Home / TECHNOLOGY / A Good Way To Invest In Media And Technology – T. Rowe Price Media And Telecommunications Fund No Load (MUTF:PRMTX)

A Good Way To Invest In Media And Technology – T. Rowe Price Media And Telecommunications Fund No Load (MUTF:PRMTX)

Overall Objective and Strategy: Growth and Income

The T. Rowe Price Media and Telecommunications Fund No Load (MUTF:PRMTX) seeks to provide long-term capital growth by investing in common stocks of media, technology and telecommunications companies.

The fund normally invests at least 80% of net assets in common stock of global companies engaged in media and telecommunications, including publishing, movies, cable TV, telephone, cellular services and technology and equipment. It generally invests in companies in the large- to mid-cap range. It seeks to identify companies with good appreciation prospects. The fund manager may use both the growth and value approaches toward stock selection.

Fund Expenses

The expense ratio for PRMTX is 0.79%, which is below average for an actively managed sector fund. Morningstar has computed the average expense ratio of similar funds to be 1.38%, so you pick up about 60 basis points of relative outperformance through lower expenses alone.

Minimum Investment

PRMTX has a minimum initial investment of $2,500 ($1,000 for IRA accounts).

Past Performance

The fund is classified by Morningstar in the “Specialty Communications” or SC category. Compared with other mutual funds in this category, PRMTX has performed extremely well, largely because of its lower expenses and outstanding stock selection. For all time periods over the last ten years, it has achieved “best of breed” performance.

Here are the long-term annual performance figures computed by Morningstar. The fund has consistently put up great performance numbers on both an absolute and a relative basis.

PRMTX

Category (SC)

+/- Category

Percentile Rank in Category

YTD

+26.71%

+7.74%

+18.97%

4

1-Year

+26.52%

+9.64%

+16.87%

4

3-Year

+14.51%

+6.44%

+8.07%

1

5-Year

+17.90%

+9.37%

+8.53%

1

10-Year

+12.72%

+3.22%

+9.51%

1

15-Year

+18.08%

+9.09%

+8.99%

8

Source: Morningstar

Mutual Fund Ratings

Lipper Ranking: Funds are ranked based on total return within a universe of funds with similar investment objectives. The Lipper peer group is Telecommunication.

1-Year #2 out of 34 funds

5-Year #1 out of 32 funds

10-Year #1 out of 23 funds

Morningstar Rating: Overall 5 Stars (out of 33 funds)

3-Year 5 Stars (out of 33 funds)

5-Year 5 Stars (out of 32 funds)

10-Year 5 Stars (out of 23 funds)

Fund Management

The fund has been managed by Paul D. Greene since May 2013. Greene has a BS in Mechanical Engineering, with a minor in Economics, magna cum laude from Rose-Hulman Institute of Technology, and an MBA from Stanford Graduate School of Business. He began his career at T. Rowe Price in 2006.

Volatility and Other Measures as of 7/31/2017

Beta: 1.07

R-squared: 0.70

Sharpe Ratio: 1.16

Standard Deviation: 12.99

P/E Ratio: 40.3

Earnings Growth Rate: 19.1

Turnover Rate: 5.5

PRMTX is a concentrated fund and is not an index hugger. It has $4.5 billion in assets invested in 71 securities. These are the top ten holdings as of July 31, 2017:

Top 10 Holdings

Alibaba (NYSE:BABA)

Alphabet (NASDAQ:GOOG)

Amazon (NASDAQ:AMZN)

American Tower (NYSE:AMT)

Comcast , Class A (NASDAQ:CMCSA)

Crown Castle International (NYSE:CCI)

Facebook (NASDAQ:FB)

Priceline (NASDAQ:PCLN)

T-Mobile US (NASDAQ:TMUS)

Tencent Holdings (OTCPK:TCEHY)

Availability

PRMTX may not be available for purchase from all brokerage firms. On Fidelity, it says the fund is closed to new investors. But a new retail investor can definitely purchase the fund at T. Rowe Price directly. It is also currently available without a transaction fee from Wells Fargo and Merrill Edge.

Summary

PRMTX has an outstanding record and is a great way to add internet and communications exposure to a portfolio. Since 2007, it has had only one losing year in 2008 and was breakeven in 2011. Even in 2008, it held up a little better than the competition losing 46.46% versus a 49.47% loss for its category peers.

The fund generally pays out year-end distributions in mid-December. Last year, it paid out $1.66 a share on 12/15/2016 ($1.63 long-term capital gain, $0.01 short-term capital gain and $0.02 dividend income), and it will likely pay out a large distribution again this year. If you purchase PRMTX in an IRA account, there is no problem, but if you buy it in a taxable account, it may pay to wait until after the distributions are paid out for 2017.

Disclosure: I am/we are long PRMTX.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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