In the Vanguard

01/07/2005 12:00 am EST


Sheldon Jacobs

Author, Investing Without Wall Street, Five Essentials for Financial Freedom

We conclude our Special report with several "double plays" stocks or funds selected as a Top Pick by two of our leading advisors. We begin with Vanguard PRIMECAP Core, chosen by two fund experts, Dan Wiener and Sheldon Jacobs.

"For our top 2005 pick, let’s go with Vanguard PRIMECAP Core (VPCCX ). This is the newest stock fund offering from the folks that brought us the top-performing Capital Opportunity and PRIMECAP funds, both of which are now closed to new investors. This fund has been opened to continue PRIMECAP’s time-tested growth-at-a-reasonable-price, or GARP, strategy in an all-cap format. Run by a team of five managers, each selects his own basket of stocks independently of the other four. Typically this yields a portfolio that is fairly concentrated in its top selections. Given that this new fund has no track record and Vanguard is loathe to market individual funds, I expect cash flows will be slightly muted here, giving the managers time to invest in only their very best ideas. Once the word gets out, however, watch for big inflows to force a potential closing until investor interest 'cools off.' If you’ve got the $10,000 minimum the fund requires, get in now before the velvet ropes go up."

Adds Sheldon Jacobs and editor Mark Salzinger of The No-Load Fund Investor, "Big profits can be made by buying in early in new stock funds from successful, experienced managers. We believe such will be the case with Vanguard PRIMECAP Core Fund, which launched December 9, 2004. The fund’s managers, each of whom runs his portion of the fund independently (allowing for the inclusion of the best ideas from each), have achieved outstanding long-term performances from the Vanguard PRIMECAP and Capital Opportunity funds, both of which are closed to new investors. Like its siblings, the new fund also benefits from low expenses (no sales fee; expected expense ratio of 0.75%). The minimum initial investment for the new fund is $10,000."

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