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Finominal.com's Review of Vanguard's Primecap Fund [VPMCX]
- Focuses on U.S. large-cap growth stocks - Impressive long-term track record, but has not outperformed since 2006 - Unfavorable style characteristics compared to its peers
Finominal (2017- ) is a UK-based fintech committed to independent and free financial information (don't they all start that way?). https://finominal.com/AboutUs?country=US
I found the site about a week ago. Seemed reasonably good. Was planning to poke around a bit more before mentioning it.
Regarding VPM[AC]X - Finormal says "The suggested benchmark for VPMAX is the Russell 3000." That's reasonable since Primecap is more of an all cap fund. Its median market cap (per M*) is $188B, while R3K's is around $190B.
Here's Finominal's comparison of VPMAX and VRTTX (institutional R3K index fund) since the latter's inception in 2010. (Finominal says it is comparing the past 14.1 years which is quite a trick since VRTTX's inception was Nov 1, 2010 per prospectus.) https://finominal.com/securities-analyzer-analyze/US/VPMAX/VRTTX
VPMAX looks a little better - 1.5% better annualized return, similar (slightly worse) std dev (17.91 vs. 17.43), slightly smaller max drawdown, slightly better Sharpe ratio (0.83 vs. 0.77).
And it has done that with a healthy dose of foreign equity. 13% per Finominal (11% + 2% EM).
In general I like the primecap funds; we've owned POAGX - Primecap Odyssey Aggressive Growth since 7/2013. It has underperformed for the last few years, but we're continuing to hold it. (By 'underperform' I mean it has still made money, just not as much as if we had instead invested in a broad-based market index fund, such as VTSAX or VRTTX.) I have to disagree with the statement that VPMCX has underperformed since 2006. According to my analysis it has underperformed since 6/2018, but it outperformed prior to that.
as someone 'stuck' in primecap with a low cost basis, am always interested in a sensible analysis outside of morningstar.
one good thing i noticed, finomial's 'overlap' is dollar weighted, as it should be. for a largecap fund with massive assets,~80% active share seems ok.
am still waiting if anyone (including howard marks) can ever come away with a better way to define lower risk over long running periods, and that's not to be found here either. so until that happens, i prefer primecap's glacial shift away from megacap growth to largecap blend. primecap core even better. but this shift may mean the real risk may be losing primecap's talent into holding on long after overvaluation seems reached.
these sort of sites don't go into much narrative such as how primecap culture and process is structured to avoid keyman risk. these details are why i pay active fees.
"Our Alpha Analyzer tool suggests the Russell 3000 Index as the most appropriate benchmark, but we select the S&P Growth Index given the focus on large-cap growth stocks and similar tracking error and correlation. We observe that VPMCX generated significant outperformance between 2001 and 2006, but none thereafter."
M* placed VPMCX in the Large Growth category from 2014 through 2020. From 2021 through YTD the fund resided in the Large Blend category. Prior to 2014, I believe VPMCX was often classified as Large Growth by M*.
It's not unusual for this active fund to experience bouts of underperformance. The fund's prospectus includes the S&P 500 Index for comparison. VPMCX calendar year returns for 2019 - 2021 lagged VFIAX & IVW returns. The fund handily outperformed VFIAX from 01/03/2007 to 08/22/2024 while its overall performance was similar to IVW during this timeframe. Portfolio Backtester
Comments
https://finominal.com/AboutUs?country=US
Regarding VPM[AC]X - Finormal says "The suggested benchmark for VPMAX is the Russell 3000." That's reasonable since Primecap is more of an all cap fund. Its median market cap (per M*) is $188B, while R3K's is around $190B.
Here's Finominal's comparison of VPMAX and VRTTX (institutional R3K index fund) since the latter's inception in 2010. (Finominal says it is comparing the past 14.1 years which is quite a trick since VRTTX's inception was Nov 1, 2010 per prospectus.)
https://finominal.com/securities-analyzer-analyze/US/VPMAX/VRTTX
VPMAX looks a little better - 1.5% better annualized return, similar (slightly worse) std dev (17.91 vs. 17.43), slightly smaller max drawdown, slightly better Sharpe ratio (0.83 vs. 0.77).
And it has done that with a healthy dose of foreign equity. 13% per Finominal (11% + 2% EM).
I have to disagree with the statement that VPMCX has underperformed since 2006. According to my analysis it has underperformed since 6/2018, but it outperformed prior to that.
one good thing i noticed, finomial's 'overlap' is dollar weighted, as it should be. for a largecap fund with massive assets,~80% active share seems ok.
am still waiting if anyone (including howard marks) can ever come away with a better way to define lower risk over long running periods, and that's not to be found here either. so until that happens, i prefer primecap's glacial shift away from megacap growth to largecap blend. primecap core even better.
but this shift may mean the real risk may be losing primecap's talent into holding on long after overvaluation seems reached.
these sort of sites don't go into much narrative such as how primecap culture and process is structured to avoid keyman risk. these details are why i pay active fees.
M* placed VPMCX in the Large Growth category from 2014 through 2020.
From 2021 through YTD the fund resided in the Large Blend category.
Prior to 2014, I believe VPMCX was often classified as Large Growth by M*.
It's not unusual for this active fund to experience bouts of underperformance.
The fund's prospectus includes the S&P 500 Index for comparison.
VPMCX calendar year returns for 2019 - 2021 lagged VFIAX & IVW returns.
The fund handily outperformed VFIAX from 01/03/2007 to 08/22/2024
while its overall performance was similar to IVW during this timeframe.
Portfolio Backtester