Dodge & Cox, Rookies, and Great Owls

  • Dodge & Cox Balanced Fund (DODBX)
  • Dodge & Cox Global Stock Fund (DODWX)
  • Dodge & Cox Income Fund (DODIX)

All on Honor Roll, which means they are top quintile in category the past 5, 3, and 1 year periods on an absolute return basis.

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DODBX, FAIRX, and Vanguard

Dodge & Cox Balanced (DODBX) is back on the Honor Roll. The only D&C fund to do so.

Fairholme Fund (FAIRX) remains on the Three Alarm list … still in the dog house. As is Sequoia Fund (SEQUX).

Vanguard has 31 Great Owl funds! Can you believe that?! Fidelity has 23. T Rowe Price has 20.

Surprise, Up 10% Plus Past Year

Three perennial GOs remain GOs this month along with Honor Roll distinction: Vanguard Wellesley Income (VWINX), Vanguard Wellington Balanced (VWELX), and Vanguard PRIMECAP (VPMCX). The past 12 months, they’ve each delivered top quintile excess returns. They are also among the highest AUM funds in their respective categories. So much for scale eating returns, in this case anyway … it’s been that kind of market. All these funds, more than 10% return! So much too for 1% real return predictions.

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Great Owl Ratings are Based on Relative Return in Category

GO distinctions are based on a fund’s relative risk-adjusted return within category. So, the category can perform badly, like commodities and EM have done last few years … indeed among the most hated funds, but individual funds can still get high marks.

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3 Bottom Fund Families Each with $1B AUM

I continue to marvel at results of Fund Family Scorecard, which went live on the premium site last week.

How do poor performing fund management companies persist? Could be that absolute return is not a concern, that it’s all about risk adjusted return. Could be that some of the funds did well initially, then went south but investors are too stuck to change. Could be that these firms just have strong marketing and, my friend Ed offers, “write good newsletters.” Could be that they are just having a run of bad luck and stuck in an uncooperative and “irrational” market … but given enough time and a return to sanity, the Great Pumpkin will appear.

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A Couple Pre-Defined Screens

The March update comprises ratings on 9,296 US mutual funds and ETFs (27,307 all share classes), based on Lipper’s Data Feed Service.

Looking through some of our Pre-Defined Screens …

Among the Best Performing Rookies: AQR Equity Market Neutral R6 (QMNRX, Alternative Equity Market Neutral), NWM Momentum (MOMOX, Flexible Portfolio), 361 Global Long/Short Equity Y (AGAWX, Alternative Long/Short Equity), Catalyst Macro Strategy I (MCXIX, Alternative Global Macro), and ProShares S & P MidCap 400 Dividend Aristocrats (REGL, Mid-Cap Core).

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Tough January and Bruce Berkowitz

It was a tough month for equity funds.

Here’s quick summary table showing average fund total return for January, organized by SubType:

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Investing In Five-Star Funds?

It’s not as daft as you’d think.

We asked the good folks at Morningstar if they’d generate a list of all five-star funds from ten years ago, then update their star ratings from five years ago and today. I’d first seen this data several years ago when it had been requested by a Wall Street Journal reporter and shared with us. The common interpretation is “it’s not worth it, since five-star funds aren’t likely to remain five-star funds.”

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Year-end 2015 Category Summary

Below is a simple table summarizing performance for year, organized by SubType and Category … showing Peer Count and Total Return Averages.

Results are computed from our Lipper database month ending December 2015, excludes money market funds. Funds at least one year old. Oldest share class only, includes max front load, if applicable.

I broke out the Alternatives … will likely separate from “Other” (aka Trading categories) in future. Basically, organize by 10 SubTypes instead of the 9 currently.

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The Invisible Chasm

One difference between Morningstar’s results reporting (1-, 3, 5 and 10 year) and ours (up cycle, down cycle, full market cycles plus standard periods) is that theirs contains an invisible chasm. That chasm exists for funds that were around during the 2007-09 market crisis but that do not have a 10 year track record yet. The only thing that Morningstar will report is their records for the past five years or less. No matter how catastrophic their performance during the meltdown, they receive no penalty for it. Their 3- and 5-year return ratings cover only the recent bull market and their star ratings (and risk grades!) are based only on their performance in the good times.

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