Dodge & Cox Income Fund

Class No Load (DODIX)
Scorecard
4 / 5 Stars
Lipper
5 5 5 5 2
Zacks Investment Research
1 (Strong Buy)
Standard & Poor's
5 / 5 Stars
TheStreet.com
B+ (Buy)

#3 in Intermediate-Term Bond

U.S. News evaluated 273 Intermediate-Term Bond Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Performance

The fund has returned 6.62 percent over the past year, 4.88 percent over the past three years, 6.55 percent over the past five years, and 5.59 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 4.6%
1 Year 6.6%
3 Years (Annualized) 4.9%
5 Years (Annualized) 6.6%
10 Years (Annualized) 5.6%

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Summary

They say that slow and steady wins the race, but even the steadiest of runners know that sometimes a quick change of pace can pay off. For Dodge & Cox Income, this mix of consistency and flexibility has proven useful over the years.

As of July 03, 2014, the fund has assets totaling $27.24 billion. Its portfolio consists primarily of bonds.

While generally very consistent in strategy, management is not afraid to make some opportunistic shifts. In 2008 and 2009, it unloaded some mortgage-backed securities and used the extra liquidity to load up on battered corporate bonds. This initially led to lukewarm performance but paid off when corporate bonds rallied. The managers are confident that these bonds will perform well in the three- to five-year time frame they use to evaluate their investments. The fund still holds a significant amount of mortgaged-backed securities. Some attribute the move into corporates in part to the close managerial relationship between the company's stock and income funds. "This may lead to a value bias of the corporate names held in the portfolio," Raymond James notes. The fund has had a quiet start to 2010, but low yields on Treasuries have made the fund's corporate bond expertise a valuable asset. The fund has returned 6.62 percent over the past year and 4.88 percent over the past three years.

Historically, the fund has charted a steady and profitable course. Management has leaned toward quality bonds but has typically stashed around 4 to 5 percent of its portfolio in below-investment-grade holdings, according to Raymond James. It has generally favored corporate bonds; Treasuries, on the other hand, have been underweighted in the portfolio. The fund has returned 6.55 percent over the past five years and 5.59 percent over the past decade.

Investment Strategy

Morningstar says, "This fund has never been known for its velocity. More often than not, this fund's seasoned management team moves slowly and cautiously, gradually shifting out of bonds whose yields have fallen too low to compensate for the risks of holding them for three to five years and into those that look more attractively valued." Although management doesn't set an average duration for its bonds, the fund falls into the intermediate-term category. Specifically, management looks to hold each investment for around three to five years.

Role in Portfolio

Morningstar calls the fund a "core" investment.

Management

The fund is led by the Dodge & Cox's nine-member Bond Strategy and Research Team. 

Fees

Dodge & Cox Income Fund has an expense ratio of 0.43 percent.

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Risk

This fund's preference for quality makes it a fairly safe pick.

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Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 1 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 2 for one year, 2 for five years, and 2 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Risk Rank, a measure of volatility, is 2 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-06-11

The fund appears on the 2011 Money 70 list of recommended mutual and exchange-traded funds.

Money 70

The fund appears on the 2011 "Kiplinger 25" list of the best no-load mutual funds.

Kiplinger 25 2011-04-13

Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, "This fund's corporate governance is top-notch. It incorporates many of the industry's best practices, including low fees, a fundholder-focused corporate culture, and a clean regulatory history."

Morningstar 2011-02-01

Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, "This fund's corporate governance is top-notch. It incorporates many of the industry's best practices, including low fees, a fundholder-focused corporate culture, and a clean regulatory history."

Morningstar 2011-02-01

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