FPA Funds

Markets globally have reacted negatively to the British having voted to leave the European Union (EU) after more than four decades. The night before the vote, UK betting markets reflected that the “remain” camp was heavily favored to win. In a 2015 speech titled, “Don’t be Surprised,” I wrote that “investing, like life, is eminently unpredictable. There are surprises – some good, some bad.” That speech seems all the more relevant today given global market volatility.

I’m reminded of a gentleman who discovers a genie in a bottle. Granted one wish only – apparently even genies have pricing power – the man asks for peace in the Middle East. The genie backs away and says, “That’s way too difficult. Give me something easier.” The man ponders his options and asks the genie instead, to help him pick a good mutual fund. The genie quickly responds, “Let me get to work on the Middle East.”

A full market cycle can be defined as a peak-to-peak period that contains a price decline of at least 15% from the previous market peak, followed by a rebound that establishes a new, higher peak.1 Few publications or data providers publish, let alone highlight, full market cycle returns, yet we believe understanding them can help the return of your portfolio over the long-term.

As many of you know, and for those of you who dont, Ive been a harsh critic of the fiscal and monetary policies that have been deployed these past several years. Since returning from my 2010 sabbatical in 2011, Ive been very cautious about capital deployment, as many of my successors will confirm. In light of the stock markets astounding rise since 2009 and five years of near zero short-term rates, Ive reassessed and challenged my basic fundamental understanding of how the financial markets operate.

Bob Rodriguez, Managing Partner and Chief Executive Officer of FPA, delivered a speech titled "Reality Check" to shareholders of FPA funds on June 2, 2014, on Fed policy and federal fiscal excess.

FPA Crescent Fund has released its quarterly commentary examining the state of the fund and its investments as well as an outlook on the greater economy. Portfolio manager Steve Romick feels that the economic recovery has been disappointing and largely engineered by central bank policy and worries that low interest rates and novel and theoretical Fed policy could lead to unintended consequences.

FPA Crescent Fund has released its Semi-Annual report on the state of the fund and its investments. The piece also delves into portfolio manager Steve Romick's market outlook and thoughts regarding the fund's positioning moving forward.