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Core Fixed Income

  • Overview
  • Composite Strategies
  • Investment Committee

Overview

Our Core Fixed Income strategies are for investors seeking an actively managed portfolio with alpha potential over longer time periods, as well as liquidity, inflation protection, and low correlation to equities. Investors use them as standalone mandates and as complements to other strategies.

Our active investment approach

Long-term investment horizon

Decades of investing have taught us that investor perceptions, and security valuations, are more volatile than underlying fundamentals. Our investment horizon, which is longer than many managers, enables us to take advantage of inherent pricing inefficiencies in an effort to maximize portfolio returns. We use short-term periods of volatility or uncertainty to lean into opportunities if our analysis shows an investment to be fundamentally sound. 

Deep fundamental research

Our Global Industry and Fixed Income analysts are the engine for idea generation and risk analysis. Our industry analysts cover the entire capital structure of companies globally, on behalf of both our credit and equity investments, building a depth of understanding crucial to developing a well-informed investment opinion. Our fixed income credit analysts partner closely with them, assessing liquidity profiles, funding profiles, access to capital, and downside scenarios. Our structured products team focuses on borrower, loan, and program characteristics, collaborating on factors affecting mortgage financing and other topics.

Valuation discipline

A strong price discipline is an essential characteristic of our investment philosophy. When a security’s valuation reflects pessimism about current challenges, we may see a potential long-term opportunity. We often find value in the higher-yielding segments of the market, where our research uncovers opportunities for durable long-term yield, including lower-rated investment-grade credit and some below investment-grade securities, typically fallen angels, or crossover credits. We also typically focus on Agency MBS and ABS whose valuation and risk profiles compare favorably to similar-duration Treasuries or high-quality credit issuers. 

Risk management

We rely on detailed fundamental research as our primary risk mitigant at the security/issuer level as we see the main investment risks as permanent capital loss or loss of future purchasing power. We stress test investments across a range of economic, capital market, and issuer-specific scenarios, because we believe that downside risk analysis is paramount in assessing fixed income securities. At the portfolio level, we employ quantitative tools to monitor absolute and relative exposures and address any unintended and/or uncompensated exposures.


Composite strategies

We offer our strategies via separate accounts. Investment guidelines can be tailored to meet most individual client circumstances and investment objectives.

Discretionary Core Fixed Income

We build diversified portfolios consisting primarily of investment grade fixed income securities. Our universe includes U.S. Treasuries, government-related securities, corporate bonds and other debt securities, and securitized investments. We may also invest in securities rated below investment grade.

 

Inception date:
January 1, 1991

 

Benchmark:
Bloomberg U.S. Aggregate Bond Index

Minimum Investment:

$150 million

Composite AUM1
$18.9 billion

Investment-Grade Core Fixed Income

We construct diversified portfolios consisting primarily of investment grade fixed income securities. Our universe includes U.S. Treasuries, government-related securities, corporate bonds and similar obligations, and securitized investments.


Inception date:

January 1, 2006

 

Benchmark:
Bloomberg U.S. Aggregate Bond Index

 

Minimum investment:
$150 million

 

Composite AUM1:
$3.0 billion


Meet the Investment Committee

We believe investors benefit from our team-based approach to managing investments. Through close collaboration and debate, we bring our best ideas forward. The primary responsibilities of the U.S. Fixed Income Investment Committee, whose members’ average tenure at Dodge & Cox is 24 years, are to:
 

  • Set broad portfolio strategy including individual issuer targets, sector weightings, duration, and other portfolio characteristics.
  • Diversify the portfolio prudently across issuers, sectors, geographies, and economic exposures. 
  • Carefully monitor and evaluate portfolio exposures and risks through regular scenario analyses, stress testing, and risk modelling, making changes when appropriate.
  • Oversee the strategy’s implementation through close collaboration with our trading team.

Our Committee members are Dodge & Cox shareholders.

Dana Emery

D&C Board Chair and Chief Executive Officer, Investment Committee Member

41 years with Dodge & Cox

Jim Dignan

Investment Committee Member, Fixed Income Analyst

25 years with Dodge & Cox

Lucy Johns

Director of Fixed Income, Investment Committee Member, D&C Board Member

22 years with Dodge & Cox

Adam Rubinson

Investment Committee Member, Fixed Income Analyst

22 years with Dodge & Cox

Tony Brekke

Investment Committee Member, Fixed Income Analyst

21 years with Dodge & Cox

Nils Reuter

Investment Committee Member, Trader, Fixed Income Analyst

21 years with Dodge & Cox

Mike Kiedel

Investment Committee Member, Fixed Income Analyst

16 years with Dodge & Cox

Footnote

1  As of 12/31/2023.

Disclosures

Dodge & Cox does not guarantee the future performance of any account or any specific level of performance, the success of any investment decision or strategy that Dodge & Cox may use, or the success of Dodge & Cox’s overall management of an account. Investment decisions made for a client’s account by Dodge & Cox are subject to various market, currency, economic, political, and business risks (foreign investing has special risks such as currency and market volatility and political and social instability), and those investment decisions will not always be profitable. Investments in debt securities are subject to interest rate risk, credit risk, prepayment risk and other risks.

The Bloomberg U.S. Aggregate Bond Index (BBG U.S. Agg) is a widely recognized, unmanaged index of U.S. dollar-denominated investment-grade fixed income securities.

BLOOMBERG is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively "Bloomberg"). Bloomberg or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. Bloomberg does not approve or endorse this material, or guarantee the accuracy or completeness of any information herein, or make any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, shall not have any liability or responsibility for injury or damages arising in connection therewith.