Choosing a Dodge & Cox Fund Is Just the Start
Patience and commitment are also required for shareholders to succeed.
It might be tough to have confidence in an actively managed fund whose portfolio in recent years has featured J.C. Penney (JCP), Nokia (NOK), Hewlett-Packard (HPQ), and Dell (DELL). Portfolio managers are supposed to select winners, not amass a collection of troubled companies with sketchy prospects and painful stock performance. One might guess that this was the portfolio of a struggling stock-picker who should find a different career, or perhaps that of an attention-seeking hedge-fund giant, gambling that he can force shakeups in management or strategy and then profit from a quick pop in the stock price.
Neither is the case. Instead, the manager in question is Dodge & Cox, a very successful firm hardly considered one of the investment world's daredevils, and certainly not an attention seeker. Its portfolio managers aren't hoping for rapid turnarounds; they aim to produce solid returns over decades. In spite of owning challenged companies which, in some cases, have been disappointing investments, the long-term performance of Dodge & Cox's stock funds has been strong. But the ride has not been easy--the funds suffered even more than most rivals in the devastating bear market from late 2007 to early 2009 and again in 2011's rough conditions.
Gregg Wolper has a position in the following securities mentioned above: DODFX. Find out about Morningstar’s editorial policies.