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How Dodge & Cox Looks at Financials

Dodge & Cox's Charles Pohl on the fund's investment process, weighting, and recent purchases in the financial sector.

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Dan Culloton: In 2008, all of the funds really got hurt by their weighting in financials, in some financial picks. The weighting has come down since then, although you haven't abandoned financials altogether. But I'm wondering if the weighting in your funds is down because you've become more reticent to invest in financials or if the opportunities just aren't there based on your criteria.

Charles Pohl: Well, if you look back at the end of 2006, we were significantly underweight financials, and it wasn't until the prices started coming down in the fourth quarter of 2007 that we even got up to where we were approaching the index weight in financials. And at the end of '07, we were still slightly underweight financials, and approximately by the same amount that we are just a tad underweight today.

Dan Culloton has a position in the following securities mentioned above: DODFX. Find out about Morningstar’s editorial policies.