Is T. Rowe Price European Stock (PRESX) a good mutual fund choice right now?

If you are considering investing in the category of equity mutual funds, I would recommend avoiding T. Rowe Price European Stock (PRESX). This fund has a Zacks rating of 5 (Strong Sell), based on nine predictive factors such as size, cost, and historical performance.

Personally, I am concerned about the history of this fund. Although T. Rowe Price, based in Baltimore, launched PRESX in February 1990 and has accumulated approximately $936 million in assets, the numbers do not lie. Tobias Mueller, who has managed the fund since July 2020, has not achieved impressive results.

The performance is mediocre at best. PRESX has a total annualized return over 5 years of only 4.37%, placing it in the middle third among its competitors. Worse still, its 3-year return is 7.25%, putting it in the bottom third. Do you really want to put your money in a fund with such uninspiring results?

Regarding volatility, it is also not reassuring. The standard deviation of PRESX over the last three years is 18.24%, higher than the category average of 17.76%. Over the last 5 years, its standard deviation of 16.07% also exceeds the category average of 15.62%. This means greater volatility than its competitors.

I find the negative alpha of -6.56 over 5 years particularly concerning, which indicates that the managers are struggling to select securities that generate returns above the benchmark. This is a clear sign of weakness in management.

The only positive aspect I can highlight is its costs. With an expense ratio of 0.95% compared to the category average of 1.30%, PRESX is cheaper than its peers. The minimum initial investment is $2,500 and each subsequent investment must be at least $100.

In summary, T. Rowe Price European Stock has a low Zacks rating, mediocre performance, higher downside risk, and although its fees are lower, this does not compensate for its shortcomings. In my opinion, there are much better options in the current market for smart investors.