Dodge & Cox Stock: Focused on Consistency

The fund managers' discipline has led to impressive performance.

Editor's note: This is part of a continuing series of articles looking at the 20 biggest no-load stock funds.

As mutual funds put on weight and graduate into the super-heavyweight class, too often they become sluggish and bloated. Yet Dodge & Cox Stock, a mega-fund, has managed its weight gain gracefully. Why?

For one thing, the folks who run Dodge & Cox are a disciplined bunch. Bryan Cameron and Charles Pohl, co-directors of research, explain the rigor that goes into selecting stocks for the portfolio. In-house analysts spend months researching a company before making a purchase recommendation to an investment committee of nine. The average stock holding period is eight years, which Cameron says makes it easier to research companies thoroughly and to manage the portfolio. At last report, Dodge & Cox Stock held 86 stocks, a relatively small number for a $66-billion fund.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%
https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

The managers analyze the combination of holdings from multiple angles. "We try to position the portfolio so that it does well under a variety of economic scenarios," says Pohl. This helps to explain the fund's admirable consistency: Dodge & Cox Stock has beaten the average large-cap value fund 13 years out of the past 14. Over the past ten years, the fund has outpaced the typical large-cap-value fund by more than five percentage points per year, on average. Top holdings include Hewlett Packard, Comcast and McDonald's.

The only bad news about this fund is that it's closed to new shareholders. If you're fortunate enough to be a shareholder, we suggest you BUY more shares.

Note: the firm's international fund, Dodge & Cox International Stock (DODFX), as well as bond fund Dodge & Cox Income (DODIX) are open to new investors and are members of the Kiplinger 25.

Want to learn more? Read an interview with Dodge & Cox veterans John Gunn and Diana Strandberg.

FUND FACTS

Dodge & Cox Stock (DODGX)

Assets: $64.8 billion

Manager (year started): team (1965)

Returns (vs. S&P 500)*

2006: 18.5% (15.8%)

Three years annualized: 15.6% (10.4%)

Five years annualized: 12.8% (6.2%)

Ten years annualized: 14.2% (8.4%)

Expense ratio: 0.52%

Portfolio turnover: 12%

Initial minimum investment: $2,500

Phone: 800-621-3979

Web site: www.dodgeandcox.com

*Returns through Dec. 31

Fund Fact sources: Standard & Poor's, Morningstar

View updated data for this fund and compare the performance of the 20 biggest no-load stock funds.

Go to A Close Look at the 20 Biggest No-Load Stock Funds.

Contributing Writer, Kiplinger's Personal Finance

Andrew Tanzer is an editorial consultant and investment writer. After working as a journalist for 25 years at magazines that included Forbes and Kiplinger’s Personal Finance, he served as a senior research analyst and investment writer at a leading New York-based financial advisor. Andrew currently writes for several large hedge and mutual funds, private wealth advisors, and a major bank. He earned a BA in East Asian Studies from Wesleyan University, an MS in Journalism from the Columbia Graduate School of Journalism, and holds both CFA and CFP® designations.