It may be the benchmark that Primecap uses, but that doesn't mean that it is the most appropriate benchmark. Primecap has a size tilt. The S&P500 tilts away from size. If I held the Primecap fund, I would compare performance with a total market portfolio or index. The Russell 3000 would be a reasonable benchmark.The S&P500 is the benchmark that Primecap Management Company has chosen for the fund (and, if you look in the fund's SAI, you will see that the managers may receive a bonus based on whether their portion of the fund outperforms the S&P500). So, pretty much by definition, that makes the S&P500 the benchmark.
I'll add that the S&P500 is not the most appropriate benchmark for the fund as this is not a large cap fund. I think it should be compared to the total market return. The issue is that there is not a single, famous total market index any more.
Statistics: Posted by Northern Flicker — Sun Nov 10, 2024 1:28 am — Replies 30 — Views 1919