3 Great Funds That Just Reopened to New Investors

Russel Kinnel: When funds reopen to new investors, it usually is in response to significant outflows that have reduced capacity constraints on the strategies. And outflows tend to happen after underperformance, of course.

As a contrarian, I like to buy funds when they reopen because it usually means they invest in an out-of-favor area and their capacity challenges have diminished. Let’s look at three great funds that have recently reopened.

3 Great Funds That Just Reopened to New Investors

1. Vanguard Primecap VPMAX
2. Vanguard Primecap Core VPCCX
3. T. Rowe Price New Horizons PRNHX

Vanguard reopened Vanguard Primecap Core and Vanguard Primecap to new investors recently. I won’t be rushing to buy them because I’ve owned Primecap Core for a long time. The funds straddle the large-growth/large-blend line, and the last two years they’ve lagged large growth but beaten large blend. Recently, AI and weight loss drugs have been fueling the gains in growth investing, and these funds have Eli Lilly as their top holding, but they don’t have Nvidia, so performance has been restrained.

But I’m still a fan of these Gold-rated funds. They have some of the best managers and analysts, and because these are Vanguard funds, they have some of the best bargains in investing. Primecap charges just 31 basis points, and Core charges 46 basis points. Both funds boast 15-year returns north of 14% annualized.

I’m also a big fan of the recently reopened T. Rowe Price New Horizons. The Silver-rated fund invests in small- and mid-cap growth stocks. Recent returns look unimpressive, but that’s mostly because it has more in small caps than its peers do. Josh Spencer has done a fine job investing at this fund since he took over in 2019, and T. Rowe has a great group of analysts covering smaller growth companies.

Finally, one other reason I like reopened funds is it means management has already proven they are willing to close funds to prevent asset bloat from spoiling the strategy.

Watch 3 Funds That Are Getting Barbecued for more from Russel Kinnel.