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3 Stock Funds to Watch

This trio of new stock funds added to Morningstar Prospects may someday come under full coverage.

Morningstar Prospects is a list of up-and-coming or under-the-radar investment strategies that Morningstar Manager Research may someday bring under full coverage. We recently added a trio of new stock funds to the list.

Dodge & Cox Emerging Markets Stock (DODEX) has some hallmarks of a Dodge & Cox strategy, but it ventures into new territory. The mutual fund, launched in May 2021, adopts the firm’s prudent investment committee structure. The strategy also draws upon a proven, valuation-driven approach that has produced solid emerging-markets picks for Dodge & Cox International Stock (DODFX). Unlike the firm’s other offerings, however, this one relies on a quantitative model to find attractive stocks. The firm’s vaunted analyst team doesn’t dive deeply into the model’s recommendations; it simply checks if those stocks meet the team’s expectations for valuation, management, and business prospects. The resulting portfolio has 200-plus holdings, much more than the typical Dodge & Cox equity strategy. It is worth watching how Dodge & Cox handles its new quant tool and its effect on analysts’ workloads, but the firm has had success with every fund launched in its 91-year history. Investors are paying a fair price as the fund gets going: Like all Dodge & Cox mutual funds, its expense ratio lands in its peer group’s cheapest quartile.