When investors are able to buy Dodge & Cox Global Stock in about three months, the fund will be more expensive than other Dodge & Cox funds, with a 0.60% management fee and total expenses capped at 0.90%. Currently the other Dodge & Cox funds are in the 0.44% - 0.65% total expense ratio range. We expect the total expense ratio of this new fund to reach around 0.80% in the next couple of years, and ultimately settle at roughly 0.65% once assets take off (which might take a little longer now that the market is weak and other Dodge & Cox funds have reopened). These extra fees in the near term will more than likely be offset by increased performance (relative to other Dodge & Cox funds) due to the benefits of a much smaller asset level (you will notice a low fat fund index on this fund's data page during its formative years). But should you buy?
Back when D&C launched International Stock, we didn't wait around to add it to our favorite funds list, we did it in 2002. We'll probably add this new fund to our favorites list for the global stock category, but we're not particularly enthusiastic about giant value funds right now, especially ones investing abroad.
Dodge & Cox funds currently suffer from two problems: 1) too much money under management 2) the value style is slipping out of favor after years of outperformance.
Of course, most other funds suffer from far more problems: mediocre management, high fees, style never in favor, to name a few.
Value should continue having problems beating the S&P 500 because too much money has flooded the doors of top value funds like Dodge & Cox. Currently investors in many value oriented funds are learning that just because a stock has a low P/E ratio and pays a market beating dividend doesn't mean it can't be overvalued. Financial stocks are currently teaching this lesson. Energy stocks will be soon. With so many "fundamental" ETFs offered up in recent years, could it be any other way?
Today Dodge & Cox manages around a quarter trillion dollars in funds (much of it in Dodge & Cox Stock [DODGX]) and private accounts. In some ways Dodge & Cox (and T. Rowe Price) are following a similar path to Janus in the 1990s. These fund families are the low fee performance leaders in what happened to be the way the market pendulum was swinging. The press, fund analysts, ratings, and rankings all helped direct performance chasing fund investors into growth and tech funds in the late 1990s. In recent years the flood has been to value and international funds. While I don't predict the same deep troubles I did for Janus back in 2000, overly popular fund families deliver underwhelming performance.
Given the ultra-low fees and quality management, most long term investors will do fine in Dodge & Cox funds in general or this new one in particular - if you have a ten year time horizon this will be one of the best global stock funds over that time period. But then, going way out, most would do fine in Janus funds. Trouble is investors tend to buy near the top and sell near the bottom of the cycle. Those looking to get in on the cheap will do better buying Dodge & Cox funds when asset levels are lower, and other fund investors are less enthusiastic about value and international funds.
Last Friday Dodge & Cox filed with the SEC to launch a new global stock fund - their first new fund since 2001 when they launched Dodge & Cox International Stock (DODFX).
When investors are able to buy Dodge & Cox Global Stock in about three months, the fund will be more expensive than other Dodge & Cox funds, with a 0.60% management fee and total expenses capped at 0.90%. Currently the other Dodge & Cox funds are in the 0.44% - 0.65% total expense ratio range. We expect the total expense ratio of this new fund to reach around 0.80% in the next couple of years, and ultimately settle at roughly 0.65% once assets take off (which might take a little longer now that the market is weak and other Dodge & Cox funds have reopened). These extra fees in the near term will more than likely be offset by increased performance (relative to other Dodge & Cox funds) due to the benefits of a much smaller asset level (you will notice a low fat fund index on this fund's data page during its formative years). But should you buy?
Back when D&C launched International Stock, we didn't wait around to add it to our favorite funds list, we did it in 2002. We'll probably add this new fund to our favorites list for the global stock category, but we're not particularly enthusiastic about giant value funds right now, especially ones investing abroad.
Dodge & Cox funds currently suffer from two problems: 1) too much money under management 2) the value style is slipping out of favor after years of outperformance.
Of course, most other funds suffer from far more problems: mediocre management, high fees, style never in favor, to name a few.
Value should continue having problems beating the S&P 500 because too much money has flooded the doors of top value funds like Dodge & Cox. Currently investors in many value oriented funds are learning that just because a stock has a low P/E ratio and pays a market beating dividend doesn't mean it can't be overvalued. Financial stocks are currently teaching this lesson. Energy stocks will be soon. With so many "fundamental" ETFs offered up in recent years, could it be any other way?
Today Dodge & Cox manages around a quarter trillion dollars in funds (much of it in Dodge & Cox Stock [DODGX]) and private accounts. In some ways Dodge & Cox (and T. Rowe Price) are following a similar path to Janus in the 1990s. These fund families are the low fee performance leaders in what happened to be the way the market pendulum was swinging. The press, fund analysts, ratings, and rankings all helped direct performance chasing fund investors into growth and tech funds in the late 1990s. In recent years the flood has been to value and international funds. While I don't predict the same deep troubles I did for Janus back in 2000, overly popular fund families deliver underwhelming performance.
Given the ultra-low fees and quality management, most long term investors will do fine in Dodge & Cox funds in general or this new one in particular - if you have a ten year time horizon this will be one of the best global stock funds over that time period. But then, going way out, most would do fine in Janus funds. Trouble is investors tend to buy near the top and sell near the bottom of the cycle. Those looking to get in on the cheap will do better buying Dodge & Cox funds when asset levels are lower, and other fund investors are less enthusiastic about value and international funds.