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Primecap
PRIMECAP Management Company (Primecap) is an American investment management firm based in Pasadena, California. The firm is known for managing US-focused equity portfolios for The Vanguard Group (Vanguard). In 2004, it launched its own mutual funds, the Odyssey Funds. In addition, it also handles separately managed accounts for institutional investors.
Despite its strong investment performance and large number of assets under management (AUM), the firm keeps a low profile.
Primecap was founded On September 15, 1983, by Howard Schow, Mitchell Milias and Theo Kolokotrones. The three of them previously worked at the Capital Group Companies where Schow was chairman of its investment committee as well as Capital Research and Management Company. A dispute between Schow and Jon B. Lovelace Jr. (the company's chief and son of founder Jonathan Bell Lovelace) eventually led to Schow leaving to found Primecap with Milias and Kolokotrones where they opened an office just 20 minutes away from the headquarters of the Capital Group.
In 1984, John C. Bogle, the founder and chief of Vanguard met with management team of Primecap to discuss a deal to set up a fund together. According to Bogle, Primecap was selected as it met the "four Ps": People, philosophy, Portfolio and Performance. It was reported that initially Primecap rejected Bogle's offer. On November 1, 1984, Primecap and Vanguard launched the Vanguard Primecap fund with $100,000 in seed money from Bogle himself. While the fund was owned by Vanguard, it would be managed by Primecap. In 2015 it was reported that a $10,000 investment in the Vanguard Primecap fund would be worth nearly $500,000 that year which would be almost double the return of the S&P 500 index. The annualized average return was 13.7%.
In a rare interview with Forbes in 1994, Schow said the firm does not go for 20% or 30% gains but rather for triples, quadruples, octuples which takes years to obtain.
In 1998, Primecap briefly put itself up for sale but the bids were too low and there were concerns that Vanguard would pull out its assets if Primecap was sold to a rival.
In 2004, Primecap launched its own mutual funds, the Odyssey Funds, which would be three different funds. They paid homage to Kolokotrones’ Greek ancestry and were referencing the Odyssey, the Greek epic poem featuring the legendary warrior Odysseus who was known for his cunningness and patience. This was in line with Primecap's strategy of being patient to obtain superior long-term results. There was some speculation there was a spat between Primecap and Vanguard and this was done to reduce dependency on Vanguard.
Regarding Primecap's performance, the Vanguard Primecap fund had a return of 621% in the 1990s compared to the S&P 500 index of 432%. In 2000 after the Dot-com bubble, the firm returned 18% while many other funds suffered significant losses. In 2004, the Vanguard Primecap fund had a return of 300% in the last 10 years compared to the S&P 500 index of 186%. During the 2008 financial crisis, Primecap funds held up far better than other growth funds. In 2014, all Primecap managed funds landed in the top 20% of their peer groups over the past five years. In 2016, it was reported that all six of the mutual funds managed by Primecap beat 86% of its peers over the past decade. Throughout its history, Primecap has closed its funds to new investors and resisted broadening its lineup.
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Primecap
PRIMECAP Management Company (Primecap) is an American investment management firm based in Pasadena, California. The firm is known for managing US-focused equity portfolios for The Vanguard Group (Vanguard). In 2004, it launched its own mutual funds, the Odyssey Funds. In addition, it also handles separately managed accounts for institutional investors.
Despite its strong investment performance and large number of assets under management (AUM), the firm keeps a low profile.
Primecap was founded On September 15, 1983, by Howard Schow, Mitchell Milias and Theo Kolokotrones. The three of them previously worked at the Capital Group Companies where Schow was chairman of its investment committee as well as Capital Research and Management Company. A dispute between Schow and Jon B. Lovelace Jr. (the company's chief and son of founder Jonathan Bell Lovelace) eventually led to Schow leaving to found Primecap with Milias and Kolokotrones where they opened an office just 20 minutes away from the headquarters of the Capital Group.
In 1984, John C. Bogle, the founder and chief of Vanguard met with management team of Primecap to discuss a deal to set up a fund together. According to Bogle, Primecap was selected as it met the "four Ps": People, philosophy, Portfolio and Performance. It was reported that initially Primecap rejected Bogle's offer. On November 1, 1984, Primecap and Vanguard launched the Vanguard Primecap fund with $100,000 in seed money from Bogle himself. While the fund was owned by Vanguard, it would be managed by Primecap. In 2015 it was reported that a $10,000 investment in the Vanguard Primecap fund would be worth nearly $500,000 that year which would be almost double the return of the S&P 500 index. The annualized average return was 13.7%.
In a rare interview with Forbes in 1994, Schow said the firm does not go for 20% or 30% gains but rather for triples, quadruples, octuples which takes years to obtain.
In 1998, Primecap briefly put itself up for sale but the bids were too low and there were concerns that Vanguard would pull out its assets if Primecap was sold to a rival.
In 2004, Primecap launched its own mutual funds, the Odyssey Funds, which would be three different funds. They paid homage to Kolokotrones’ Greek ancestry and were referencing the Odyssey, the Greek epic poem featuring the legendary warrior Odysseus who was known for his cunningness and patience. This was in line with Primecap's strategy of being patient to obtain superior long-term results. There was some speculation there was a spat between Primecap and Vanguard and this was done to reduce dependency on Vanguard.
Regarding Primecap's performance, the Vanguard Primecap fund had a return of 621% in the 1990s compared to the S&P 500 index of 432%. In 2000 after the Dot-com bubble, the firm returned 18% while many other funds suffered significant losses. In 2004, the Vanguard Primecap fund had a return of 300% in the last 10 years compared to the S&P 500 index of 186%. During the 2008 financial crisis, Primecap funds held up far better than other growth funds. In 2014, all Primecap managed funds landed in the top 20% of their peer groups over the past five years. In 2016, it was reported that all six of the mutual funds managed by Primecap beat 86% of its peers over the past decade. Throughout its history, Primecap has closed its funds to new investors and resisted broadening its lineup.