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Market Turmoil Hammers Dodge & Cox Stock

The coronavirus and the steep drop in oil prices were an unexpected double whammy for this Gold-rated fund.

Securities In This Article
Charles Schwab Corp
Dodge & Cox Stock I
Capital One Financial Corp
Occidental Petroleum Corp
Wells Fargo & Co

Editor’s note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.

Dodge & Cox Stock DODGX has struggled in 2020, posting bottom-quintile returns in its large-value Morningstar Category through March 16. Yet investors shouldn't see this as a sign that the fund's managers have strayed from their proven process. The fund retains its Morningstar Analyst Rating of Gold.

The managers' contrarian streak led them into sectors that had languished even before the coronavirus that causes COVID-19 hit, such as financials and energy. The virus' arrival in the United States spurred interest-rate cuts and lower oil prices, which hammered key holdings. The fund's top four holdings in December 2019 were financials--Wells Fargo WFC, Capital One Financial COF, Charles Schwab SCHW, and Bank of America BAC--and each lost 35% or more for the year through March 16. Occidental Petroleum OXY was its top energy pick in December, but oil's weakness raised questions about the company's ability to pay its debts. As a result, the stock was down nearly 70% through mid-March.

The Dodge & Cox brand of value investing sometimes courts risk, but COVID-19 and the steep drop in oil prices were an unexpected double whammy that pummeled this fund. Its seasoned investment committee and time-tested approach should help it make adjustments and navigate these challenges effectively over the long run.

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About the Author

Tony Thomas

Associate Director
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Tony Thomas is associate director of equity strategies for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers domestic-equity funds across the capitalization spectrum.

Before joining Morningstar in 2016, Thomas was the dean of arts, sciences, and basic education at Wenatchee Valley College in Washington. Prior to that, he was an instructor of philosophy at Kishwaukee College in Illinois, where he was the founding director of the college’s honors program.

Thomas holds a bachelor’s degree in philosophy from Utah State University, a master’s degree in philosophy from Northern Illinois University, and a doctorate in philosophy from the University of Missouri.

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