Vanguard Clamps Down on PRIMECAP Asset Growth

The Vanguard Group has shuttered its PRIMECAP Core Fund to advisers and institutional clients such as defined benefit plans, endowments, and foundations.

The  investment management company said in a news release, however, that the $3.8-billion fund (VPCCX) remains opens without purchase limits to defined contribution plan participants.

The Core Fund will not accept new accounts from most retail clients and Vanguard has limited additional share purchases by existing shareholders to $25,000 annually. The company has also placed a $25,000 annual limit on additional share purchases of Vanguard PRIMECAP Fund and Vanguard Capital Opportunity Fund by Flagship clients.

“Despite the market volatility, Vanguard investors are continuing to commit assets to our stock and bond funds and ETFs,” said Vanguard CEO Bill McNabb, who noted that net cash inflows into Vanguard’s long-term funds totaled nearly $60 billion in the first half of 2009. “We are taking preemptive steps to limit the growth of PRIMECAP Core Fund and its sister funds, with the goal of enabling the team at PRIMECAP Management to continue to implement their investment strategy in an effective manner.”

Based in Pasadena, California, PRIMECAP Management currently manages $37 billion in Vanguard investment products.