There are plenty of choices in the Large Cap Growth category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard PRIMECAP Fund Investor (VPMCX). VPMCX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
VPMCX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.
Vanguard Group is based in Malvern, PA, and is the manager of VPMCX. Since Vanguard PRIMECAP Fund Investor made its debut in November of 1984, VPMCX has garnered more than $5.02 billion in assets. The fund’s current manager is a team of investment professionals.
Investors naturally seek funds with strong performance. VPMCX has a 5-year annualized total return of 13.39% and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 10.44%, which places it in the middle third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. VPMCX’s standard deviation over the past three years is 16.77% compared to the category average of 15.73%. The fund’s standard deviation over the past 5 years is 17.43% compared to the category average of 16.82%. This makes the fund more volatile than its peers over the past half-decade.
With a 5-year beta of 0.92, the fund is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. VPMCX’s 5-year performance has produced a negative alpha of -0.6, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VPMCX is a no load fund. It has an expense ratio of 0.38% compared to the category average of 0.84%. VPMCX is actually cheaper than its peers when you consider factors like cost.
