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Frequent Contributor

2* Rating for Dodge & Cox - are they next?

Yes, we speak of things that matter
    With words that must be said
        "Can analysis be worthwhile?"
            "Is Value really dead?"

             (apologies to ~ Paul Simon)

D&C funds have bounced around between 5* and 4* ... occasionally 3* during periods of high volatility when they found themselves on the wrong side of the market. But they're usually not wrong for long and they bounce back quickly.

DODWX with a 2* rating is something I haven't seen before.

We've seen the demise of Oak Value, Clipper, Torray, Muhlenkamp, Davis/Feinberg, Third Avenue (in flames), Longleaf, ICAP,  and most recently it seems Oakmark/Harris Associates (all 1* funds).

Is Dodge & Cox next?

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Participant ○○○

Re: 2* Rating for Dodge & Cox - are they next?

M* seems to love D&C, just as they love Vanguard - their ratings always seem to have one star higher than performance would imply.  No idea if they are next. The whole market seems so irrational currently that I've given up trying to figure out whether one investment would be better than another.  Mentally, I'm selling in May and going away.

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Re: 2* Rating for Dodge & Cox - are they next?


@chang wrote:

Yes, we speak of things that matter
    With words that must be said
        "Can analysis be worthwhile?"
            "Is Value really dead?"

            ~ Paul Simon

D&C funds have bounced around between 5* and 4* ... occasionally 3* during periods of high volatility when they found themselves on the wrong side of the market. But they're usually not wrong for long and they bounce back quickly.

DODWX with a 2* rating is something I haven't seen before.

We've seen the demise of Oak Value, Clipper, Torray, Muhlenkamp, Davis/Feinberg, Third Avenue (in flames), Longleaf, ICAP,  and most recently it seems Oakmark/Harris Associates (all 1* funds).

Is Dodge & Cox next?


That should really read: "With apologies to Paul Simon"!  8^b

D&C screwed up in 2008.  Then doubled down on value, which has gone nowhere.  I'm not sure they're dead exactly, but they stick to their knitting; you've got to give them that!

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Re: 2* Rating for Dodge & Cox - are they next?

D&C is highly overrated by M*.  Not a fan of D&C’s Chairman and Director of Research and their mediocre performance has happened on their watch.  I think their corporate culture needs a good housecleaning.  The firm is located in San Francisco and was maybe the last mutual fund company to buy any of the tech firms from that area.  Why didn’t they see value right in their own backyard.  Some of the key people who really drove D&C’s outperformance retired years ago and now the firm is average at best.  Key people at Primecap have also retired and they have become average at best.  Sometimes firms are unable to effectively pass along the culture that made them successful.  From my perspective there are only three firms that I have confidence in being able to effectively pass along their corporate culture that made them successful.  Those three are TRP, Wellington, and Capital Group.  Although I think Wellington is a fine firm, I even question my owning VDIGX as compared with simply owning the S&P500 Index (FXAIX).

I pay very little attention to M* rankings because they fall in love with certain funds and stick to their rankings way too long.  FPACX is another example.  M* makes money by promoting active management.  If everyone used index funds, why would you need or want to look at M*.  The reality is the vast majority of investors should use index funds.  I say that as someone who has the vast majority of his money in actively managed funds, but I recognize and acknowledge the odds are against me.  The actively managed fund industry is a fabulous marketing machine and consumers fall for it.  Just think of the money posters on these forums have paid in management fees to firms that have underperformed the index.  That money would be better in the wallets of posters rather than underperforming fund managers.

There was an article written by Jason Zweig where he indicated if you are going to invest in active management do it with a fund where the management has wide latitude to invest in any financial security it thinks will appreciate in value.  Otherwise, just buy a low cost broad-based index fund (which is where the bulk of your money should be anyway).  I think Mr. Zweig may have nailed it with his thinking.  

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Frequent Contributor

Re: 2* Rating for Dodge & Cox - are they next?

I have been discussing D&C for years.  I found an old comment I posted

D&C have decent-good funds but many of them are riskier and it shows at market stress such as 2008 and many times when stocks go down at least 10%. This is why when volatility increases, such as the last 3 years, their funds lag.
I have never owned their funds because I found better choices.

DODBX-->I used to own PRWCX. In the last 3-5 years, DODBX ranks in its category at 90 and 50. 90 means it's in the bottom 10%. JABAX is much better too.

DODIX-->is probably their best fundDODIX is really Multi sector light. 

DODGX--->SP500(VFIAX/VFINX) has better performance for 5-10-15 years. This is PorVis(link) for 15 years that shows that SP500 had better performance, SD, Sortino.

DODFX has a negative performance for 3-5 years and ranks in its category at 77,78 which is pretty bad. Very easy to find better funds such as AFCNX.

D&C funds have low expenses which are nice but only one part of the puzzle.

You are getting to my LT views, mostly indexes for stocks.  The more bonds you have, you can find great bond funds.  There are very a few managed funds that work LT, most work just several years.  Technology and access level the field of investing, it's much harder to beat stock indexes on risk-adjusted. If I would gamble on a stock category, high tech has been doing it for decades.

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Participant ○○

Re: 2* Rating for Dodge & Cox - are they next?

DODGX has a five year trailing return 1.1% (annualized) higher than its index. Many other value oriented funds haven't done nearly as well. For instance OAKMX has a trailing five year return 4.8% (annualized) lower than its index. Given how many other value-oriented funds have been so thoroughly crushed this year, DODGX is doing pretty well. 

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Frequent Contributor

Re: 2* Rating for Dodge & Cox - are they next?

Quick note about comments on active vs passive (which are not really welcomed on this thread):

1. If the active fund in question doesn’t have an explicit strategy to beat a specific index benchmark, then you’re wasting your breath. Maybe you’re making a point about AA, but that’s something else.

2. If an active fund is 3* after expenses, it doesn’t suck. It’s roughly in line with its benchmark / category. (Actually I look at both actual returns and risk-adjusted returns, because I tend not to mind excess volatility. Star rankings only reflect risk-adjusted returns.)

Prolonged 2* and 1* performance, however, isn’t good.

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Re: 2* Rating for Dodge & Cox - are they next?


@chang wrote:

Quick note about comments on active vs passive (which are not really welcomed on this thread):

1. If the active fund in question doesn’t have an explicit strategy to beat a specific index benchmark, then you’re wasting your breath. Maybe you’re making a point about AA, but that’s something else.

2. If an active fund is 3* after expenses, it doesn’t suck. It’s roughly in line with its benchmark / category. (Actually I look at both actual returns and risk-adjusted returns, because I tend not to mind excess volatility. Star rankings only reflect risk-adjusted returns.)

Prolonged 2* and 1* performance, however, isn’t good.


There is a saying....

Don't ask the question if you can’t handle the answer you may receive.

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Frequent Contributor

Re: 2* Rating for Dodge & Cox - are they next?

CE - I’m trying to stay on topic and avoid known mine fields, especially when they are off topic. Your cooperation would be appreciated.
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Re: 2* Rating for Dodge & Cox - are they next?

I have watched, liked and owned DODGX for many years (some years I had to hold my nose) and it's a pretty good fund. I like team management and their e/r is low. I remember people raving about its greatness and probably some of the same people screaming about how horrible it is. This starting this year half of my RMDs will be going in to DODGX and I feel it's a good move for me (And yes I think D&C will be around for quite some time).

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Re: 2* Rating for Dodge & Cox - are they next?


@Recordman wrote:

I have watched, liked and owned DODGX for many years (some years I had to hold my nose) and it's a pretty good fund. I like team management and their e/r is low. I remember people raving about its greatness and probably some of the same people screaming about how horrible it is. This starting this year half of my RMDs will be going in to DODGX and I feel it's a good move for me (And yes I think D&C will be around for quite some time).


Sure, I like many vehicles but why would I buy an inferior vehicle.  This is 15 years of DODGX vs VFIAX=SP500(link).  The SP500 made more money with better volatility, Sharpe and Sortino.  

Total Return % (05/08/2020)YTD1-Year3-Year5-Year10-Year15-Year
DODGX-19.51-11.261.434.5810.236.5
VFIAX-8.73.819.018.912.478.53
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Re: 2* Rating for Dodge & Cox - are they next?


@FD1001 wrote:

@Recordman wrote:

I have watched, liked and owned DODGX for many years (some years I had to hold my nose) and it's a pretty good fund. I like team management and their e/r is low. I remember people raving about its greatness and probably some of the same people screaming about how horrible it is. This starting this year half of my RMDs will be going in to DODGX and I feel it's a good move for me (And yes I think D&C will be around for quite some time).


Sure, I like many vehicles but why would I buy an inferior vehicle.  This is 15 years of DODGX vs VFIAX=SP500(link).  The SP500 made more money with better volatility, Sharpe and Sortino.  

Total Return % (05/08/2020)YTD1-Year3-Year5-Year10-Year15-Year
DODGX-19.51-11.261.434.5810.236.5
VFIAX-8.73.819.018.912.478.53

FD, that’s actually my point.  Some investors will never understand or maybe choose not to because their egos can’t handle it.

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Re: 2* Rating for Dodge & Cox - are they next?

One of the easiest ways to escape lower returns is to claim that a managed fund can't compare to an index or another managed fund because they are not equal.

With that in mind, I suggest all managed funds to change their prospectus.  Here is an example: our funds will be invested MOSTLY in US LC but we may invest up to 30% in SC-MD but also abroad....boom...done...wait, we can invest in growth but also value...please don't try to compare our fund to anything, we just told you why not  :-)

If I run the show, I make all funds select their benchmarks and %.  If they trail them for 1-3-5 years they must lower the ER to a max of 0.3% or shut it down. Then, If they beat it after 3 years they can raise the ER again.

 

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Re: 2* Rating for Dodge & Cox - are they next?


@FD1001 wrote:

@Recordman wrote:

I have watched, liked and owned DODGX for many years (some years I had to hold my nose) and it's a pretty good fund. I like team management and their e/r is low. I remember people raving about its greatness and probably some of the same people screaming about how horrible it is. This starting this year half of my RMDs will be going in to DODGX and I feel it's a good move for me (And yes I think D&C will be around for quite some time).


Sure, I like many vehicles but why would I buy an inferior vehicle.  This is 15 years of DODGX vs VFIAX=SP500(link).  The SP500 made more money with better volatility, Sharpe and Sortino.  

Total Return % (05/08/2020)YTD1-Year3-Year5-Year10-Year15-Year
DODGX-19.51-11.261.434.5810.236.5
VFIAX-8.73.819.018.912.478.53

You are comparing a value fund to a broad market fund. That is not a valid comparison. If someone doesn't want to invest in a value fund that's fine, but they shouldn't avoid such a fund based only on a backward-looking apples-to-oranges comparison.

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Re: 2* Rating for Dodge & Cox - are they next?


@Academic wrote:

@FD1001 wrote:

@Recordman wrote:

I have watched, liked and owned DODGX for many years (some years I had to hold my nose) and it's a pretty good fund. I like team management and their e/r is low. I remember people raving about its greatness and probably some of the same people screaming about how horrible it is. This starting this year half of my RMDs will be going in to DODGX and I feel it's a good move for me (And yes I think D&C will be around for quite some time).


Sure, I like many vehicles but why would I buy an inferior vehicle.  This is 15 years of DODGX vs VFIAX=SP500(link).  The SP500 made more money with better volatility, Sharpe and Sortino.  

Total Return % (05/08/2020)YTD1-Year3-Year5-Year10-Year15-Year
DODGX-19.51-11.261.434.5810.236.5
VFIAX-8.73.819.018.912.478.53

You are comparing a value fund to a broad market fund. That is not a valid comparison. If someone doesn't want to invest in a value fund that's fine, but they shouldn't avoid such a fund based only on a backward-looking apples-to-oranges comparison.


That was expected, claim that your lagging fund is different ;-)

BTW, DODGX owns Google + MSFT at number 2,4...so much for "value". 

When you own a fund that falls behind for performance but also risk attributes (SD, Sharpe,Sortino) it's a 2 strike knockout.

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Re: 2* Rating for Dodge & Cox - are they next?


@cegibbs wrote:

I pay very little attention to M* rankings because they fall in love with certain funds and stick to their rankings way too long. [...]  M* makes money by promoting active management.  If everyone used index funds, why would you need or want to look at M*.  The reality is the vast majority of investors should use index funds.  I say that as someone who has the vast majority of his money in actively managed funds, but I recognize and acknowledge the odds are against me.  The actively managed fund industry is a fabulous marketing machine and consumers fall for it.  Just think of the money posters on these forums have paid in management fees to firms that have underperformed the index.  That money would be better in the wallets of posters rather than underperforming fund managers.

There was an article written by Jason Zweig where he indicated if you are going to invest in active management do it with a fund where the management has wide latitude to invest in any financial security it thinks will appreciate in value.  Otherwise, just buy a low cost broad-based index fund (which is where the bulk of your money should be anyway).  I think Mr. Zweig may have nailed it with his thinking.  


Well said, @cegibbs. But when it comes to bond funds I definitely prefer active management.

Fred

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Re: 2* Rating for Dodge & Cox - are they next?


@FD1001 wrote:

@Academic wrote:

@FD1001 wrote:

@Recordman wrote:

I have watched, liked and owned DODGX for many years (some years I had to hold my nose) and it's a pretty good fund. I like team management and their e/r is low. I remember people raving about its greatness and probably some of the same people screaming about how horrible it is. This starting this year half of my RMDs will be going in to DODGX and I feel it's a good move for me (And yes I think D&C will be around for quite some time).


Sure, I like many vehicles but why would I buy an inferior vehicle.  This is 15 years of DODGX vs VFIAX=SP500(link).  The SP500 made more money with better volatility, Sharpe and Sortino.  

Total Return % (05/08/2020)YTD1-Year3-Year5-Year10-Year15-Year
DODGX-19.51-11.261.434.5810.236.5
VFIAX-8.73.819.018.912.478.53

You are comparing a value fund to a broad market fund. That is not a valid comparison. If someone doesn't want to invest in a value fund that's fine, but they shouldn't avoid such a fund based only on a backward-looking apples-to-oranges comparison.


That was expected, claim that your lagging fund is different ;-)

BTW, DODGX owns Google + MSFT at number 2,4...so much for "value". 

When you own a fund that falls behind for performance but also risk attributes (SD, Sharpe,Sortino) it's a 2 strike knockout.


DODGX portfolio average P/E 10.0 vs. VFINX average P/E 21.0. 

Your trailing performance numbers really don't give an accurate picture of the difference between these two investments. 

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Re: 2* Rating for Dodge & Cox - are they next?


@Academic wrote:

You are comparing a value fund to a broad market fund. That is not a valid comparison. If someone doesn't want to invest in a value fund that's fine, but they shouldn't avoid such a fund based only on a backward-looking apples-to-oranges comparison.


I agree, they are not directly comparable, and DODGX does have a lower average P:E, but, like you said, some choose not to like, after 2016, a few months into 2017, I sold out because I did not want to hold a large-cap value fund; however, mid-cap value, I have kept FLPSX so far and might add to it. I also sold out of DODIX, as it lost value and then in 2019 gained some back then it did not do as well as other core plus funds and aggregate bond funds, now I do not hold it, or any D&C. 

This may mean I have lost my faith is D&C and no loner invest with them.

PS. I do think M* has a favorable view of D&C, but they also favor other funds for seemingly pointless reasons

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Re: 2* Rating for Dodge & Cox - are they next?

I replaced dodgx by vanguard primecap core last month. 

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Re: 2* Rating for Dodge & Cox - are they next?


@Academic wrote:

@FD1001 wrote:

@Academic wrote:

@FD1001 wrote:

@Recordman wrote:

I have watched, liked and owned DODGX for many years (some years I had to hold my nose) and it's a pretty good fund. I like team management and their e/r is low. I remember people raving about its greatness and probably some of the same people screaming about how horrible it is. This starting this year half of my RMDs will be going in to DODGX and I feel it's a good move for me (And yes I think D&C will be around for quite some time).


Sure, I like many vehicles but why would I buy an inferior vehicle.  This is 15 years of DODGX vs VFIAX=SP500(link).  The SP500 made more money with better volatility, Sharpe and Sortino.  

Total Return % (05/08/2020)YTD1-Year3-Year5-Year10-Year15-Year
DODGX-19.51-11.261.434.5810.236.5
VFIAX-8.73.819.018.912.478.53

You are comparing a value fund to a broad market fund. That is not a valid comparison. If someone doesn't want to invest in a value fund that's fine, but they shouldn't avoid such a fund based only on a backward-looking apples-to-oranges comparison.


That was expected, claim that your lagging fund is different ;-)

BTW, DODGX owns Google + MSFT at number 2,4...so much for "value". 

When you own a fund that falls behind for performance but also risk attributes (SD, Sharpe,Sortino) it's a 2 strike knockout.


DODGX portfolio average P/E 10.0 vs. VFINX average P/E 21.0. 

Your trailing performance numbers really don't give an accurate picture of the difference between these two investments. 


The only accuracy I'm looking for is risk-adjusted returns and DODGX failed on both performance + risk attributes which you don't want to address. I have been saying it about D&C for years, not just today.

If the term "VALUE" gives you comfort while DODGX makes less money + have higher volatility and you are OK with it then go ahead and keep it but where is the logic?

But wait, why just hold DODGX I can offer many other lagging funds when are you going to address the real issue of risk-adjusted returns.

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