FPA Crescent Fund (FPACX) is a moderate risk fund that invests in both domestic and international stocks. Manager Steve Romick is a well knowned value investor with expertise in long and short positions across a company's capital structure. The FPA Crescent Fund, which he started in 1993, was ranked by Lipper on December 31, 2004 as the number one balanced fund for the 3, 5 and 10 years periods out of 446, 368 and 162 funds, respectively, in that category. The fund has a five-star rating by Morningstar.
Investors can learn a lot from the fund's stock picks. The following are the top ten holdings from the Crescent fund:
|Top 10 Holdings (28.83% of Total Assets)|
|Aon Corporation Common Stock||AON||4.32|
|CVS Caremark Corporation Common||CVS||3.86|
|Wal-Mart Stores, Inc. Common St||WMT||3.73|
|Covidien plc. Ordinary Shares (||COV||2.93|
|Ensco PLC ADR||ESV||2.61|
|Anheuser-Busch Inbev SA Sponsor||BUD||2.22|
|Occidental Petroleum Corporatio||OXY||2.17|
|Omnicare, Inc. Common Stock||OCR||2.08|
The stock holdings financial ratios are:
|Median Market Cap||30.93K||35.94K|
|3 Year Earnings Growth||1.38%||5.39%|
From the above, one can see that Romick favors low Price/Book and Price/Sales stocks. On the other hand, his picks are usually out of favor or fit into a secular trend.
It is well known that Romick (and FPA in general) believes in a secular energy shortage trend, especially in oil and gas drilling sector. Both Ensco (NYSE:ESV) and Occidental Petroleum (NYSE:OXY) are his long term holdings (for more than 5 years). Furthermore, they are very cautious on the current economic environment. This is reflected by their defensive holdings such as Wal-Mart (NYSE:WMT), CVS Caremark (NYSE:CVS) and Anheuser-Busch (NYSE:BUD).
The following compares the fund performance with two diversified ETF portfolios.
Portfolio Performance Comparison
|Portfolio/Fund Name||1Yr AR||1Yr Sharpe||3Yr AR||3Yr Sharpe||5Yr AR||5Yr Sharpe|
|Retirement Income ETFs Strategic Asset Allocation Risk Profile 0||-3%||-12%||16%||66%||1%||-0%|
|Retirement Income ETFs Tactical Asset Allocation Risk Profile 0||-5%||-18%||12%||60%||10%||46%|
It is very impressive that the fund achieved 5% annualized returns in the last 5 years and did pretty well in 2011 (about 3%).
Investors can start from these solid companies and work out their stock portfolios.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.