, such as a 4.61% return since inception and a 4.88% return over ten years, suggest a more moderate growth trajectory. Investors should consider these figures in the context of the fund’s specialty focus and the inherent volatility of real asset investments.
Portfolio Composition: A Heavy Focus on Real Estate and Basic Materials
The portfolio of PRAFX is heavily weighted towards real estate and basic materials, with allocations of 40.39% and 36.74%, respectively. This strategic allocation reflects the fund’s commitment to real assets, providing investors with exposure to sectors that can benefit from economic growth and inflationary pressures. The top holdings include companies like Bhp, Equinix Inc, and Prologis Inc, which are leaders in their respective industries. The fund’s significant allocation to energy, at 17.78%, further diversifies its portfolio, offering potential upside from fluctuations in energy prices. This composition is designed to capture the growth potential of real assets while managing risks associated with market volatility.
Risk Metrics: Understanding the Volatility and Drawdown
PRAFX exhibits a unique risk profile characterized by a beta of 0.61, indicating lower volatility compared to the broader market. However, the fund’s negative alpha of -17.78% suggests it has underperformed relative to its benchmark on a risk-adjusted basis. The Sharpe Ratio of -1.26 and Treynor Ratio of -29.20 further highlight the challenges in achieving risk-adjusted returns. The fund’s maximum drawdown of -7.5% and a quick recovery period of one month demonstrate its resilience in adverse market conditions. Investors should weigh these risk metrics against the potential benefits of investing in real assets, which can offer diversification and inflation protection.
Comparative Analysis: How PRAFX Stacks Up Against Peers
When compared to similar funds, PRAFX presents a mixed picture. While its 1-year return of 19.89% is competitive, its expense ratio of 0.95% is higher than peers like William Blair International Leaders-I (WILIX) and JOHCM International Select-Inst (JOHIX), which have expense ratios below 0.01%. Additionally, PRAFX’s yield of 1.43% is modest compared to Steward International Enhanced IxFd-Inst (SNTCX), which offers a yield of 3.12%. These comparisons highlight the importance of considering both performance and cost when evaluating investment options. Investors should assess whether PRAFX’s focus on real assets justifies its higher expense ratio and moderate yield.
Sector Allocation: A Strategic Bet on Real Estate and Energy
PRAFX’s sector allocation is a strategic decision to capitalize on the growth potential of real estate and energy sectors. With 40.39% of its portfolio in real estate and 17.78% in energy, the fund is positioned to benefit from economic recovery and rising commodity prices. The allocation to basic materials at 36.74% further supports this strategy, providing exposure to industries that are essential for infrastructure development and industrial growth. This sector focus aligns with the fund’s objective of investing in real assets, offering investors a unique opportunity to participate in sectors that are often underrepresented in traditional equity portfolios.
Market Cap Allocation: Balancing Growth and Stability
The market cap allocation of PRAFX is diversified across various sizes, with a significant portion in medium (38.38%) and large-cap (32.92%) companies. This balance between growth-oriented medium-cap stocks and stable large-cap stocks provides a blend of growth potential and stability. The fund’s exposure to small-cap stocks at 9.60% and extra-large-cap stocks at 12.33% further diversifies its holdings, allowing it to capture opportunities across different market segments. This allocation strategy is designed to enhance the fund’s growth prospects while mitigating risks associated with market fluctuations, making it suitable for investors seeking a balanced approach to real asset investing.
Conclusion: Is PRAFX the Right Fit for Your Portfolio?
PRAFX stands out as a unique investment option for those seeking exposure to real assets with a global value focus. Its strong 1-year performance and strategic sector allocation make it an attractive choice for investors looking to diversify their portfolios with tangible assets. However, the fund’s higher expense ratio and mixed long-term performance metrics may be a consideration for cost-conscious investors. PRAFX is best suited for those who are comfortable with the inherent risks of real asset investments and are seeking a fund managed by a reputable firm like T. Rowe Price. Investors should carefully evaluate their investment goals and risk tolerance to determine if PRAFX aligns with their portfolio strategy.
Similar Securities
PRIGX: TRPrice Global Value Equity-I | Global Diversification & Value Focus
PRIGX offers global exposure with a focus on undervalued equities, boasting a 26.89% 1-year return and a competitive 0.69% expense ratio.
DODWX: Dodge & Cox Global Stock-I | Global Value Investment
DODWX offers global equity exposure with a 0.62% expense ratio and strong 1-year return of 21.41%, focusing on value stocks for long-term growth.
BABDX: BlackRock Global Dividend-InvA | High Global Dividend Yields
BABDX offers high global dividend yields with a focus on large-cap equities, outperforming its benchmark with a 22.44% 1-year return.
MDISX: Franklin Mutual Global Discovery-Z | Global Value Investment
MDISX offers global value equity exposure with a 0.96% expense ratio and strong 1-year return of 17.36%, outperforming its benchmark.
PRAFX: TRPrice Real Assets-Inv | Real Asset Growth Fund
PRAFX offers unique exposure to real assets with a focus on global value, featuring a 0.95% expense ratio and 1.43% yield.
Futher Reading
https://finance.yahoo.com/quote/PRAFX/”>Yahoo: TRPrice Real Assets-Inv
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