PRIMECAP Still Won—But Taxes Took Their Cut

MAILBAG | Two decades of after-tax returns, and what the Discovery ETF could change for taxable investors.

Executive Summary: PRIMECAP's six mutual funds have beaten 500 Index after taxes over the past two decades—but the tax drag is real, and the soon-to-launch Discovery ETF could change the calculus for taxable investors. Here's how to think about your situation.

PRIMECAP Management has beaten the market for decades. But for investors holding PRIMECAP-run mutual funds in taxable accounts, the scorecard has a hidden line item: taxes.

So, before PRIMECAP Odyssey Discovery ETF arrives this June, let’s tackle a key question: How much have taxes actually cost PRIMECAP shareholders? And what would a tax-friendly ETF wrapper be worth?

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