Dodge & Cox Balanced Fund

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

#5 in Moderate Allocation

U.S. News evaluated 233 Moderate Allocation 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 21.14 percent over the past year, 14.54 percent over the past three years, 16.48 percent over the past five years, and 7.38 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 6.3%
1 Year 21.1%
3 Years (Annualized) 14.5%
5 Years (Annualized) 16.5%
10 Years (Annualized) 7.4%

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Summary

The value-focused strategy of Dodge & Cox Balanced Fund leads its managers to seek out companies that are generally out of favor but offer plenty of upside potential.

As of July 03, 2014, the fund has assets totaling $14.85 billion. Its portfolio consists of stocks, corporate bonds, and mortgage-backed securities.

Even after the passage of healthcare reform, the fund managers are committed to a fairly large stake in healthcare, specifically pharmaceuticals. Currently, some of the fund’s largest holdings are companies like Novartis and GlaxoSmithKline. Management also holds a higher-than-average amount of U.S. corporate bonds. The fund has returned 21.14 percent over the past year and 14.54 percent over the past three years.

The fund’s benchmark is an allocation of 60 percent stocks and 40 percent bonds, but as of the end of the first quarter, the fund had only about 20 percent of its assets in bonds. Normally, the fund’s investments are made up of stocks of large-cap companies, corporate bonds, and mortgage-backed securities backed by the government, according to Morningstar. Dodge & Cox’s chief investment officer, Charles Pohl, says the fund is “for people who want a little more conservative posture than an equity-only fund would provide.” The fund has returned 16.48 percent over the past five years and 7.38 percent over the past decade.

Investment Strategy

“We’re very much a bottom-up approach, so we’re looking at individual companies and individual securities,” Pohl says. The managers hunt for companies that they believe are undervalued, which means they’re often out of favor in the market.

Role in Portfolio

Morningstar describes the fund’s role in portfolio as “core.”

Management

The fund’s fixed-income and equity holdings are overseen by separate teams of managers. The fund’s former chairman, Harry Hagey, retired in early 2007 after 14 years at the helm of Dodge & Cox. His replacement, John Gunn, served as the company’s chief investment officer for 25 years before taking the chairmanship.

Fees

Dodge & Cox Balanced Fund has an expense ratio of 0.53 percent.

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Risk

At times, the fund managers select companies that are extremely out of favor, which can cause the fund to lag behind others in its category, according to Morningstar. Also, the fund tends to favor corporate bonds over treasuries, so its returns have taken a hit when corporate bonds don’t perform well.

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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, 3 for five years, and 3 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

Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, “It’s tough to find fault with this fund’s corporate governance. It has low fees, it’s backed by an industry-leading corporate culture, and it has a clean regulatory record.”

Morningstar 2011-04-04

The fund is the oldest of the five funds in the Dodge & Cox family. “You’re going to have a hard time finding someone who manages as much money as we do and only has five mutual funds,” Pohl says. “There’s a tremendous degree of focus here.”

2010-01-26

Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, “It’s tough to find fault with this fund’s corporate governance. It has low fees, it’s backed by an industry-leading corporate culture, and it has a clean regulatory record.”

Morningstar 2011-04-04

The fund is the oldest of the five funds in the Dodge & Cox family. “You’re going to have a hard time finding someone who manages as much money as we do and only has five mutual funds,” Pohl says. “There’s a tremendous degree of focus here.”

2010-01-26

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