Dodge & Cox Worldwide US Stock A USD |
Morningstar's Take
|03/06/2024by Tony Thomas
| Dodge & Cox’s January 2025 personnel update suggests that by year’s end, a generational leadership change that began to take shape at least six years ago will be complete. Careful planning has made this process smooth so far, and the remaining steps aren’t too worrisome. Dodge & Cox retains its High Parent rating. The main news is that Dana Emery—CEO, chair of the firm’s board, and a member of the US and global fixed-income investment committees—will retire at the end of 2025 after more than four decades at Dodge & Cox. Her departure will conclude an orderly handoff of duties by Emery and now-retired chair and chief investment officer Charles Pohl. In Emery’s case, she started sharing fixed-income leadership duties back in 2019 and handed the presidency to Roger Kuo in mid-2022. Pohl’s retirement followed a similar path, with successors placed in supporting positions before taking up full responsibilities. The firm has telegraphed each step well. A few key preparatory steps will take place in 2025 to wrap up Emery’s Dodge & Cox career and maintain the firm’s two-leader structure which she and Pohl inherited. Throughout the year, David Hoeft—CIO since the start of 2022—will shadow Emery as chair of the firm, while Kuo will be her understudy as CEO and chair of the fund board. When 2026 dawns, Hoeft will be the firm’s chair as well as its CIO; Kuo will be president, CEO, and chair of the fund board. Both are already familiar figures at the firm. Hoeft has spent 31 years at Dodge & Cox, while Kuo has served 26. Like their predecessors, they rose through the investment team’s ranks, and their apprenticeships under Pohl and Emery should serve them well as they become the firm’s next generation of leaders. The investment committees that manage the firm’s strategies are changing a bit as well, but their depth and structural integrity mean they can handle the adjustments. As announced in July 2024, Mario DiPrisco came off the international equity and emerging-markets equity investment committees and left the firm at the end of 2024. Hoeft, who already serves on the US and global equity investment committees, will replace him on the international side; Phil Barret, who sits on the US equity committee, will expand his duties by taking DiPrisco’s place on the emerging-markets team. Both appointments take effect Jan. 15, 2025. In another change—rather unusual in that it occurred with little advance notice—Karol Marcin also left the firm as 2024 closed. Dodge & Cox indicated that Marcin, a member of the US and global equity investment committees and a 24-year veteran of the firm, resigned. To keep its committees at sizes that its leadership believes allow for healthy, participatory debate (usually around a half-dozen members), Marcin will not be replaced on either committee. With Emery’s pending retirement, one addition will shore up the fixed-income investment committees. Jose Ursua, who specializes in macroeconomics and currencies and who is a member of the global fixed-income investment committee, will join the US fixed-income investment committee on Jan. 15 while retaining those other duties. Emery will stay on both committees throughout 2025. Dodge & Cox’s succession planning is typically exemplary, and if all goes as planned in the year ahead, it will again pull off a multiyear leadership transition without hurting its culture or operations. |
| Exceptional personnel and a proven, faithfully followed approach earn high marks for Dodge & Cox Stock and its related Irish UCITS offering Dodge & Cox Worldwide US Stock. A group of managers gives this strategy stability. Seven veteran investors serve on Dodge & Cox’s US equity investment committee, including CIO David Hoeft and director of research Steven Voorhis. Its structure helps the strategy benefit from different perspectives and address team changes with relative ease (as it has in the past). Talented as it is, the committee relies heavily on an impressive unit of global industry analysts who perform the extensive research that’s key to this strategy. The process requires expert hands such as these. The strategy seeks an edge on out-of-favor, cheap stocks. Analysts scrutinize companies’ competitive strengths, growth opportunities, and leadership. They discuss firms’ merits first in specialized sector committees; promising prospects then go before the investment committee. The managers try to take advantage of what they believe are temporary troubles to buy and add to these stocks. Such an approach courts risk. Dodge & Cox has improved its risk management in recent years, however, building in-house tools to help its investment teams better understand portfolio traits and risks facing their holdings. Managing risks hasn’t necessarily tempered the strategy’s returns—they’re typically quite lumpy over short periods—but the managers’ calm demeanor and the analysts’ vigilance often turn that volatility to investors’ advantage over time. The strategy has an impressive long-term record. Investors in the Irish UCITS should know that it closely resembles but doesn’t exactly replicate Dodge & Cox Stock’s portfolio. The US mutual fund typically invests a bit in non-US stocks to which many overseas investors already have access. In response, the UCITS portfolio usually holds fewer non-US stocks and replaces them with similar US counterparts. In March 2024, for example, the UCITS portfolio didn’t own Dutch insurer Aegon and Swiss bank UBS; instead, it held slightly more in US companies such as MetLife and Charles Schwab than the mutual fund. |
Humming along. To find out how Morningstar rates a fund click here.
| Morningstar Pillars | |
| People | High |
| Parent | High |
| Process | High |
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
|
| Morningstar reserve its rights to charge for access to these Ratings and/or Rating report. |
|
| Permissions/Reprints E-mail Morningstar |
