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Primecap Comanager Howard Schow Dies at 84

Veteran's passing is a loss, but a smooth transition is expected.

David Kathman, CFA, 04/10/2012

Vanguard has announced that Howard Schow, comanager of Vanguard Primecap VPMCX and the other five mutual funds managed by the Primecap team, died on Sunday, April 8, at the age of 84.

Schow co-founded Primecap Management in 1983 with Mitch Milias and Theo Kolokotrones after many years at Capital Research and Management Company, the advisor to the American Funds, where he served as chairman and headed up the investment committee. He had been one of the comanagers of Vanguard Primecap since its launch in 1984, and of Vanguard Capital Opportunity VHCOX since the Primecap team took it over in 1998. In late 2004, Vanguard launched Vanguard Primecap Core VPCCX, and Primecap launched its own lineup of funds--Primecap Odyssey Growth POGRX, Primecap Odyssey Stock POSKX, and Primecap Odyssey Aggressive Growth POAGX--with Schow as comanager of all of them.

While Schow's death is certainly a significant loss for Primecap and for Vanguard, the firm's deep bench means that there should be few disruptions. All the Primecap funds are managed using a team approach, with each manager independently running a sleeve of money. The assets that Schow managed will be distributed among the remaining members of the team who are highly experienced investors with excellent track records. Firm co-founder Kolokotrones remains as a comanager of all six funds, along with Joel Fried, who joined the firm in 1986, and Al Mordecai, who joined in 1999. Co-founder Milias remains as comanager of all except Vanguard Capital Opportunity and Primecap Odyssey Aggressive Growth. Mohsin Ansari was named comanager of the three Vanguard funds in October 2010, and he's now expected to be named comanager of the three Primecap Odyssey funds as well. They're supported by a team of experienced analysts who typically get to manage sleeves of money once they've proved themselves.

In all these funds, the managers employed a contrarian growth strategy with extremely low turnover. Their long-term perspective means that the funds are sometimes out of sync with the market in the short term, but over the long term the results have been outstanding. Vanguard Primecap has been one of the best-performing mutual funds since its inception 28 years ago, with 10- and 15-year returns that rank in the top decile of the large-growth category, and the other funds all have similarly strong records over shorter periods. All six funds have earned the Morningstar Analyst Rating of Gold, and those ratings aren't expected to change with Schow's passing.

David Kathman, CFA, is a senior fund analyst with Morningstar.

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