Dodge & Cox reopens 2 mutual funds as returns slip

By Jonathan Stempel

NEW YORK, Feb 1 (Reuters) - Dodge & Cox Funds, one of the most popular U.S. mutual fund families, said it will reopen to new investors its flagship Stock fund and its Balanced fund, which invests in stocks and bonds, after performance lagged its peers for the first time in more than a decade.

The $63 billion asset Stock fund and $27.1 billion balanced fund will reopen on Monday. Dodge & Cox had in 2004 stopped accepting money from new investors after assets in the funds had grown too rapidly for it to invest easily. It continued to accept money from existing investors.

In a statement on Friday, Dodge & Cox said investors have recently been redeeming money from the funds because of weak returns and volatile markets.

It said the latter also has created "many interesting long-term equity and fixed-income opportunities," and that both funds can "accommodate reasonable growth into the foreseeable future."

According to Morningstar Inc, the Stock fund last year returned 0.1 percent, trailing 61 percent of its "large-value" peers, while the Balanced fund returned 1.7 percent, lagging 89 percent of its "moderate allocation" peers.

Both funds had outperformed a majority of their peers in every year over the previous decade, Morningstar said.

Dodge & Cox's $53.4 billion International Stock fund and $15.9 billion Income fund remain open to new investors.

San Francisco-based Dodge & Cox is the 10th-largest U.S. mutual fund family, ending 2007 with $159.6 billion of assets under management, according to Financial Research Corp.

In 2007, it also ranked sixth nationally in net inflows, with $18.1 billion, despite the two funds' closures. Most net inflows went into the International Stock fund.

Another large fund long closed to investors, Fidelity Magellan, reopened to new investors last month.

Dodge & Cox said it oversees more than $235 billion, including private accounts. (Editing by Carol Bishopric)