Comeback Funds
By ROB WHERRY
Lately it seems that whenever we talk to advisers and industry watchers, there's one fund family that generates the most discussion: Dodge & Cox. The venerable 78-year-old firm got caught this year holding stocks like Fannie Mae, American International Group and Wachovia as those companies spiraled downward. That has caused its flagship fund, Dodge & Cox Stock, to post a 47.7% loss in 2008, worse than the Standard & Poor's 500-stock index's 41.1% decline.
That's an unaccustomed place for this company. Its funds ordinarily are ranked high in their respective categories. Indeed, Dodge & Cox Stock has returned an average annual 4.4% the past decade, a tally that puts it near the top of the large-cap value category. That leaves shareholders wondering: Will Dodge & Cox make a comeback? While we think the answer is an unequivocal yes, we also realize we don't have a crystal ball. Unfortunately for investors, there are plenty of other funds out there that sport a similar penthouse-to-doghouse track record.
By ROB WHERRY
Lately it seems that whenever we talk to advisers and industry watchers, there's one fund family that generates the most discussion: Dodge & Cox. The venerable 78-year-old firm got caught this year holding stocks like Fannie Mae, American International Group and Wachovia as those companies spiraled downward. That has caused its flagship fund, Dodge & Cox Stock, to post a 47.7% loss in 2008, worse than the Standard & Poor's 500-stock index's 41.1% decline.
That's an unaccustomed place for this company. Its funds ordinarily are ranked high in their respective categories. Indeed, Dodge & Cox Stock has returned an average annual 4.4% the past decade, a tally that puts it near the top of the large-cap value category. That leaves shareholders wondering: Will Dodge & Cox make a comeback? While we think the answer is an unequivocal yes, we also realize we don't have a crystal ball. Unfortunately for investors, there are plenty of other funds out there that sport a similar penthouse-to-doghouse track record.
This week we're focusing on those funds, with an eye toward finding the ones best poised to bounce back. We started with ones that have stellar track records over the past decade, but also were in the bottom 40% of their peer groups the past three years. We knocked out those with sales loads and added our usual fee criteria.
We were left with 28 equity funds. We handicapped that list by picking seven we think will return to form based on adviser interviews, managers' reputations, past track records, and the funds' strategy and current portfolios. The finalists are listed below.
No comments:
Post a Comment