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Dodge and Cox

So in 2008, Dodge and Cox got burned. It eventually recovered. Recently, Dodge and Cox has touted European financials and energy. We shall see how that plays out in this environment. I own both DODGX and DODFX. Morningstar loves them. This is NOT a criticism (I have no business questioning them since I am a novice) but I am wondering.
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Comments

  • DODGX will be bumpy. But for me, the returns have been better than the S&P 500 since I bought it for my taxable (4/15/1991) and retirement account (10/06/2011). So I am happy.

    Most of the experts I've ever read say you should have some exposure to overseas markets. So DODFX is probably as good as any of them. Given the bets you describe, it may be even bumpier, as well as a longer wait to beat its benchmark.

    I do like the way they do business. There's just one low fee for everyone buying the funds. And the turnovers on their portfolios are low.

    I don't care for funds that have a large discrepancy between the surfs and the lords. And I don't think there are all that many people smart enough to beat the market trading rapidly. It just adds a cost drag to returns.

    I bought DODIX this past December when I was rebalancing my retirement account to lean more on bonds. I was attracted to their A avg rating and lower than average duration.

    I wouldn't sell anything in this environment unless I needed the money, or wanted to realize a tax loss for some reason. I have enough cash to go shopping, probably sometime later this year. So I don't need to sell anything.

    I might even buy more DODGX for the IRA. It is currently suffering worse than the S&P 500. And may continue to do so for a while.
  • edited March 10
    It’s the financial exposure. They’ve really gotten clocked since rates plunged. They’ve been expecting rates to rise for couple years. That would be benefit banks, etc. Their balanced fund, DODBX, is also lagging. It’s equity holdings are similar to DODGX. No crystal ball here - but I think it’s fair to say that their recent performance isn’t on a par with their storied reputation. It could just be that you and I don’t have the same longer term focus these guys have.

    Edit: - Have a few extra minutes here so will elaborate. D&C has low fees for a managed fund house. Over long periods, that shows up in your return. Very long term (10, 20, 30 years) they stand up well). Nearer term can be a bumpy ride. I have a small allocation to DODBX in my most aggressive sleeve. I carry a similar allocation to PRWCX. Over many decades, I’d expect those two to run about even - but PRWCX has outshined now for about a decade. Great hot manager. And good luck.

    The larger portion of my above mentioned investment sleeve, however, is in RPGAX. Long term it shouldn’t do as well as the other two (for lots of reasons). However, if like myself you view current markets as “frothy”, than RPGAX should hold up better in such an environment since it’s better hedged.

    Not meant as advice. Just my (amateur) views. BTW - I dumped OAKBX over a year ago. I didn’t think the managers were consistently hewing to their stated philosophy. The fund’s behavior indicated something else. I can’t say that of D&C. In this case, they’ve held true to their deep value long term approach. Markets just aren’t cooperating.
  • edited March 10
    Until now I've been slowly bailing out of DODGX. A little too concentrated in financials and tech, big, and it's not been outperforming index funds. Stopped selling it for now until things settle down. Not a bad fund, but I'm retired and shedding risk.
  • D&C have good funds but many of them are riskier and it shows at market stress such as 2008 and many times when stocks go down at least 10%. This is why when volatility increases, such as the last 3 years, their funds lag.
    I have never owned their funds because I found better choices.

    DODBX-->I used to own PRWCX. In the last 3-5 years, DODBX ranks in its category at 90 and 50. 90 means it's in the bottom 10%. JABAX is much better too.

    DODIX-->is probably their best fund but I still owned PIMIX for several years, I know, it's not the same category. DODIX is really Multi sector light and why yesterday it lost -1% while most core plus did better.

    DODGX--->SP500(VFIAX/VFINX) has better performance for 5-10-15 years. This is PorVis(link) for 15 years that shows that SP500 had better performance, SD, Sortino.

    DODFX has a negative performance for 3-5 years and ranks in its category at 77,78 which is pretty bad. Very easy to find better funds such as AFCNX.

    D&C funds have low expenses which is nice but only one part of the puzzle.
  • "This is why when volatility increases, such as the last 3 years, their funds lag."

    Volatility decreased for DODFX and in foreign markets.

    Std dev Jan 2014 - Jan 2017
    DODFX: 14.81%
    EFV: 12.97% (iShares MSCI EAFE Value, used as proxy for foreign large cap value market)
    VEU: 12.58% (Vanguard FTSE All-World, ex-US, used as proxy for foreign market)

    Std dev Jan 2017 - Jan 2020
    DODFX: 14.13%
    EFV: 12.12%
    VEU: 11.80%



  • FD1000 said:

    D&C have good funds but many of them are riskier and it shows at market stress such as 2008 and many times when stocks go down at least 10%. This is why when volatility increases, such as the last 3 years, their funds lag.
    I have never owned their funds because I found better choices.

    DODBX-->I used to own PRWCX. In the last 3-5 years, DODBX ranks in its category at 90 and 50. 90 means it's in the bottom 10%. JABAX is much better too.

    DODIX-->is probably their best fund but I still owned PIMIX for several years, I know, it's not the same category. DODIX is really Multi sector light and why yesterday it lost -1% while most core plus did better.

    DODGX--->SP500(VFIAX/VFINX) has better performance for 5-10-15 years. This is PorVis(link) for 15 years that shows that SP500 had better performance, SD, Sortino.

    DODFX has a negative performance for 3-5 years and ranks in its category at 77,78 which is pretty bad. Very easy to find better funds such as AFCNX.

    D&C funds have low expenses which is nice but only one part of the puzzle.

    While I agree performance is only one piece of the puzzle, it's not reasonable to compare a value shop like D&C (DODFX) to a growth shop like AC (AFCNX). Growth has been a major tailwind for folks like American Century, WCM, etc.
  • Wife and I own many D&C funds. They obviously have a value tilt, and tend to stay fully invested. I don't expect a smooth ride from them, but I do expect them to act as true fiduciaries. I like the fact that they don't do marketing and have a team culture.

    I wouldn't go 100% in on D&C, but I'm comfortable with them representing 20% of my holdings.
  • FD1000 said:

    D&C have good funds but many of them are riskier and it shows at market stress such as 2008 and many times when stocks go down and 2020 is no different
    For YTD
    Allocation DODBX -23.4...PRWCX -16.2...JABAX -13.1
    Mostly US LC: DODGX -32.1....SPY -22.4
    Foreign stocks: DODFX -34.5...AFCNX -21.9

    BTW, all the funds above have better long term(1-3-5-10-15 years) risk/reward than D&C funds too.

  • edited April 4

    VLAAX -13.8 and VALIX -24.2, ouch

    30-70 and 40-60 of the below would be worse than 50-50, obvs, did not compute, but better than the above:
    50-50 BND + CAPE = ~-10.5, same as BND + VOO
    50-50 BND + VOOG = -7.6

  • All I can add here about the D&C stable is that they are a 'value' oriented shop and value has been a fallen angel for quite some time. When value reign's D&C is right up at or near the top like like similar oriented shops. To compare their performance to growth funds during a fairly raging long time bull run seems inappropriate but WTFDIK. D&C will tell you themselves that they will rarely lead the parade but they will invest your money the way they always have, with care and thoughtfulness according to their value principals. No shame there.
  • One plausible explanation of the lagging performance of D&C for the last 10 years is the value stocks invested in their funds are out style. Not only D&C, other value-oriented mutual funds companies are also lagging, most notably Oakmark. The growth stocks such as the FANNG stocks dominate and contribute to their out-sized performance in S&P 500 relative to the value-oriented stocks. In contrast, PRWCX is a growth-oriented balanced fund and the top to holdings consist of Microsoft and Google (at one point it held Amazon). David Giroux has also done a good job picking his allocation and stocks well in this environment.
  • edited April 6
    More observations:

    1. For 5 years DODFX is rated at 75-89 in its category.
    DODGX lags the SP500 for 1-3-5-10-15 years which is a blended index not growth or value. But Wait...DODGX also lags VTV(value ETF) for 1-3-5-10-15 years

    2. If you read DODGX strategy (link)
    Stocks — The Fund typically invests in companies that, in Dodge & Cox’s opinion, appear to be temporarily undervalued by the stock market but have a favorable outlook for long-term growth.

    It's similar to PRWCX
    "invests primarily in the common stocks of established U.S companies believed to have above-average potential for capital growth."
    The value approach carries a risk that the market will not recognize a security’s intrinsic value for a long time or that a stock judged to be undervalued may actually be appropriately priced because of the fund’s fixed-income holdings or cash position, it may not keep pace in a rapidly rising market.

    PRWCX managers are excellent while D&C are not and the rest are just excuses.


  • edited April 4
    Dodge & Cox was founded in 1930. The company has introduced only six mutual funds since then. The firm's analysts and managers tend to stay at the company for a very long time. Dodge & Cox funds are team-managed and they have below-average expense ratios. There is a lot to admire about the firm's philosophy and operations. As others have mentioned, value has generally been out of favor for many years. I agree with Mark that it is inappropriate to compare Dodge & Cox funds to growth funds from other shops.
  • edited April 6

    Dodge & Cox was founded in 1930. The company has introduced only six mutual funds since then. The firm's analysts and managers tend to stay at the company for a very long time. Dodge & Cox funds are team-managed and they have below-average expense ratios. There is a lot to admire about the firm's philosophy and operations. As others have mentioned, value has generally been out of favor for many years. I agree with Mark that it is inappropriate to compare Dodge & Cox funds to growth funds from other shops.

    1) Is the SP500 a growth fund?

    2) DODGX hold Google and MSFT in their top 10, are these not growth?

    3) How can you explain DODGX falling behind VTV(value ETF) for 1-3-5-10-15 years. But wait, VTV also have lower volatility(=SD) and better Sharpe. See 16 years results (link)

    4) VOO (SP500) expense = 0.03% and VTV = 0.04% are definitely cheaper than DODGX = 0.52%
  • VTV is not SP500 value, right? That would be VOOV.

    3/4 as many stocks.

    And if you write and edit fund prospectuses, you recognize that the D&C language nuance / emphasis are subtly more different from than similar to the TRP language.
  • msf
    edited April 4
    Nuance? GARP and value investing are more than subtly different.

    M* offers FCNTX and ANEFX as prominent examples of GARP funds. Investopedia says that "GARP investing was popularized by legendary Fidelity manager Peter Lynch." That would be the manager of the legendary "value" fund Magellan (FMAGX).

    I guess what really matters is what TRP says about PRWCX's actual portfolio. In its latest (June 2019) semiannual report, TRP writes:
    Over the long term, we are extremely confident in the quality of companies in which we have chosen to invest. These are mostly GARP (growth at a reasonable price) stocks with excellent management teams that use capital allocation to create sustainable long-term value for shareholders.
  • I'm reading, learning with interest on this thread. Way back in 2010, I agreed t babysit my colleague's money. I put him into PRWCX, which I own, too. I put his wife in DODBX. (And DODIX, too.) I just read the Morningstar update on DODBX. Morningstar is not "gospel-truth," but they have, I notice, reduced the DODBX rating down to 3 stars (from 5, then 4 some time ago) but they continue to rate it "GOLD." And not every fund even gets one of those "metal-medals:" bronze, silver, gold. THEY are not too worried.

    Over the past 10 years, "risk" is rated HIGH, but that's compared to other funds in a not-so-risky category, yes? Over the same 10-year period, "Returns' are rated Above-Average. I must say, I don't like that recipe: high risk but (only) above-average profit. But it's not a deal-breaker. So, over that long-haul period of 10-years, it's performing better than the avaerage in its category. I take solace in that, at least.
  • edited April 4

    VTV is not SP500 value, right? That would be VOOV.

    3/4 as many stocks.

    And if you write and edit fund prospectuses, you recognize that the D&C language nuance / emphasis are subtly more different from than similar to the TRP language.

    My main point, for years now, that many put D&C on a pedestal because their team management style, LT investing history, lower rates which I know all about but the numbers don't back it up and then I hear the excuses.

    Any fund can make up a more complicated strategy and claim...well, it's not really the same so you can't compare it.

    LC US stocks is the main category investors use and if a fund can't perform better for 1-3-5-10-15 years than the SP500 + its volatility is higher than the SP500 there are no buts or ifs. We are talking short-term + long-term
    See 15 years of risk/reward(link).

    As of 3/31/2020
    15 years aver annual performance...VFIAX=7.39...DODGX 5.45%
    15 years SD=volatility......................VFIAX=14.3...DODGX 17.1

    Below is the more current results as of 04/03/2020
    image
  • was not foolish enough to try and argue with you, was not defending D&C shop ever,

    just pointing out that you made a nontrivial mistake

    which you can man up to, or not, I don't care
  • Based on Fidelity's fund screening tools, DODBX 3 year Sharpe ratio is .32 as of 2/29/2020, which was one of the lowest among the balanced funds I reviewed. VWELX PRWCX JABAX RPBAX BALFX MAPOX FOBAX all outperformed DODBX. OAKBX and FPACX were 2 funds that underperformed DODBX. Fidelity funds used 3/31/2020 to calculate their data so they were excluded.
  • edited April 5
    Thanks for that, @carew388. D & C made it impossible to do what I had been doing for her, some time back, and she has regrettably simply lost interest in what her own money is doing. Still, she could do worse--- maybe.;)
  • @davidmoran, I concur with your points. Apples and oranges comparison.
  • Other than DODIX, I would not own any other D&C funds. I got burned by DODGX during the financial crisis in 2008 and vowed never to return once I got to a point where I felt comfortable selling. IMHO, they are operating on their past reputation pre-2008. I'm not surprised to see DODGX and DODFX doing worse than their respective categories during this current mess. There are plenty of better alternatives, IMHO.
  • har, imagine saying of FAIRX, CGMFX, or even FMAGX that they were operating on their <08 rep
  • edited April 6

    Other than DODIX, I would not own any other D&C funds. I got burned by DODGX during the financial crisis in 2008 and vowed never to return once I got to a point where I felt comfortable selling. IMHO, they are operating on their past reputation pre-2008. I'm not surprised to see DODGX and DODFX doing worse than their respective categories during this current mess. There are plenty of better alternatives, IMHO.

    Well put and what I have been saying for years. I think maybe D&C managers are more comfortable investing in financial/banking stocks which were their biggest category and not realizing this category has been lagging the SP500 while the high tech is where you have all the value+growth.
    @davidrmoran: har, imagine saying of FAIRX, CGMFX, or even FMAGX that they were operating on their pre 08 rep
    I used to own FAIRX,OAKBX,SGENX for about 7-8 years until 2009. In these years when I own a very high % in stocks, it fit my criteria for good risk/reward funds. PV (link) I don't believe in investing based on prior reputation.
  • edited April 6
    Looking at DODGX's holdings as of 12/31/19 and their highest stake was financials at 26%, followed by healthcare at 23%. I did notice their 10% stake in energy, which is more than double the S&P index. Big underweight of tech, too.
  • edited April 6
    I do sometimes wonder when there are contentious posters who rarely comment on this board and then suddenly do to insult folks if some people don't have multiple identities here. I know it's happened before.

    D&C has a number of positive traits analysts like--low fees, low turnover or trading costs, long tenured managers, carefully thought out products without an excess of launches, a lack of celebrity jerk managers from the team approach and consistency of style. All of that said, value has been a terrible place to be since the end of the 2008 crash. D&C are value managers and ones that sometimes take on more risk than they should, investing in particular in financial stocks that can suffer from leverage problems for instance. That is a value managers' bread and butter, but some competing value managers have done better with more of a quality overlay. High quality value--with less leverage and more consistent earnings--is not as cheap as "value classic," but it tends to hold up better in downturns.

    Oh, regarding the S&P 500 fund(s), it most definitely isn't a value fund. The way it works is at the beginning of a bull market it has value characteristics and at the end of one it has growth characteristics as the largest most popular stocks dominate it. What it really is is a momentum fund, and when the momentum is positive as it has been for a long time until now, the most popular stocks get an increasingly large weighting and they are invariably the growthiest names. Comparing it to D&C most definitely is wrong.

    The larger question that seems to get asked repeatedly on this board is is value investing dead? A better question I think is do you think the tech sector darlings that comprise the lion's share of growth indexes will continue to dominate the world forever or will other less popular sectors eventually make a comeback? The academics would have us believe that as the ur-factor bigger than JC in finance, it must eventually come back. But much of what constitutes financial academia is really weak science at best. There is a lot more evidence for anthropogenic climate change, and a significant portion of failed scientists/poor mathematicians and snakeoil salesmen in finance don't believe in that, yet do believe in the value factor or say they do to sell their actively managed higher cost products.
  • Interesting, and interesting to parse the various strands of value in a gross sense.
    I just graphed SP500 over 10-7-5-3-1y beating VOOV (SP500 value) and RSP (SP500 equal-weight), with the latter two overlaying much more than not. Both outperform RPV significantly and constantly; DODGX is only somewhat better than RPV.
    CAPE is better than everything until 4y and nearer, and then tracks SP500 plus or minus, showing, I guess, that its auto-churn thing is not value but growth cloaked as.
    Or maybe I have that backward.
  • edited April 7

    I do sometimes wonder when there are contentious posters who rarely comment on this board and then suddenly do to insult folks if some people don't have multiple identities here. I know it's happened before.

    D&C has a number of positive traits analysts like--low fees, low turnover or trading costs, long tenured managers, carefully thought out products without an excess of launches, a lack of celebrity jerk managers from the team approach and consistency of style. All of that said, value has been a terrible place to be since the end of the 2008 crash. D&C are value managers and ones that sometimes take on more risk than they should, investing in particular in financial stocks that can suffer from leverage problems for instance. That is a value managers' bread and butter, but some competing value managers have done better with more of a quality overlay. High quality value--with less leverage and more consistent earnings--is not as cheap as "value classic," but it tends to hold up better in downturns.

    Oh, regarding the S&P 500 fund(s), it most definitely isn't a value fund. The way it works is at the beginning of a bull market it has value characteristics and at the end of one it has growth characteristics as the largest most popular stocks dominate it. What it really is is a momentum fund, and when the momentum is positive as it has been for a long time until now, the most popular stocks get an increasingly large weighting and they are invariably the growthiest names. Comparing it to D&C most definitely is wrong.

    The larger question that seems to get asked repeatedly on this board is is value investing dead? A better question I think is do you think the tech sector darlings that comprise the lion's share of growth indexes will continue to dominate the world forever or will other less popular sectors eventually make a comeback? The academics would have us believe that as the ur-factor bigger than JC in finance, it must eventually come back. But much of what constitutes financial academia is really weak science at best. There is a lot more evidence for anthropogenic climate change, and a significant portion of failed scientists/poor mathematicians and snakeoil salesmen in finance don't believe in that, yet do believe in the value factor or say they do to sell their actively managed higher cost products.

    Can't claim the expense ratio card when VTV beat DODGX
    D&C love financial and it costs them. That tells me they are stubborn instead of looking for better choices.
    No, we don't question value, we question DODGX for short+long term. It's already 15 years that they fall behind the "stupid" VTV.
    How can you make excuses for DODGX when this value fund was worse on the way up and much worse in market meltdowns

    Well, why not make up a unique fund strategy such as the following...our goals are to invest mostly in LC but if we find good value in SC+MC we can use too...and this way nobody can compare our fund to anything ;-)

    The whole idea of the SP500 is the fact that the best companies get to the top and why this simple "stupid" cheap brilliant idea works, so now you say, wait, no more, not fair...really?

    But I always let the numbers talk, after all, numbers are more objective. I looked up MFO database for the last 10 years for LC value. For MFO,Sharpe,Martin rating DODGX ranks at 3 out of 5, there are so many better options. VTV=VIVAX is at the top ranking at 5.
    VTV has better performance than DODGX from 1 to 15 years but also lower SD. VTV is based on "an indexing investment approach designed to track the performance of the CRSP US Large Cap Value Index" how can you defend thousands of hours of analysis fall short to an index? :-)

    So, I'm expecting someone to post...well, if you look for 20-25-30 years then...nope, 15 years is long enough and year to date looks awful for DODGX. Sure, you can wait another 10 years and hope for better results.
    BTW, do you expect the financial to get you back to even? :-)

    Lastly, posters who defend DODGX probably own it.
  • edited April 7
    @FD1000
    The whole idea of the SP500 is the fact that the best companies get to the top and why this simple "stupid" cheap brilliant idea works
    Do the best companies always get to the top? That is the $10,000 question. Saying they do is basically an argument for efficient markets, that only the best companies rise to the top and are priced as they should be. If you believe that, fine. Many people do. But then there's no reason to be on a board devoted to undiscovered actively managed funds like this one. In fact, your investment decision is relatively simple. Buy Vanguard Total Stock Market ETF (VTI) and be done with your equity allocation. No need to consider factor active funds D&C's or factor index ones like VTV because the market is always right in such a view.
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