Dodge & Cox stock fund is one of the most popular stock funds available in retirement plans. Its asset size is $43.8 billion. It has stellar long term performance: since its inception in 1985, it achieved 12.4% annualized return, putting it as one of the best stock funds in long term. The fund is managed by a team of seasoned portfolio managers in Dodge & Cox.
However, the fund was hard hit in 2008, losing a whopping 43%. Since then, it has bounced back. See more performance info at the end of this article.
It is a traditional value stock fund. But recently, this fund is classified as Large Blend by Morningstar. Though its investment style was never openly disclosed by Dodge & Cox, its stock selection is mostly based on low price to sales with reasonable growth potential. But from the following average fund holdings' ratios, one can see in the current period, the fund is more tilted to growth than it was used to be. That explains why Morningstar now puts it into large blend category.
|Stock Portfolio||Category Avg|
|Dividend Yield %||2.02||2.56|
|Long-Term Earnings %||9.54||9.05|
|Historical Earnings %||2.21||29.00|
|Sales Growth %||9.14||5.71|
|Cash-Flow Growth %||12.60||2.47|
|Book-Value Growth %||2.39||6.82|
Though the price to sales ratio is now comparable with the large blend category average, it has much higher sales growth and cash-flow growth. Again, this is somewhat consistent with its emphasis on sales and solid fundamental factors.
The following shows its top 10 holdings, as of 3/31/2011
|Ticker||Company name||% Net assets|
|CMCSA||Comcast Corporation A||3.71%|
|COF||Capital One Financial Corporation||3.69%|
|WFC||Wells Fargo Company||3.66%|
|GE||General Electric Company||3.36%|
|NWSA||News Corporation A||2.86%|
|NVS||Novartis AG ADR||2.64%|
|TWX||Time Warner, Inc.||2.63%|
Looking at these stocks more closely, one can see that CMCSA and SLB are definitely growth stocks while COF, GE, PFE are value stocks. It is also clear that the fund favors media (NWSA, TWX), financial (COF, WFC) and drug (PFE, NVS) companies.
With its stellar long term performance, it is interesting to compare its performance with diversified, all-risk-class-only ETF portfolios. The following shows the comparison between Contrafund and diversified dividend stock ETF portfolios. The strategic asset allocation portfolio consists of equal weights of U.S. stocks, international stocks, emerging market stocks and REITs ETFs (i.e. 25% each) and rebalanced monthly.
Portfolio Performance Comparison
|Portfolio/Fund Name||1Yr AR||1Yr Sharpe||3Yr AR||3Yr Sharpe||5Yr AR||5Yr Sharpe|
|Retirement Income ETFs Strategic Asset Allocation Risk Profile 0||26%||213%||8%||22%||7%||20%|
|Retirement Income ETFs Tactical Asset Allocation Risk Profile 0||25%||156%||18%||91%||16%||78%|
For performance of more than five years, please refer here.
Though Dodge & Cox stock fund (MUTF:DODGX) underperformed in the last five years, it has recently bounced back and recouped some of its loss. With its stable and reputable team of managers, value oriented investors can get some of ideas from its top holdings. Barring from another severe crisis, the fund and its stocks should perform well.
Disclaimer: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical. I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.