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T. Rowe Price Mid-Cap Growth Fares Swimmingly

Management hits the tech bargain bin.

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It's just barely in the red for the year, but for shareholders of T. Rowe Price Mid-Cap Growth Fund (RPMGX), that's nothing to complain about. That's because most mid-growth funds have incurred steep losses thus far in 2001, and this fund, which has posted just a slight drop through May 7, 2001, lands just outside the mid-growth category's top decile for the year to date. Not too surprisingly, given its typically conservative positioning relative to other mid-growth funds, a major reason for the fund's outperformance has been its relatively low tech weighting (though being light in that area has held it back a bit in the last month or so). Manager Brian Berghuis still likes the growth prospects in the managed health-care sector, and sizable stakes in firms like AmeriSource (AAS) have performed nicely. 

Though tech is still not the massive chunk of this portfolio as it is in other mid-growth funds, Berghuis has been snapping up shares of tech companies that he thinks were slammed unnecessarily hard during the Nasdaq's pullback. For example, he added shares of some battered software stocks because he believes that the software industry is somewhat insulated from economic cycles (Electronic Arts (ERTS) and VeriSign (VRSN) are two he likes). However, he's less sanguine about the prospects for semiconductors like KLA-Tencor (KLA), which he thinks have had a good run and would need a very strong economic recovery to flourish again soon. Thus, he is more actively cutting semiconductor exposure.

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Catherine Hickey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.