Why We Like Dodge & Cox Stock

Key Morningstar Metrics for Dodge & Cox Stock

• Morningstar Medalist Rating: Gold
• Process Pillar: High
• People Pillar: High
• Parent Pillar: High

Exceptional personnel and a proven, faithfully followed approach earn high marks for Dodge & Cox Stock DODGX.

A group of managers gives this fund stability. Seven veteran investors serve on Dodge & Cox’s US equity investment committee, including CIO David Hoeft and director of research Steven Voorhis. Its structure helps the fund benefit from different perspectives and address team changes with relative ease (as it has in the past). Talented as it is, the committee relies heavily on an impressive unit of global industry analysts who perform the extensive research that’s key to this strategy.

The process requires expert hands such as these. Dodge & Cox Stock seeks an edge on out-of-favor, cheap stocks. Analysts scrutinize companies’ competitive strengths, growth opportunities, and leadership. They discuss firms’ merits first in specialized sector committees; promising prospects then go before the investment committee. The managers try to take advantage of what they believe are temporary troubles to buy and add to these stocks.

Such an approach courts risk. Dodge & Cox has improved its risk management in recent years, building in-house tools to help its investment teams better understand portfolio traits and risks facing their holdings. Managing risks hasn’t necessarily tempered the fund’s returns—they’re typically quite lumpy over short periods—but the managers’ calm demeanor and the analysts’ vigilance often turn that volatility to investors’ advantage over time.

Dodge & Cox Stock: Performance Highlights

Indeed, the fund has an impressive long-term record. From longest-tenured manager David Hoeft’s January 2002 start through April 2024, Dodge & Cox Stock’s I share class gained 9.2% annualized. That beat 97% of peers in the fund’s large-value Morningstar Category as well as the 7.8% gain of the Russell 1000 Value Index category benchmark.

Stock-picking, rather than allocations to certain sectors or geographies, typically defines performance. That’s been true in the three years through April 2024, when the fund’s 7.2% annualized return outpaced the Russell 1000 Value Index by 2 percentage points. Although the portfolio invested more in technology stocks than the index during the period, it was picks such as Microsoft MSFT and financial technology firm Fiserv FI that made the difference. In one of their boldest calls, the managers traded energy firm Occidental Petroleum OXY rather prudently, sticking with it through the company’s expensive acquisition of Anadarko in 2019 and the lows of the coronavirus pandemic to see a huge rally in the share price in ensuing years.