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Credit and Liability Hedging
Our credit-oriented strategies seek to generate recurring alpha while mitigating portfolio volatility and tracking error. These strategies are often used by single-employer defined benefit plans sponsors within liability hedging portfolios and by other investors, such as public defined benefit plans and insurance companies, as part of their overall fixed income allocation. In particular, given our deep pension investing expertise, we partner with clients to customize our strategies to meet their specific pension risk management objectives.
Our active investment approach
We offer our strategies via separate accounts. Investment guidelines can be tailored to meet most individual client circumstances and investment objectives. In addition, we offer bespoke mandates that are managed to blends of market benchmarks or liability cashflows.
Meet the Investment Committee
U.S. Fixed Income 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, is 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 Liability Hedging Implementation team.
Our Committee members are Dodge & Cox shareholders.
Liability Hedging Implementation Team
The Liability Hedging Implementation Team, whose five members' average tenure at Dodge & Cox is 11 years, oversees the day-to-day implementation of credit and liability-hedging portfolios with the context of the U.S. Fixed Income Investment Committee's guidance and individual client objectives and guidelines. The Team combines credit research, trading, actuarial, and pension risk management expertise to address our clients' evolving investment needs. Membership overlap with the U.S. Fixed Income Investment Committee enables efficient and smooth communication and execution.
1 As of 12/31/2022.
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. Long Credit index includes securities in the long maturity range of the U.S. Credit index which includes publicly issued U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity, and quality requirements.
The Bloomberg U.S. Credit Index includes publicly issued U.S. Corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements.
The Bloomberg U.S. Intermediate Credit Index includes publicly issued U.S. Corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements.
The Bloomberg U.S. Long Government/Credit Index includes securities in the long maturity range of the Government/Credit Index. The Government Index represents treasuries, and agencies. The Credit Index includes publicly issued U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity, and quality requirements.
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.