Yahoo Finance 2 PRIMECAP Funds to Look Into as Vanguard Reopens Them
The Vanguard Group recently decided to reopen two of its most well-known funds sub-advised by the PRIMECAP Management Company. Vanguard PRIMECAP Core Fund Investor Shares VPCCX and Vanguard PRIMECAP Fund VPMCX have remained closed to new investors for the better part of two decades. Existing investors have an annual cap of $25,000.
In a statement announcing the reopening of the funds, Vanguard said that “it evaluates its active fund lineup on an ongoing basis to monitor investment capacity and to ensure that cash flows into a fund do not affect its ability to meet its investment objectives, among other factors. After careful consideration, Vanguard has determined that the PRIMECAP and PRIMECAP Core Funds have sufficient investment capacity to reopen.”
Actively managed funds have also witnessed over a decade of focus shift to passively managed funds. In fact, by the end of 2023, assets invested in U.S. passive funds reached $13.3 trillion, quietly overtaking the $13.2 trillion invested in active funds. VPMCX and VPCCX, incepted in 1984 and 2004, respectively, are actively managed by Theo A. Kolokotrones, Joel P. Fried, Alfred W. Mordecai, M. Mohsin Ansari and James M. Marchetti. These primarily comprise large and mid-cap growth-oriented stocks and have a long-term perspective.
While being actively managed, these funds have shown great return performance over the years. Per S&P 500’s report, over the last two decades, more than 90% of actively managed equity funds in every sector underperformed their benchmark. VPMCX and VPCCX fall in the remaining 10% bucket. Since inception, VPMCX has returned 13.69% compared with benchmark’s rise of 11.69%. VPCCX has returned 11.32% compared with the benchmark’s growth of 10.33%. VPMCX and VPCCX returned 10.5% and 10.8% as of May 31, 2024, since the start of the year.
Investing in these funds may provide growth potential in a market that is expected to do well in the coming months. Investors might consider such funds that have bucked the trend even when their broader bucket has lagged the market. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
These mutual funds also satisfy the basic criteria that we set for suggesting funds. They boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000, as well as carry a low expense ratio.
VPCCX advisors invest in stocks that they believe have reasonable valuations and attractive growth prospects compared to their peers. VPCCX can invest in stocks across all sectors and market caps.
Joel P. Fried has been one of the lead managers of VPCCX since December 2004. The three top holdings for VPCCX are Eli Lilly (9%), Intel (3.3%) and Amgen (3.2%).
VPCCX’s 3-year and 5-year annualized returns are 8.3% and 15.1%, respectively, and its net expense ratio is 0.46%. VPCCX has a Zacks Mutual Fund Rank #2. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VPMCX advisors invest in stocks that they believe have above-average growth potential that is not being reflected currently. VPMCX usually invests in large and mid-cap stocks.
Joel P. Fried has been one of the lead managers of VPMCX since December 1988. The three top holdings for VPMCX are Eli Lilly (10.6%), Adobe (3.7%) and Amgen (3.7%).
VPMCX’s 3-year and 5-year annualized returns are 8.5% and 15.8%, respectively, and its net expense ratio is 0.38%. VPMCX has a Zacks Mutual Fund Rank #2.
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