I've held their funds since early 2000s when they could do no wrong. Currently about 15-20% divided between DODBX and DODWX and another 10% in the Income fund. Won't try to regurgitate the numbers, but as you likely know they are dismal, most funds near bottom of peer class going back 5 years and decidedly mediocre over 10 years, though they long held top place at the 10 year period. The income fund DODIX fares considerably better, but has slipped to mediocre past year.
I've followed them pretty close and have read the comments of many fine contributors in the past, including Bob C. Yep, they got bloated. And they got caught in a value trap loading up on financials at just the wrong time. They continue to hold big chunks of earnings challenged HP. As I've observed, they've long been bearish on bonds and are over-weight equities in the Balanced fund which will drag it down in this environment.
My questions remain. Were they that over-rated and over-hyped 10 years ago? That's an awful lot of intelligent observors getting it wrong. Even the launch of DODWX in 2008 was greeted positively by many at FA. Has management changed so much as to cause them to fall off a cliff? How big are outflows and are they contributing to the dismal performance? Could they be correct but early in their long term assessments? Sure, I can move the money. But it would sting to move it and them have DC rebound a year or two later, which I think possible. On the other hand maybe they are fundamentally flawed?
Comments
If you don't like a specific fund for a number of reasons (large specific bets that have gone awry, consistently off timing on allocation, bloated, etc), then move. I don't disagree with favoring equities over bonds at this point, but who knows and maybe there's better vehicles out there to take advantage of that. You've certainly given them time, it's not as if you've had the funds for a month and are disappointed.
I mention that mostly because we sometimes draw conclusions based on headlines (two-star fund, lagged since inception) when it might be worth the extra effort to dig a bit more. Since I haven't looked at volatility or other portfolio characteristics, I'm not even pretending to offer a judgment about the fund as it has evolved, just a few more data points.
I should not have alluded to 5 year performance of DODWX as it has not been around that long yet. Sorry. At $7.53 today, it's NAV is about 25% below inception. However, doesn't take into account reinvested dividends/cap gains. I've tried to find out how much it's really off since inception, but no success. DC web site shows it roughly "even" as of June 30 if I'm reading it right.
David's point about not reading too much into number of stars a fund has or rigid/short time frames is well taken. I believe a good fund house cultivates a successful culture, one reason TRP is so highly regarded. Guess that was really the gist of my question, whether such a culture existed and is still intact at DC. If it is intact they might well overcome short term failings. Thanks for all the thoughts.
From the 2010 Annual Statement:Growth of $10,000 since inception (as of Dec 31, 2010) is $9107.
From M*, 2011 YTD performance: -15.39% (through 9/9/11)
Combining, we have total return since inception = 91.07% * 84.61% = 77.05%.
In other words, since May 1, 2008, the fund has lost 22.95%, cumulative. Easy enough to annualize.
This is consistent with the dividend distribution: annual dividends of under 1%/year for 2008, 2009, 2010. (Again, per M*).
It seems to me that the question is whether, or to what extent, to discount the fund's troubled first nine months. The managers admit to two miscalculations in the face of a massive financial crisis (premature optimism and over commitment to financials, if I recall correctly). They claim to have reversed the mistakes and to have learned from the episode. From then through August 2011, they had a strong record. In the past six weeks, they've had a weak record.
The vexing question is how to think about the data; what 'narrative framework' should we impose on it? Is the story "great active managers whose low-turnover discipline will inevitably lead to soft spots?" or "a committee that's trying a 20th century model in a 21st century environment"? Once you pick your story (almost regardless of what it is), all of the data will magically fall in place.
David
I had lost confidence in Dodge & Cox, Currently invested in Global Allocation funds like IVWIX and SGIIX in Taxable account, So far my new funds are performing to my satisfaction, I am glad on my decision to get out of the Dodge and Cox and move money in funds that I have confidence in.
Given that, DODGX had a horrible 2008, which has really hurt its 3 and 5-year numbers. If you want a fund that has less downside risk, FVALX is worth considering. As others have said, D&C could return to form, but until financials and some of its tech picks turn around, it will probably continue to struggle. Another option would be to consider high-quality dividend stocks, something like TIBIX. But then you get more into a global fund, not a mostly U.S. large cap fund. Another option would by SDY.
When we sold out of DODGX a while back, it was because of a combination of too many assets, too concentrated a position in financials given the then-current outlook, and just a gut feeling. No doubt they may have some great years. But I think you have to make a decision and move on.
Also, too many cooks.
I still like the company. Make no mistake though, they are a traditional value bottom up outfit. Just know what you're getting.
Message Added: Past Underperformance of Dodge and Cox
The following information was added to the message board:
________________________________________
Name: LarryT
E-Mail:
Subject: Past Underperformance of Dodge and Cox
Body of Message:
I've posted this before, in response to the wave of admirers of this fund who were posting the sort of "no brainer" "one fund I'll hold 'til death" kind of messages. This is the fund's returns against the S&P:
1995 -4.06
1996 -0.69
1997 -4.96
1998 -23.18
1999 -0.83
I posted this not as an argument against buying D&C, which I think is a fine fund, but as a warning about buying any fine fund after it has been on fire with the expectation that it will remain so. I asked these boosters if they would have bought the fund in 1999, considering the above record, but didn't get any responses.
Obviously, 1999 was a great time to buy D&C, when it was in the midst of a five-year slump. When people were buying D&C in 2005 and 2006 after five or six years of outperformance, I suggested looking for great funds that had underperformed, rather than chasing the hot dot (again, and again, and again). Still seems to make sense to me--if D&C continues to slump, it will make sense to consider adding it in a year or two or three.
Added on Date: 06:42:15 05/13/08