Author Topic: Vanguard Primecap Fund  (Read 2227 times)

Mustache ride

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Vanguard Primecap Fund
« on: July 28, 2017, 08:14:35 PM »
Hi all, I'm hoping someone can show me where to find a graph for this fund that I can compare other funds to it. Also willing to hear from others about their thoughts on the subject. I'm working on helping my parents get into a more diversified portfolio (VG Target 2025 from Primecap), because they are getting closer to retirement. I can only find a chart for the Primecap (morningstar) that dates back 10 years, even though it started in 1984. When comparing the funds over the last 10 years I was expecting to see the Primecap perform slightly better than the 2025 fund but pretty close to VTSAX or VFIAX. To my surprise, it has outperformed all of these most of those years, and when I expected it to underperform (in the down years, 08-09) it stayed almost the same. This went against what I thought would be better gains during the good years, but worse losses in the down years. With that said, I'm a little worried about only looking at 1 data point of a down year and comparing, and it isn't a big enough sample size. If all you were looking at was the chart I could find, it looks like Primecap is the best of both worlds which doesn't make sense to me. Can any provide me with a bigger sample size for downturns to see how it compares?

Another Reader

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Re: Vanguard Primecap Fund
« Reply #1 on: July 28, 2017, 09:53:57 PM »
If you look at the holdings of the fund, it is more concentrated in health care and IT than the S&P.  Both sectors have done very well during Primecap's existence.  Not sure how much the holdings have shifted over the last ten years, but it is less concentrated in financial stocks than the S&P 500 currently.  Financial stocks took big hits in the 2008 crash. 

The fund has been closed to new investors for a number of years because of its' success.  I know many older people that have done very well with that fund by holding it for years.  I would not advise selling it in most circumstances.

ETA:  The comparison to the closest benchmark, the S&P 500, from Vanguard is here.

https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0559
« Last Edit: July 28, 2017, 09:57:49 PM by Another Reader »

Clean Shaven

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Re: Vanguard Primecap Fund
« Reply #2 on: July 28, 2017, 10:09:17 PM »
I've been reading up on Primecap, because it is available to me in my work 401K. I'm tempted by its long term performance and it's resilience in the 2008 crash. I'm skeptical because it is actively managed, and that's something I've avoided for the entirety of my investing life.

If you could buy Primecap, would you? Why or why not?

Edit for clarification:  the fund I'm interested in is the closed Primecap fund, which is VPMCX (investor) or VPMAX (admiral).  Also, in the hopes of not derailing this thread too far, I'm not interested in a discussion of whether this specific fund fits my IPS -- let's assume that is not a factor here.
« Last Edit: July 29, 2017, 09:45:20 AM by Clean Shaven »

Mustache ride

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Re: Vanguard Primecap Fund
« Reply #3 on: July 29, 2017, 05:41:40 AM »
If you look at the holdings of the fund, it is more concentrated in health care and IT than the S&P.  Both sectors have done very well during Primecap's existence.  Not sure how much the holdings have shifted over the last ten years, but it is less concentrated in financial stocks than the S&P 500 currently.  Financial stocks took big hits in the 2008 crash. 

The fund has been closed to new investors for a number of years because of its' success.  I know many older people that have done very well with that fund by holding it for years.  I would not advise selling it in most circumstances.

ETA:  The comparison to the closest benchmark, the S&P 500, from Vanguard is here.

https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0559

Thanks for the explanation, that makes sense as to why it performed better than expected. That makes it even more important to see how it performed more than 10 years though, so I can see how it faired in the late 90's/early 2000's tech crash. I'm not sure what I was reading though when initially looking at the fund, I thought it said it held the top 750 companies, which to me meant it fell somewhere in between VSTAX and VFIAX. After going back and looking at it I was indeed wrong. I might have been confused with another fund since I was looking at a few different ones. Anyways, I didn't realize it is not the Primecap Fund (VPMAX) that my parents are in, it is the Primecap Core Fund (VPCCX) which is apparently slightly different. It is still heavily weighted in the same sectors but it is a little different elsewhere, and the expense ratio goes from .33% to .46%.

Clean Shaven, I too have this option in my old 401k, and might actually think about leaving 100% VFIAX (VTSAX not offered) depending upon what the graph/numbers show.

Clean Shaven

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Re: Vanguard Primecap Fund
« Reply #4 on: July 29, 2017, 09:59:56 AM »
I've been reading up on Primecap, because it is available to me in my work 401K. I'm tempted by its long term performance and it's resilience in the 2008 crash. I'm skeptical because it is actively managed, and that's something I've avoided for the entirety of my investing life.

If you could buy Primecap, would you? Why or why not?

Edit for clarification:  the fund I'm interested in is the closed Primecap fund, which is VPMCX (investor) or VPMAX (admiral).  Also, in the hopes of not derailing this thread too far, I'm not interested in a discussion of whether this specific fund fits my IPS -- let's assume that is not a factor here.

And to partially answer my own question:  as a pro and/or con to Primecap -- it holds 136 stocks, and has a significantly heavier concentration in health care and tech vs the SP500. 

To complicate my own question:  so, if tech and/or health care crashes, does the fact of Primecap having active management tend to help in the event of a crash? 

Clean Shaven

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Re: Vanguard Primecap Fund
« Reply #5 on: July 29, 2017, 10:16:23 AM »
Continuing my research --

Here, on p. 9 of the linked PDF (a memo from Bogle), is a table comparing Primecap's #s to the SP500, from Primecap inception in 1984, up to June of 2015:

http://johncbogle.com/wordpress/wp-content/uploads/2015/12/PRIMECAP-30th-Anniversary.pdf