ASK KIM


Is This Fund Worth the Fee?

Kimberly Lankford

To purchase newly reopened Dodge & Cox Stock fund, you'll have to pay a $75 transaction fee if you don't buy it directly.



I have a Roth IRA with Fidelity Investments and would like to know if I can invest in the newly reopened Dodge & Cox Stock with money from my Fidelity account.

It's a good news-bad news story. Yes, you can buy Dodge & Cox Stock (or any of the other Dodge & Cox funds) if you have a Fidelity brokerage account. But you'll have to pay a $75 transaction fee to purchase the fund, no matter how much you're investing (there's no charge for selling). If you invest the minimum $2,500, that's 3% of principal. If you invest $50,000, that's 0.15% of principal.

Dodge & Cox doesn't participate in brokerage firms' no-transaction-fee programs because its fees are so low. Funds usually pay brokers 0.25% to 0.35% of their assets to participate in these arrangements. With a low management fee of 0.50% a year (and low overall expenses of 0.52%), Dodge & Cox would either have to surrender half of its management fee or tack on a 12b-1 fee (for marketing expenses) to participate in NTF programs.

Of course, you can invest directly with any no-load family, such as Dodge & Cox, and avoid both a sales charge and a transaction fee.

Dodge & Cox stock would be a good addition to your portfolio. A member of the Kiplinger 25, the fund has a superb long-term record. Over the past ten years through May 2, Stock returned an annualized 9.5%, an average of almost six percentage points better than Standard & Poor's 500-stock index.

Got a question? Ask Kim at askkim@kiplinger.com.




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