The T. Rowe Price Blue Chip Growth Fund ("TRBCX") was created in June 1993 and has $32.5 billion in assets under management (AUM) as of August, 2016. The fund's investment goal is to achieve long-term capital appreciation by investing in common stocks of blue-chip firms with higher growth rates compared to their industry averages. The fund invests in companies with a wide range of market capitalizations to take advantage of undervalued opportunities. It is managed by T. Rowe Price, which is a well-known wealth management company with over $763 billion in AUM as of Dec. 31, 2015. 

Investment Philosophy

TRBCX primarily relies on qualitative analysis for selecting its stocks. The fund focuses on companies with strong competitive advantages, high returns on invested capital, consistent growth in free cash flow and highly competent management teams. It also pays particular attention to companies' leverage and stays away from firms that have above-average debt ratios. The fund's manager limits his holdings in the realm of 140 stocks with a broad diversification and relatively low portfolio concentration. While the fund attempts to keep its sector diversification at reasonable levels, it can increase its exposure to a particular sector to over 25% to take advantage of positive secular trends.

Portfolio Composition

TRBCX invests mainly in domestic stocks with minor exposure of about 5% of the fund's assets to high-quality foreign stocks. As of Jan. 31, 2016, the fund's biggest exposures by sectors are information technology stocks at 30%, consumer discretionary equities at 25% and health care stocks at 24.90%. The fund's top 10 holdings account for 37.79% of its portfolio and include companies such as Inc. (NASDAQ: AMZN), Facebook (NASDAQ: FB), and Alphabet Class C (NASDAQ: GOOG).

Fund Management

TRBCX has been managed by Larry Puglia since 1993. Puglia is a vice president at T. Rowe Price Group and a portfolio manager in the US. equity division. Under Puglia's management, the fund has flourished and earned high marks from fund-rating agencies. Puglia's work is supported by numerous equity analysts working in fundamental stock research teams. Puglia provides the fund with a consistent management approach despite some turnover in T. Rowe Price's research department. Besides the T. Rowe Price Blue Chip Growth Fund, Puglia manages other mutual funds that specialize in investing in equity securities. For its consistent risk-adjusted returns over the years, TRBCX has received the highest four-star overall rating and silver analyst rating from Morningstar.

Investment Terms

The T. Rowe Price Blue Chip Growth Fund has consistently decreased its net expense ratio as its size has grown. The fund has a net expense ratio of 0.71%, which is significantly below the expense ratio of 1.19% in the large growth category. TRBCX requires its investors to make an initial investment of $2,500.

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