Advise please on which Bond Fund to hold in my 401K

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
investment guy
Posts: 157
Joined: Sat Mar 27, 2021 2:00 pm

Advise please on which Bond Fund to hold in my 401K

Post by investment guy »

Advise please on which Bond Fund to hold in my 401K:

For many years, I have held one bond fund in my 401K (Dodge and Cox Income 1 DODIX 0.42% expense ratio).

I do have the option of Vanguard Total Bond Index 1 VBTIX 0.035%

VBTIX has a far superior expense ratio (0.035% compared to 0.42 for DODIX), however, does the benefit of the expense ratio outweigh the following performance advantages displayed by DODIX compared to VBTIX? I don't know how to compute the math. Holdings $370K

DODIX has outperformed the Vanguard fund at EVERY mark: From Inception, 10 year, 5 year, 3 year. 1 year and has outperformed the benchmark over the same durations. Does the expense ratio outweigh performance? Here are the Return Results:

From inception: DODIX 6.15% VBTIX 4.50%

10 Year: DODIX 2.70% VBTIX 1.59%

5 Year: DODIX 2.10% VBTIX 1.24%

3 Year: DODIX .99% VBTIX -.24%

1 Year: DODIX -8.35% VBTIX -9.41%

I appreciate your help.
User avatar
retired@50
Posts: 12709
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Advise please on which Bond Fund to hold in my 401K

Post by retired@50 »

investment guy wrote: Mon Aug 08, 2022 3:40 pm DODIX has outperformed the Vanguard fund at EVERY mark...
I think the better performance is due to the higher risk taken by the Dodge & Cox fund.

If you compare and contrast the holdings you'll see what I'm referring to. For example, according to Morningstar, DODIX holds 27.2% in BBB bonds, while VBTIX holds 14.17% in BBB bonds.

Sources:
https://www.morningstar.com/funds/xnas/dodix/portfolio
https://www.morningstar.com/funds/xnas/vbtix/portfolio

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Lionel Hutz
Posts: 379
Joined: Sat Jan 30, 2021 12:18 pm

Re: Advise please on which Bond Fund to hold in my 401K

Post by Lionel Hutz »

When you take a closer look, they simply hold different types of bonds.

https://investor.vanguard.com/investmen ... omposition

https://investor.vanguard.com/mutual-fu ... IntExt=EXT

Total Bond has more government bonds where Dodge & Cox has more corporate bonds. Dodge & Cox is greater risk greater reward. The Vanguard fund isn't worse, it just has a different goal. If you're comfortable with more short to long term volatility you can certainly go with Dodge & Cox.
Topic Author
investment guy
Posts: 157
Joined: Sat Mar 27, 2021 2:00 pm

Re: Advise please on which Bond Fund to hold in my 401K

Post by investment guy »

I will take a closer look at both bond funds. Thanks for the input, much appreciated.
Post Reply