On the lookout for a Investment Grade Bond - Intermediate fund? Starting with Dodge & Cox Income I (DODIX) is one possibility. DODIX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify DODIX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
Dodge & Cox is based in San Francisco, CA, and is the manager of DODIX. Dodge & Cox Income I debuted in December of 1988. Since then, DODIX has accumulated assets of about $81.84 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 0.84%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 4.58%, which places it in the top third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. DODIX's standard deviation over the past three years is 6.32% compared to the category average of 8.35%. Looking at the past 5 years, the fund's standard deviation is 6.54% compared to the category average of 9.53%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. DODIX has a modified duration of 6.13, which suggests that the fund will decline 6.13% for every hundred-basis-point increase in interest rates.
With a beta of 1.04, this fund is more volatile than a broad market index of fixed income securities. Taking this into account, DODIX has a positive alpha of 1.27 , which measures performance on a risk-adjusted basis. Ratings
Investors should also consider a bond's rating, which is a grade "AAA" to "D" given to a bond that indicates its credit quality. With this letter scale in mind, DODIX has 68.86% in high quality bonds rated at least "AA" or higher, while 26.75% are of medium quality, with ratings of "A" to "BBB". The fund has an average quality of AA, and focuses on high quality securities.Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, DODIX is a no load fund. It has an expense ratio of 0.41% compared to the category average of 0.80%. Looking at the fund from a cost perspective, DODIX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Dodge & Cox Income I ( DODIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
Don't stop here for your research on Investment Grade Bond - Intermediate funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare DODIX to its peers as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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Get Your Free (DODIX): Fund Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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