Is This Fund Worth the Fee?

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.

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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.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.