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Is Dodge & Cox Balanced Fund (DODBX) a Strong Mutual Fund Pick Right Now?

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On the lookout for an Allocation Balanced fund? Starting with Dodge & Cox Balanced Fund (DODBX - Free Report) is one possibility. DODBX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

DODBX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.

History of Fund/Manager

Dodge & Cox is based in Boston, MA, and is the manager of DODBX. The Dodge & Cox Balanced Fund made its debut in December of 1967 and DODBX has managed to accumulate roughly $15.41 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 10.07%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 11.05%, which places it in the top third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 6.89%, the standard deviation of DODBX over the past three years is 8.02%. Looking at the past 5 years, the fund's standard deviation is 7.81% compared to the category average of 6.76%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. DODBX lost 45.78% in the most recent bear market and outperformed its peer group by 9.64%. This might suggest that the fund is a better choice than its peers during a bear market.

Nevertheless, with a 5-year beta of 0.75, the fund is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. Over the past 5 years, the fund has a negative alpha of -0.76. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is principally on equities that are traded in the United States.

Currently, this mutual fund is holding 80.55% stock in stocks, with an average market capitalization of $133.11 billion. The fund has the heaviest exposure to the following market sectors:

  1. Other
  2. Finance
  3. Technology
Turnover is about 20%, so those in charge of the fund make fewer trades than comparable funds.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, DODBX is a no load fund. It has an expense ratio of 0.53% compared to the category average of 0.89%. Looking at the fund from a cost perspective, DODBX is actually cheaper than its peers.

While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.

Bottom Line

Overall, Dodge & Cox Balanced Fund ( DODBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

This could just be the start of your research on DODBXin the Allocation Balanced category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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