The top five holdings of this balanced fund are: Oracle Corp (ORCL, 4.99% of assets); United Technologies Corp (UTX, 3.40%); Tencent Holdings Ltd (TCTZF, 3.37%); Aon PLC (AON, 3.11%) and Naspers Ltd (NAPRF.JO, 3.07%).
FPA Crescent Fund (FPACX)
From Leeb Income Performance
One of the best-rated funds in our Mutual Funds portfolio is FPA Crescent Fund (FPACX).
This balanced fund has more than its share of fans, as can be seen by its significant size. With $17 billion in assets, it’s a force in the world of balanced funds. Fund manager Steve Romnick has been the helm since 1993, although he has been assisted by two co-managers since 2013.
The fund is categorized as balanced (moderate allocation, with 50 to 70% equity position), and its objective is to generate equity-like returns over the long-term, take less risk than the market, and avoid permanent impairment of capital. The fund takes a flexible approach; with a mandate to invest across all asset classes, geographies, sectors, and market capitalizations.
Most recently, U.S. equities accounted for 47.5% of the portfolio, non-U.S. stock, for 7.7%, bonds, 4.5%, and “other,” 4%. The portfolio, as of the last report, was significantly overweight in financial services and technology, while underweight in defensive stocks (such as consumer defensive, healthcare, utilities). Meanwhile the cash position, still high, could be viewed as a substitute for a fixed-income position. This makes sense: bond yields are relatively low, while risk for the loss of principal is high.
Still the fund has invested in new fixed income positions, namely in energy and basic materials, based on the weakness of those sectors. Further, as true contrarians, in some cases, according to Romnick, the fund would even be okay with companies involved in restructuring, as they expect a positive risk/return potential.
The fund’s long-term record speaks for itself: it stands in the top 2% of its peers for the last 15-year period, the top 11% of peers for 10 years, the top 31% for the last 5-year period and the top 45% of peers for the last 3-year period.
Genia Turanova and Stephen Leeb, Leeb Income Performance, www.leebincomeperformance.com, 877-883- 8356, July 2016