There are plenty of choices in the Large Cap Value category, but where should you start your research? Well, one fund that might be worth investigating is Dodge & Cox Stock Fund (
DODGX Quick Quote DODGX - Free Report) . DODGX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance. Objective
Large Cap Value mutual funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value; this value investing strategy often leads to low P/E ratios and high dividend yields, though growth levels are often curtailed. The high-growth opportunity of these funds are slowed even further, as large-cap securities are generally in stable industries with low to moderate growth prospects. Therefore, Large Cap Value funds are usually more appealing to investors who are interested in a stable income stream.
History of Fund/Manager
DODGX is a part of the Dodge & Cox family of funds, a company based out of Boston, MA. Dodge & Cox Stock Fund made its debut in December of 1964, and since then, DODGX has accumulated about $70.76 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 10.22%, and it sits 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 9.09%, 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. DODGX's standard deviation over the past three years is 13.55% compared to the category average of 12.12%. The standard deviation of the fund over the past 5 years is 13.9% compared to the category average of 12.16%. This makes the fund more volatile than its peers over the past half-decade.
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In DODGX's case, the fund lost 57.94% in the most recent bear market and underperformed its peer group by 7%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. DODGX has a 5-year beta of 1.09, which means it is likely to be more volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. DODGX has generated a negative alpha over the past five years of -2.68, demonstrating that 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 primarily on equities that are traded in the United States.
The mutual fund currently has 91.36% of its holdings in stocks, and these companies have an average market capitalization of $151.52 billion. The fund has the heaviest exposure to the following market sectors:
Finance Technology Industrial Cyclical Health
This fund's turnover is about 18%, so the fund managers are making fewer trades than its comparable peers.
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, DODGX is a no load fund. It has an expense ratio of 0.52% compared to the category average of 1%. So, DODGX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Overall, Dodge & Cox Stock Fund ( DODGX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Dodge & Cox Stock Fund ( DODGX ) looks like a good potential choice for investors right now.
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