Dodge & Cox Worldwide Global Stock Fund

Important information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest.

There has been a lot of attention on growth stocks recently, especially those operating in the technology sector, but it’s important not to overlook the diversification benefits of a more value-oriented mandate. A good example is the Dodge & Cox Worldwide Funds plc - Global Stock Fund, whose experience in this area has helped to earn it a place in Fidelity’s Select 50 list of handpicked funds.

Dodge & Cox was established in 1930 and is one of the largest independently owned investment firms in the world. Unlike most of their peers, they only manage money using a value-based philosophy, which they apply across a focused set of strategies.

Objective and approach

The Global Stock fund provides exposure to a diversified portfolio of medium-to-large, well-established companies that appear to be temporarily undervalued, but have a favourable outlook for long-term growth. These can be based in either the developed or the emerging markets.

When making the stock selection decisions they take into account a number of different factors including the company’s: financial strength; economic condition; competitive advantage; quality; and environmental, social and governance (ESG) credentials; as well as the reputation, experience and competence of its management. It is then a case of weighing them all up against the valuation.¹

The underlying portfolio

At the end of September the fund had a total of 91 stocks drawn from 19 different countries. The ten largest positions accounted for just 23.8% of the assets, which suggests that it is a well-diversified portfolio that is not overly reliant on any particular company.²

Its holdings tend to be smaller than those in the benchmark with a weighted average market cap of $234bn compared to $585bn. The value approach has also resulted in a substantially cheaper price to earnings ratio than for the index.³

Top 10 holdings

1. Alphabet
2. Sanofi
3. GSK
4. Charles Schwab
5. Johnson Controls International
6. Charter Communications
7. Alibaba Group
8. RTX Corporation
9. Fiserv
10. Comcast

Source: Dodge & Cox Worldwide Global Stock Fund factsheet, 30 September 2024 

From a top down perspective, the largest allocation was the US at 46.5%, but this was well below the MSCI ACWI benchmark of 64.5%, whereas the UK, Europe and the Emerging Markets were all overweight. The key sector bets were Financials and Health Care, with Technology being the main underweight.⁴

What are the manager’s latest views?

Writing in their latest update at the end of June, the managers said that the widening valuation gaps between US and non-US stocks, as well as between growth and value stocks, create opportunities for bottom-up, value-oriented investors like Dodge & Cox.⁵

“We continue to be optimistic about the long-term outlook of the fund’s portfolio, which trades at 11.8 times forward earnings (versus 17.7 times for the MSCI ACWI) and remains diversified across sectors, geographies and investment theses.”⁶

Performance

Over the 10 years to the end of September the GBP accumulating share class produced an average annual total return net of fees of 10.4%. This looks like an excellent result, despite being slightly behind the benchmark’s 11.5% due to the dominance of growth stocks for much of the period.⁷ Please remember past performance is not a reliable indicator of future returns.

How do the costs stack up?

The ongoing charges figure of 0.63% appears good value for an actively managed global fund that is run by such an experienced firm.⁸

Who is it suitable for?

As with other equity-only products, it really requires a long-term investment horizon of ten years or more to allow the returns to compound. The value bias means that it would work well alongside a more growth-oriented alternative.

More on Dodge & Cox Worldwide Funds plc - Global Stock Fund

Past performance is not a reliable indicator of future returns

Source: Morningstar from 30.9.19 to 30.9.24. Basis: bid to bid with income reinvested in GBP. Excludes initial charge.

Source:

^1,2,3,4,7,8 Dodge & Cox Worldwide Global Stock Fund factsheet, 30 September 2024
⁵ Dodge & Cox Semi-Annual Report, 30 June 2024
⁶ Dodge & Cox Global Stock Fund Investment Commentary, 30 June 2024