For the first time in at least 15 years, new investors can buy shares in two of Vanguard’s best-regarded actively managed mutual funds. In June, Vanguard fully reopened Vanguard Primecap (VPMCX) and Vanguard Primecap Core (VPCCX). Both funds are run by Primecap Management, described by Jeff DeMaso, editor of The Independent Vanguard Adviser newsletter, as, “arguably, one of the best active managers out there.”
Vanguard locked new investors out of Primecap in 2004 and out of Core in 2009, limiting existing investors to adding no more than $25,000 a year. The funds’ strong performances had attracted more money than the managers felt they could put to work in the long-term, value-priced growth opportunities they seek.
But in recent years, performance — especially at Primecap — has been lumpy. Investors have withdrawn more than $38 billion from Primecap since 2019 (leaving it with assets of $76.1 billion), and nearly $5 billion from Core (now with $13.2 billion). And, says Ryan Barksdale, who oversees Vanguard’s active stock funds, “the market has evolved,” creating new investment opportunities for additional cash. Both funds require a minimum initial investment of $3,000 for investor-class shares.
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The two funds hold many of the same stocks. Both are tilted toward health care and industrial firms, and have benefited from a boom in Eli Lilly, which makes up more than 10% of each portfolio. Lilly has returned 94% over the past 12 months.
Although it can invest in stocks of any size, Primecap is currently weighted slightly more toward large companies. Charging an expense ratio of 0.38%, it has returned 27.5% over the past 12 months, beating the 24.6% return of the S&P 500. The fund gained 15.5% annualized over the past 15 years, compared with 14.8% for the S&P 500. Core, with expenses of 0.46%, has returned 25.4% over the past year; 14.7% over the past 15 years.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.