Hang in There With This Value Fund
Patience is required for investors in the Dodge & Cox Stock Fund, but its long-term outperformance proves it's worth the wait.
Value investing enjoyed 15 minutes of sunshine in early 2025, when the S&P 500 sank 19% from its February peak to its early April trough. Dodge & Cox Stock (DODGX) — a member of the Kiplinger 25, our favorite no-load mutual funds — held up better, albeit with a 15% decline.
Since then, the large-company value fund has rebounded 21% through September. That's impressive, but it lags the S&P 500, which has bounced 34%. All told, over the past 12 months through September 30, Dodge & Cox Stock has climbed just over 9%, far short of the nearly 18% gain in the S&P 500.
It's a good time to remember that the point of holding funds with different investing approaches is to enhance diversification — it can smooth out your returns, for starters. These days, the S&P 500 is more growth- and momentum-tilted than ever, which makes Dodge & Cox Stock a good foil.
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The fund's biggest holdings, Charles Schwab (SCHW), industrial firm Johnson Controls International (JCI) and aerospace and defense company RTX (RTX), bear no resemblance to the tech giants at the top of the S&P 500. Each of the three is up more than 40% over the past 12 months, by the way.
Hunting for bargains
The fund's six managers are true-blue contrarians. If a sector or industry is struggling, you can bet they're looking for hidden gems. Recently, they increased their investment in the health care sector, a market laggard since the start of 2023 and the worst-performing sector over the past 12 months.
Over the first half of 2025, they even added to stakes in embattled health giant UnitedHealth Group (UNH), which brought back a former chief executive to run the firm in May. "UNH is currently trading at a discount compared to the overall market, the health care sector and its historical valuation," the managers said in a report over the summer.
It can take time for their investment hypotheses to play out, so patience is required for investors in the fund. But over the past five years, Dodge & Cox Stock's 17% annualized return beats the S&P 500.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
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