3 / 5 Stars
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Zacks Investment Research
Standard & Poor's
3 / 5 Stars
#40 in Mid-Cap Value
U.S. News evaluated 107 Mid-Cap Value Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 23.80 percent over the past year, 12.43 percent over the past three years, 20.72 percent over the past five years, and 8.92 percent over the past decade.
|Trailing Returns||Updated 11.30.2013|
|Year to date||20.3%|
|3 Years (Annualized)||12.4%|
|5 Years (Annualized)||20.7%|
|10 Years (Annualized)||8.9%|
FPA Capital proudly marches to the beat of its own drum.
As of December 04, 2013, the fund has assets totaling almost $1.26 billion invested in 30 different holdings. Its portfolio consists primarily of shares of midsized companies.
FPA Capital's managers are contrarian investors, and they're proud of it. As they say in the fund's latest annual report: "Being a loyal value investor is generally a lonely endeavor. That is, liquidity typically rises as bullish sentiments prevail and valuations become rich. On the other hand, when investors' fear levels rise and valuations plummet, those with liquidity and a keen eye toward great values are in a position to purchase attractive securities at bargain-basement prices. This has been our modus operandi for decades and partially explains the excess returns we have produced over the years." This manifesto goes a long way toward accounting for some of this fund's quirks. For starters, earning a spot in the fund's portfolio is no easy task. As of the end of 2010, management owned just 20 names. Couple that with the fund's sizeable cash stake--it had 27 percent of its assets stashed away in cash--and a picture emerges of a management team that doesn't take commitment lightly. The fund's portfolio also points to management's willingness to forgo diversification. Over half the fund's stock portfolio is invested in energy companies, and the fund's top three holdings--Ensco, Rowan Companies, and Rosetta Resources--all come from that sector. Lately, the fund has been on a hot streak. As of the end of January, its trailing three-year returns landed it in the top 2 percent of Morningstar's mid-cap value category. The fund has returned 23.80 percent over the past year and 12.43 percent over the past three years.
Despite the fund's recent success, short-term performance isn't of much import to its management team. Instead, management will often eschew short-term trends in favor of longer-term fundamentals. Notably, management is concerned primarily with just one thing: finding value. While the fund's laser focus will certainly lead to off years, management is confident that over the long haul, the strategy will win out. So far, that's turned out to be the case. As of the end of January, the fund's trailing 10-year returns beat those of its Morningstar peer group by upwards of 3 percentage points per year. The fund has returned 20.72 percent over the past five years and 8.92 percent over the past decade.
Management runs a concentrated portfolio, which means that it invests only in its favorite, highest-conviction picks. The fund frequently has a huge chunk of its portfolio stashed away in cash, reflecting management's patience and desire to have money to deploy should opportunities present themselves. The fund's managers are contrarian investors and look to find cheap companies with stellar long-term potential. Management will overlook short-term trends in favor of long-term fundamentals.
Role in Portfolio
Morningstar calls the fund a "supporting player."
Rikard Ekstrand and Dennis Bryan manage the fund.
FPA Capital Fund has an expense ratio of 0.83 percent.
Like all stock funds, this one comes with some risks.