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In 2002, MarketWatch published an article called "One fund for a lifetime." The author Paul Merriman actually recommended two: Vanguard Wellington (VWELX) and Dodge & Cox Balanced (DODBX). The article impressed me back then, and my wife rolled her 401 into DODBX. The fund closed shortly afterward.
Here's a look back at its performance (from 2003 Dodge & Cox and Morningstar reports). The fund avoided the tech bubble and sailed steadily upward. You tripled your money over ten years with this consistent, sector-topping choice:
DODBX became one of the most highly recommended balanced funds during this time. Remaining a Moningstar 5 star fund for years. Here is a mid 2007 snapshot (from Schwab report):
And then, the bottom fell out. Its strong value bent had it chasing value traps, like GM, Fannie Mae, and Wachovia. It also did not recover to its old form due to continued poor stocks picks, like HP.
Lately though it appears strong against other notables, like FPACX and OAKBX, and has climbed back into the 4 star category for last three years. Here's a comparison this past year:
And YTD, Morningstar shows it's top of class:
How about the other "fund for a lifetime" Merriman picked back in 2002? Vanguard Wellington has performed masterfully:
With its success, the still-open VWELX has swelled to $62B in assets, while DODBX has a modest $12B. DODBX remains more aggressive with a 75% stock holding versus 65% for Wellington. And, the stocks DODBX is picking, BAC, GS, Panasonic, and yes even HP, may indeed now be at true value levels compared to their book value and earnings power.
My guess going forward? To paraphrase a FundAlarm report on Dodge & Cox from several years back: If this firm can't beat its benchmark over the long haul, then active management is a myth. I choose DODBX.