Vanguard Closes Two Funds to New Investors

Vanguard Group, the second-largest U.S. mutual fund company, said it closed two equity funds to new investors because of concerns that the portfolios might become unwieldy.

The $23.6-billion Vanguard Primecap Fund and $7.5-billion Vanguard Capital Opportunity Fund would immediately stop accepting new investors, said the company, based in Valley Forge, Pa.

Both funds are managed by subadvisor Primecap Management Co. of Pasadena. Vanguard Primecap is the company’s largest actively managed fund after Vanguard Windsor II, which had $28.4 billion in assets last month.

“While the funds’ asset levels and cash flows are currently manageable, the likelihood for rising cash flows is clearly high given the funds’ strong performance,� Vanguard Chairman John Brennan said in a statement.

Vanguard Primecap produced a return of 38% last year and is up 7.6% this year; the Capital Opportunity fund soared 50% last year and is up 11.2% this year. The Standard & Poor’s 500 index, by contrast, gained 29% last year and is up 4.2% this year.