Vanguard Reopens Two Actively Managed Mutual Funds to New Investors

Vanguard has decided to reopen two actively managed stock mutual funds. 

On Tuesday the firm announced that it would reopen its Primecap (VPMCX) and Primecap Core (VPCCX), which have been closed off to new investors since 2004 and 2009, respectively. A third Primecap fund, Capital Opportunity (VHCAX), was also closed in 2004 and remains closed.  

The two large-cap growth funds have reopened without restriction to all investors and will be available for all new accounts. Primecap had assets of $76.1 billion at the end of May, while Primecap Core had assets of $13.2 billion.

Vanguard routinely closes funds to new investors when it is in the best interest of shareholders, according to a spokesperson for the firm. One thing that the firm evaluates when doing so is whether the size of a fund could impact a manager’s ability to effectively generate alpha for investors. 

“After careful consideration of the funds’ current investment capacity, Vanguard has determined that the funds have sufficient capacity to reopen to new accounts and additional purchase without limit,” the spokesperson said.

Both funds have strong returns, outperforming their benchmarks. Primecap has returned 15788.63% since its inception in 1984, or 13.66% annualized against an 11.6% benchmark and has posted annualized one-, three-, five- and 10-year returns of 29.11%, 27.80%, 108.14%, and 249.48%, respectively.

Primecap Core, launched in 2004, has returned an annualized 11.2% since inception, beating its 10.26% benchmark and over the past one, three, five and 10 years has returned an annualized 28.98%, 8.26%, 15.04%, and 12.42% respectively, against benchmarks of 28.17%, 8.67%, 15.59% and 12.56%, respectively. 

Over the last two decades, investors have significantly shifted from actively managed strategies to passive ones. According to Morningstar data, passively managed funds took in $73 billion, while passively managed ones saw outflows of $15 billion in May 2024. 

Both Primecap funds are actively managed mutual funds with a long-term perspective, primarily made up of U.S. large-cap equities. Primecap focuses on growth-oriented stocks, while Primecap Core’s portfolio consists of stocks with value and growth characteristics. Year to date, Primecap Fund has returned 14.48%, and Primecap Core has returned 13.11%.

Since the closure of the funds, existing investors have been limited to annual purchases of $25,000. Among those who could still buy the actively managed mutual funds included Vanguard flagship services clients, those with more than $1 million invested in the firm’s mutual funds. 

Both funds are managed by Primecap Management Co., an American investment management firm, which has actively managed equity portfolios for Vanguard since 1984.