Why Dodge & Cox International Stock Is a Good Investment
The fund is outperforming its peer group this year. But that's not why Morningstar likes it.
Plenty of proven strengths earn Dodge & Cox International Stock's (DODFX) two share classes Morningstar Analyst Ratings of Gold.
The investment team's structure and makeup are impressive. Here, a seven-member investment committee calls the shots. The committee structure fosters healthy dialogue, consistency of execution, and stability. The latter is evident in 2022 as Diana Strandberg, who steered this fund's launch in 2001, heads toward retirement at year's end. She and the firm have cultivated strong successors such as Ray Mertens, who worked with Strandberg in the global equity group before joining her here in 2018. Behind the committee sits a deep, talented bench of equity and fixed-income analysts, most of whom Dodge & Cox has molded from the start of their careers.
The seasoned management team has capably handled this strategy's contrarian, value-seeking approach. Focusing on developed nations but willing to wade well into emerging markets, the managers look to invest in businesses they believe have competitive edges, good growth prospects, and capable leaders, but whose shares have suffered because of bad news or temporary economic headwinds. Such investments might take time to work out, but the Dodge & Cox team has shown it is patient and opportunistic. Improved risk-management tools are a plus. Better understanding of portfolio-level risk exposures and selective use of currency hedging or derivatives such as total-return swaps help temper risk. A recent effort, begun in 2021-22, urges closer consideration before selling winners because value investors sometimes exit too early from once-undervalued stocks that start to work. In all, it's a potent style of investing that works well for long-term investors.
It helps that Dodge & Cox is an excellent steward of investors' capital along the way. The firm keeps its funds' expense ratios in their respective peer groups' cheapest quartiles. In May 2022, the firm launched a new X share class across most funds (including this one) to better serve defined-contribution plans' needs.
All of this makes for an excellent international-equity option.
Morningstar Analyst Rating: Gold
Process Pillar: High
People Pillar: High
Parent Pillar: High
Tony Thomas has a position in the following securities mentioned above: DODFX. Find out about Morningstar’s editorial policies.