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The Primecap Edge

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Dodge & Cox has been around forever--the San Francisco firm dates to 1930. But the fund family didn't really garner notice from the average investor until earlier in this decade, when a rally in value stocks and the dot-com bust revealed that outstanding fundamental value investors like Dodge & Cox deserved investor attention. The same may be said today of Primecap, which is one of the best fundamental growth managers.

In the Shadows
Few growth investors have gotten much attention this decade because the 2000-02 bear market took a big bite out of their returns. The five- and 10-year returns of the typical growth-stock manager aren't exciting.

Primecap isn't obscure. It runs billions of dollars in  Vanguard Primecap (VPMCX), and its cofounder, Howard Schow, has a track record of nearly 25 years at the company. But the Primecap team isn't getting one tenth the attention that  American Funds Growth Fund of America (AGTHX) receives. The two oldest Vanguard funds that Primecap runs, with long and glorious track records, are closed to new investors, and Primecap's four newer funds have had fewer than four years to show what they can do. Vanguard Primecap's 10-year return of an annualized 10.8% to Sept. 5 blows away the return of the typical large-company growth fund.

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Russel Kinnel has a position in the following securities mentioned above: VPCCX, VHCOX, POAGX. Find out about Morningstar’s editorial policies.