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Investing Specialists

Have Your Primecap-Run Vanguard Fund and Eat It Too

New investors can't buy Vanguard's Primecap-run funds anymore, but they can still buy Primecap.

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Earlier this year, Vanguard closed  Vanguard Primecap Core (VPCCX) to new investors, shutting what had been the only avenue left to invest with the redoubtable subadvisors from Primecap Management Company directly through Vanguard. So, where's a contrarian growth investor to go now? What other open actively managed funds at Vanguard or elsewhere follow a similar strategy of trying to buy and hold fundamentally solid growth companies when they are out of favor or attractively priced?

You're No Primecap
At Vanguard, the choices are somewhat limited. The family recently transformed  Vanguard Growth Equity (VGEQX) from a fast-trading, momentum-chasing aggressive growth fund into a lower-turnover offering that leans more on classic core growth stocks. The new subadvisors--Jennison Associates and Baillie Gifford--are experienced and successful in their own rights, but it's clear this fund is not what it used to be. Ultimately that may not be a bad thing. The more judicious approaches of Kathleen McCarragher of Jennison and Mick Brewis of Baillie Gifford will make this fund easier to own than it was when Turner was at the helm. It's not yet clear, though, if the combination will be as fruitful as Primecap. As I've written before, it's also disconcerting how Vanguard dumped former U.S. Growth manager Turner Investment Partners just before the market began to favor its aggressive style.

There's  Vanguard US Growth (VWUSX), whose subadvisors, AllianceBernstein and William Blair, both purport to invest in very large firms with competitive advantages and unappreciated growth opportunities. It has staged a comeback recently, but I'd still like to see a longer track record of success at this fund, which has seen its share of ups and downs and manager changes over the past decade, before giving it an unqualified endorsement.

Dan Culloton has a position in the following securities mentioned above: SLADX, POAGX. Find out about Morningstar’s editorial policies.