Investment Focus

We build diversified portfolios primarily of U.S. equities with attractive valuations relative to fundamentals, seeking to generate returns from capital appreciation.

We build diversified portfolios primarily consisting of investment grade fixed income securities, with a goal of maximizing income and total return potential, consistent with long-term preservation of capital. 

We build diversified portfolios primarily consisting of investment grade intermediate-term fixed income securities. Our goal is maximizing income and total return potential, consistent with long-term preservation of capital. 

We construct customized portfolios to hedge liability cash flows, either relative to market-based benchmarks or actual liability cash flows using an array of debt securities.

We construct customized portfolios for the unique characteristics of these mandates—such as wrap constraints, duration caps, sector/security-level limitations, etc.

We construct diversified portfolios primarily allocating between equity and fixed income securities, seeking regular income, conservation of principal, and an opportunity for long-term growth of principal and income.

In this quarter’s issue, we address the drivers of single-employer plan funded status changes, considerations for interest rate and credit spread hedge ratios in the current macro environment, recent dynamics in the corporate bond market, and a potential trend toward re-risking by some well-funded plans.

Today’s market environment calls for broader thinking about fixed income allocations. Yields have risen from ultra-low levels, but how you compose your fixed income exposure matters; not all sources of yield are created equal. Careful stewardship and flexibility remain critical amid economic uncertainty. The Dodge & Cox Global Bond Fund is a flexible and opportunistic strategy that can fit different needs in your asset allocation framework.

In this paper, we share our view on the role of securitized assets—namely residential and commercial mortgage-backed securities as well as a variety of asset-backed securities—in liability-hedging portfolios. While these assets may not be a compelling liability hedge on their own, they can provide valuable diversification, liquidity, and relative value benefits within the broader portfolio context, especially for more mature pension plans. We also discuss how our investment team uses our extensive experience in structured products to complement credit exposure within our liability-hedging portfolios.