Low Turnover, High Returns

Kenneth Olivier likens his office to a college dorm.

When he heads up or down a hallway, he usually runs into one of the seven other co-managers of the Dodge & Cox Stock Fund (800-621-3979; $2,500 minimum investment).

But the results of their constant communication are anything but boisterous: a lean-and-simple portfolio with fewer stocks (76 in all) and much less trading (just 10 percent turnover last year) than the typical growth-and-income fund.

And solid returns.

Dodge & Cox is up 13.4 percent this year through May 31; 19.39 percent annually for five years. Magazines such as Forbes and Fortune rank the San Francisco-based fund among their favorites.

That low turnover lets Dodge & Cox minimize capital gains, which puts after-tax returns three or four percentage points above its peers, Morningstar estimates.

The managers of the $2.5 billion fund have each spent 10 to 30 years at its helm. They look for slightly undervalued, large companies. Holdings include General Motors, Dayton Hudson, IBM, and American Express.

"We're now looking for issues with a slight defensive play to them," Mr. Olivier says. He forecasts market gains of 10 percent or less in coming years.

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