What do you think of the T. Rowe Price Blue Chip Growth Fund (TRBCX)?

Question

The only dedicated growth fund my 401(k) plan offers is TRBCX. It's a large-cap growth fund. Its expense ratio is 0.85% with no load. I've done some research on the fund, and even though it hasn't put up overly inspiring results the past 5 years, Morningstar still gave it a 4-star rating.

What are your opinions of TRBCX? Is it worth having as a core holding, worth a few percent of my contributions, or should I forego it completely and dedicate more to the plethera of ultra-low-expense index funds my plan offers?

Also, I easily have 30+ years until retirement if that makes any difference.

Answer 1

T. Rowe is a good shop. That's a good fund.

The uninspiring performance is because last year it faced dual headwinds of smaller cap stocks outperforming larger, and value stocks outperforming growth. For a large cap growth manager, it was a difficult market environment.

We have seen an extended time where the market has had an extraordinary appetite for risk. After this week's volatility, I think we might see some of that risk finally get priced into the equity markets and money may begin to flow to some of these quality, fundamentally-driven equities. If that happens, the large growth guys will look pretty good, and as TRBCX is in that camp, it could be a pretty good year fo them.

And if you have 30 years to retirement, you should have exposure to large cap growth anyway.