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Is Vanguard PRIMECAP Core Investor (VPCCX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Large Cap Growth fund? Vanguard PRIMECAP Core Investor (VPCCX) is a possible starting point. VPCCX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VPCCX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.

History of Fund/Manager

Vanguard Group is responsible for VPCCX, and the company is based out of Malvern, PA. The Vanguard PRIMECAP Core Investor made its debut in December of 2004 and VPCCX has managed to accumulate roughly $10.66 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.

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Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VPCCX has a 5-year annualized total return of 10.81% and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 12.96%, which places it in the bottom third during this time-frame.

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. VPCCX's standard deviation over the past three years is 14.2% compared to the category average of 13.85%. The fund's standard deviation over the past 5 years is 13.42% compared to the category average of 13.5%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, VPCCX lost 43.02% and outperformed comparable funds by 6%. This might suggest that the fund is a better choice than its peers during a bear market.

Nevertheless, with a 5-year beta of 1.08, the fund is likely to be more 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. VPCCX's 5-year performance has produced a negative alpha of -0.65, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is mostly on equities that are traded in the United States.

The mutual fund currently has 80.68% of its holdings in stocks, which have an average market capitalization of $141.38 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Industrial Cyclical

  3. Health

  4. Finance

Turnover is 16%, which means this fund makes fewer trades than comparable funds.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VPCCX is a no load fund. It has an expense ratio of 0.46% compared to the category average of 1.08%. Looking at the fund from a cost perspective, VPCCX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.

Bottom Line

Overall, Vanguard PRIMECAP Core Investor ( VPCCX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Large Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


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