Vanguard Total US Stock Index (VTSAX) vs. Vanguard PRIMECAP (VPMAX)?

[aperture]

My employer retirement accounts are managed through Vanguard and offers access to PRIMECAP managed fund VPMAX as well as an institutional version of VTSAX.  PRIMECAP has out-performed the S&P 500 over its lifetime and over the last 5 years.  Can anyone speak to the differences between Vanguard's Total US stock Index and their managed PRIMECAP fund?  Is this the fund that disproves the tenet of index investors that managed funds do not beat the market over time? Should I have my equities in PRIMECAP?

Thanks, Ap.

[DaveSch]

Hi Ap.
I've held Primecap for just under 20 years so far in my IRA. It is one of my larger fund holdings, but overall, not a huge amount.

Primecap has it's largest holdings in healthcare, technology and industrials. In some sectors, they have no or very few holdings. I've noticed that Primecap will have some really great periods and in other times laggy times.

Your wish to hold Primecap vs TSM would be your belief in their sectors and their management skills. The managers are very good at what they do. The portfolio alone is a bit concentrated.

How about a 75% TSM and 25% VPMAX? Or 50-50? As much as I like Primecap, I wouldn't load the boat just with that fund.

Dave

[aperture]

Thanks DaveSch.  I am still learning, but I agree it is not a great idea to be too concentrated in a couple sectors. (I already worry about being too concentrated in Apple, MSoft and Google with VTSAX).  I think I will probably stick with my current portfolio of Total US Stocks Index and Total Bond Index.  Thanks for your thoughts, Ap.