Year-end Distribution Information:  2023 estimated year-end income and capital gain distributions information (estimates as of October 31, 2023) is now available.



Russia's Invasion of Ukraine and Potential Investment Implications

April 2022


Key Takeaways

  • Our thoughts are with the individuals and families impacted by Russia’s invasion of Ukraine and its consequences.
  • The Dodge & Cox Funds are broadly diversified. The International Stock Fund, Global Stock Fund, Emerging Markets Stock Fund, and Global Bond Fund have minimal direct holdings in Russia.1
  • We are actively monitoring developments and taking appropriate actions given the evolving risks. We will continue to take investment decisions to protect our clients' interests and will comply with sanctions that apply to the Funds.
  • The temporary closure of the Moscow Stock Exchange and restrictions imposed by the Russian Central Bank on trading by non-Russian investors have impacted the liquidity for these holdings.
  • We are evaluating investment opportunities that might arise from the geopolitical volatility.

As a consequence of Russia’s invasion of Ukraine and the resulting wide-sweeping sanctions imposed on Russia by governments around the world, Dodge & Cox does not intend to invest in any new Russian securities for the foreseeable future. These securities are currently priced at negligible values, so there is limited downside from here.

The Dodge & Cox Funds Have Minimal Exposure to Russia

Each Fund’s sector, industry, region, and country positioning is a result of our bottom-up, research-driven investment approach that evaluates each company’s long-term fundamental outlook in relation to its current valuation. We consider macroeconomic factors among many inputs into our individual company investment analysis.

The Dodge & Cox Funds are broadly diversified with limited direct holdings in Russia. In line with industry consensus, we have marked down the fair value of the Funds' Russian equity holdings to essentially zero (see Figure 1). Overall, the Funds also have little indirect exposure to Russia when the small contributions of individual holdings are aggregated across the portfolios. We continue to monitor the situation and work with industry counterparties to analyze potential indirect impacts.

  • International Stock Fund and Global Stock Fund: Magnit, one of the largest retailers in Russia, is the only holding in Russia in these Funds. Despite current market conditions, we believe the company has good long-term growth prospects. We don’t expect sanctions will be applied to the company as Magnit operates only in Russia. The current conflict and sanctions will impact consumer sentiment and spending, food inflation, and the company’s ability to import food. It may also affect the company’s access to funding. On the other hand, Magnit has an extensive supply chain to deliver food and supplies to the Russian people. We continue to assess the situation and have been talking with Magnit’s management team. In addition, our equity, fixed income, and macroeconomic teams are working closely together to evaluate the company’s risk-reward prospects.
  • Emerging Markets Stock Fund: In addition to Magnit, the Fund had five other holdings directly incorporated in Russia: Alrosa, Detsky Mir, Lukoil, Novatek, and Severstal. Furthermore, three holdings are incorporated outside of Russia—Globaltrans Investment (Cyprus), TCS Group Holding (Cyprus), and X5 Retail Group (the Netherlands)—but trade on Russian exchanges and are issued in Russian ruble.
  • Global Bond Fund: On March 31, the Fund had 0.08% in Russian ruble-denominated government bonds, which were marked at minimal valuation (around 5% of par) due to the impact of capital controls, sanctions, and trading restrictions.

Russia Sanctions and the Impact on Our Trading

Securities held by the Funds continue to be impacted by the actions of governments, stock exchanges, and counterparties, leading to severe valuation and liquidity issues. Our ability to execute trades is impacted by the same industry-wide issues that are affecting other market participants. These range from disruptions caused by the temporary closure of the Moscow Stock Exchange to restrictions imposed by the Russian Central Bank on local brokers that prevent non-Russian investors from trading in Russian securities and receiving related dividend or interest payments. The situation remains fluid and changes daily. We are actively monitoring developments and taking appropriate actions given the evolving risks.

Implications for Global Markets

We believe spillover from the Russia/Ukraine crisis is likely to have the most material impact on energy prices. This is due to potential disruptions to Russian energy supply and measures by Western governments to limit Russian oil and gas imports. Russia is also a key global producer of a number of other commodities. For example, Russia has large market shares in the global production of palladium, platinum, nickel, copper, and aluminum. Russia and Ukraine are estimated to contribute 15-20% of global output of major grains (including wheat and corn). Upward pressure on global oil and commodity prices could add further risk to already high inflation in many countries.

Due to its higher trade activity with Russia and higher reliance on Russian energy imports, Europe is more economically exposed than other regions. Outside of Europe, Russia’s trade and financial exposure to the rest of the world is relatively small. However, broader risks center on global supply chain disruptions fueling stagflation and the potential for cyberattacks.

Going Forward

We acknowledge the extreme downside scenario with respect to our Russia-domiciled exposures has materialized, and we are analyzing the evolving risks, market valuations, and liquidity conditions. The distribution of risks appears to be mostly negative for the global economy, especially in the short to medium term. However, we are carefully assessing other potential implications over our long-term investment horizon (e.g., further strengthening of Western alliances and increased economic integration amongst their economies). We are also exploring potential dislocations in other parts of the market due to the geopolitical volatility.


Before investing in any Dodge & Cox Fund, you should carefully consider the Fund’s investment objectives, risks, and charges and expenses. To obtain a Fund’s prospectus and summary prospectus, which contain this and other important information, visit or call 800-621-3979. Please read the prospectus and summary prospectus carefully before investing.

The above information is not a complete analysis of every material fact concerning any market, industry, or investment. Data has been obtained from sources considered reliable, but Dodge & Cox makes no representations as to the completeness or accuracy of such information. Opinions expressed are subject to change without notice. The information provided is historical and does not predict future results or profitability. This is not a recommendation to buy, sell, or hold any security and is not indicative of Dodge & Cox’s current or future trading activity. Any securities identified are subject to change without notice and do not represent a Fund’s entire holdings.


1 Unless otherwise specified, all weightings and holdings are as of March 31, 2022.