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Insights from Our Investment Team

 
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Pension Perspectives

Q3 2024 Pension Perspectives

10/29/2024

In this quarter’s issue, we discuss drivers of single-employer plan funded status changes over the quarter; potential tactical positioning considering last quarter's declines in Treasury yields and credit spreads; investment process and guideline considerations for potentially shifting into credit when credit spreads widen; and recent developments in the pension risk transfer space.

Paper

Flexing With Flexible Fixed Income: Dodge & Cox Global Bond Fund

10/24/2024

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.

Paper

Cash Balance Plans: Managing Legacy Liabilities and Looking Ahead with Innovative Designs

10/07/2024

For many plan sponsors, the cash balance (CB) component of their pension liability likely became more material over the last few years as interest rates rose, funded status improved, and/or a portion of traditional defined benefit (DB) liabilities was eliminated via pension risk transfer.

On-Demand Audio

2024 Semi-Annual Investment Reviews

07/31/2024

Hear from members of our Equity and Fixed Income Investment Committees as they share their thoughts on the market environment, portfolio positioning, and where we are finding long-term opportunities.

Pension Perspectives

Q2 2024 Pension Perspectives

07/30/2024

In this quarter’s issue, we discuss drivers of single-employer plan funded status changes over the quarter, potential tactical positioning at the asset allocation and portfolio levels, high-level thoughts on credit spread diversifier strategies, and recent developments in the pension risk transfer space.

Paper

Staying the Course in Value Investing

07/24/2024

The exceptional performance of a handful of high-valuation technology companies has led investors to question the merits of value investing. When Morningstar recently sat down with David Hoeft, they concluded, “value investing is alive and well.” We expand upon their conversation and share why we believe our approach is well suited to capture opportunities in today's bifurcated market environment.

Paper

Morningstar Magazine: Value Investing in the Age of Intangibles

06/10/2024

In this article, Morningstar delves into the state of value investing and features insights from our Chief Investment Officer, David Hoeft, including how we view current valuation spreads as a tailwind for our style of investing.

Paper

Emerging Markets: Why and Where

05/08/2024

Learn why now is a particularly interesting time to invest in emerging markets (EM) and where to locate compelling opportunities in the broad EM universe.

Pension Perspectives

Q1 2024 Pension Perspectives

04/25/2024

In this quarter’s issue, we address the drivers of single-employer plan funded status changes, hedge ratio considerations following the Q4 decline in interest rates and credit spreads, high-level considerations for re-opening a defined benefit plan, and cash balance hedging, lump sum windows, and pension risk transfer in the current interest rate environment.

On-Demand Audio

2023 Annual Investment Reviews

02/07/2024

Hear from members of our Equity and Fixed Income Investment Committees as they share their thoughts on the market environment, portfolio positioning, and where we are finding long-term opportunities.

Pension Perspectives

Q4 2023 Pension Perspectives

01/31/2024

In this quarter’s issue, we address the drivers of single-employer plan funded status changes, hedge ratio considerations following the Q4 decline in interest rates and credit spreads, high-level considerations for re-opening a defined benefit plan, and cash balance hedging, lump sum windows, and pension risk transfer in the current interest rate environment.

Paper

Emerging Market Stocks: A Wealth of Opportunity

11/28/2023

Learn more about investment opportunities and risks in the emerging markets and how our Emerging Markets Stock Fund aims to capitalize on them through our valuation-driven focus.

Pension Perspectives

Q3 2023 Pension Perspectives

10/24/2023

The third quarter was characterized by a sharp rise in long Treasury yields and a  drawdown in global equity markets. Notably, the Bloomberg U.S. Long/Government Credit Index returned -9.4% for the quarter, its fourth-worst quarterly return in the last 20 years, while the MSCI All Country World Index (Net) returned -3.4%. As a result, aggregate pension assets declined less than aggregate pension liabilities and funded status rose to 103.6%.

Paper

Long-Term Solutions for Overfunded Plans: Stay the Course, De-Risk, or Re-Risk?

10/06/2023

Despite the recent volatility in the capital markets, many plan sponsors are experiencing asset-liability surpluses for the first time since the Global Financial Crisis. Consequently, it may be timely to re-assess the end-game objectives and long-term investment strategy, especially for frozen plans.

Pension Perspectives

Q2 2023 Pension Perspectives

08/01/2023

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.

Paper

The Benefits of a Flexible Approach to Global Fixed Income

07/02/2023

Learn more about Dodge & Cox's differentiated approach to global bonds, featuring a total return mindset, a focus on credit, and a long-term investment horizon.

Paper

Investing Outside the Credit Box

05/31/2023

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. 

Pension Perspectives

Q1 2023 Pension Perspectives

04/26/2023

Despite volatility in the capital markets, the aggregate funded status of U.S. corporate defined benefit plans remained strong in the first quarter. Liabilities increased as discount rates fell, and asset values were driven higher due to both declining bond yields and strong global equity returns. With domestic and global equities slightly outperforming high-quality bonds, both well-hedged plans and those with high allocations to return-seeking assets likely fared well.

Paper

Our Current Thoughts on Financials

04/16/2023

The recent failures of Silicon Valley Bank and Signature Bank, as well as the takeover of Credit Suisse, have driven broad stock price declines and a weakening in credit spreads for Financials globally. In this paper, we share our thinking on recent developments, our assessment of risks and opportunities, and an update on how we are managing our investment strategies in this environment.

Pension Perspectives

Q4 2022 Pension Perspectives

02/01/2023

We address single-employer plan funded status changes, potential tactical opportunities, and the current interest rate environment in this paper.

Paper

A New Dawn for Fixed Income

01/08/2023

We see a silver lining in the cloud that has hung over the bond market over the past year: the cumulative interest rate increases that drove record annual losses have simultaneously returned the asset class to greater relevance going forward. Additionally, the elevated uncertainty and volatility in the current environment create the potential for active managers employing deep research to generate outperformance.  

Video

Where Macro and Fundamental Analysis Meet

10/26/2022

with Jose Ursua, Mimi Yang, Stephanie Notowich

 In recent months, surging inflation, rising interest rates, and geopolitical issues have roiled the capital markets. Recently, members of our Macro and Client Service teams discussed some of these issues and the role macro analysis plays as an input in our evaluation of equity and fixed income securities’ fundamentals.

Pension Perspectives

Q3 2022 Pension Perspectives

10/24/2022

We briefly review the drivers of single-employer plan funded status changes during the third quarter, outline several investment considerations in the current volatile macro environment, and suggest a few potentially overlooked implications of higher interest rates and inflation.

Paper

U.S. Inflation Risks and Their Investment Implications

07/26/2022

After rising at one of the sharpest rates in recent history, U.S. inflation is now at its highest level since the early 1980s. In our latest Investment Perspectives paper, Dodge & Cox Investment Committee members share our views on inflation risks and how we’ve positioned our fixed income and equity investment portfolios to navigate a range of macroeconomic outcomes.

Pension Perspectives

Q2 2022 Pension Perspectives

07/25/2022

We briefly review this quarter’s drivers of single-employer plan funded status changes, note potential implications of the changing macro environment on pension asset allocations and hedge ratios, and touch on the impacts of rising interest rates for some cash balance plan sponsors. 

Paper

Intermediate Credit: Refining the Credit Spread Hedge and Generating Alpha

06/20/2022

We review the critical role of Intermediate Credit within liability hedging assets, analyze differences between the Intermediate Credit and Long Credit investment universes, and address a wide spectrum of intermediate-duration, out-of-benchmark securities that offer further opportunities to diversify corporate exposures and add less correlated alpha. 

Paper

Russia's Invasion of Ukraine and Potential Investment Implications

04/13/2022

Our investment team is carefully evaluating both the short- and medium-term macroeconomic and investment implications and risks of Russia's invasion of Ukraine, as we continue to evaluate investment considerations that might arise from the geopolitical volatility.

Paper

Evolving our Approach to Building a Balanced Portfolio

01/11/2022

Learn more about how we have enhanced our investment tools and processes and why we believe these improvements will have meaningful benefits for the Balanced Fund in the years ahead.

Paper

Practical Considerations for Hedging the Liability Discount Rate: Managing the Credit Spread Hedge

12/13/2021

We describe a portfolio structure designed to hedge the often high and opaque liability discount rate, while providing plan sponsors with sufficient flexibility to express tactical views and meet other objectives. We also discuss the benefits of investing across the investment grade spectrum, and selectively diversifying the credit spread hedge beyond investment-grade corporate bonds.

Paper

MBS Investing Through the Pandemic: A Look Back

08/15/2021

We leaned into our active management approach to take advantage of dramatic changes to the mortgage-backed securities (MBS) landscape in 2020 to re-craft our MBS holdings and provide strong contributions to relative returns.

Paper

Go BIG, but Carefully: Enhancing Liability-Hedging Portfolio Returns with Below Investment Grade Bonds

06/21/2021

Below investment-grade (BIG) bonds offer fertile ground to enhance liability-hedging asset returns but they also come with risks. Explore how Dodge & Cox mitigates them via deep credit research, downside scenario analysis, and prudent active portfolio risk management.

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