Allocation Balanced fund seekers should not consider taking a look at Dodge & Cox Balanced Fund (DODBX - Free Report) at this time. DODBX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
DODBX is one of many Zacks' Allocation Balanced mutual funds to pick from. Allocation Balanced funds seek to invest in 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. Investors utilize Allocation Balanced funds as a way to get a good start with diversified mutual funds, as well as for core holdings in a portfolio of funds.
History of Fund/Manager
DODBX finds itself in the Dodge & Cox family, based out of Boston, MA. Dodge & Cox Balanced Fund debuted in December of 1967. Since then, DODBX has accumulated assets of about $14.18 billion, according to the most recently available information. The fund's current manager is a team of investment professionals.
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 6.03%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 8.15%, 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. Over the past three years, DODBX's standard deviation comes in at 8.96%, compared to the category average of 7.61%. The standard deviation of the fund over the past 5 years is 9.24% compared to the category average of 7.8%. This makes the fund more volatile than its peers over the past half-decade.
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In DODBX's case, the fund lost 45.78% in the most recent bear market and underperformed comparable funds by 10%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.72, which means it is hypothetically less volatile than the market at large. 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. With a negative alpha of -1.48, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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.
The mutual fund currently has 87.74% of its holdings in stocks, which have an average market capitalization of $143.23 billion. The fund has the heaviest exposure to the following market sectors:
With turnover at about 24%, this fund is making fewer trades than comparable funds.
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 0.92%. So, DODBX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.
Overall, Dodge & Cox Balanced Fund ( DODBX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on the Allocation Balanced area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into DODBX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.