The views expressed in these articles, commentaries or recordings are those of the author and/or presenter at the time created and is for informational purposes only. They do not necessarily reflect the views of FPA or the distributor. Future events, results or views may vary significantly from those expressed and are subject to change at any time based on market and other conditions, and FPA and/or the distributor disclaims any responsibility to update such views. No forecasts can be guaranteed, and certain assumptions may prove to be inaccurate. These views may not be relied upon as investment advice or as indication of trading intent on behalf of any FPA portfolio or the distributor and should not be construed as an offer to sell or a solicitation of an offer to buy securities or any product mentioned. FPA shall not be responsible for any trading decisions, damages or other losses from or related to the information, data analysis or opinions or their use. This information and data has been prepared from sources believed reliable. However, the accuracy and completeness of the information cannot be guaranteed and is not a complete summary or statement of all available data. FPA has received certain nominations or awards by third-parties as reflected herein. Investors should review the criteria for each nomination or award as reflected on the third-party’s webpage. You should not construe the contents herein as legal, tax, accounting, or other advice or recommendations.

You should consider the Fund’s investment objectives, risks, fees and expenses before investing. The Prospectus contain this and other important information which should be read carefully before investing. 

September 16, 2020

Morningstar’s The Long View – Steven Romick: ‘We Think Defensively’

Steven Romick, founding Portfolio Manager of FPA Crescent Fund (“FPACX” or “Fund”), discusses investing through the pandemic and broader market cycles, shifting return dynamics, and opportunities within the U.S. and abroad on Morningstar’s The Long View.

Please find the link to the podcast and transcript after the following disclosures:

References to individual investments are for informational purposes only and should not be construed as recommendations by the Fund, the portfolio managers, FPA or the distributor. Any information provided is not a sufficient basis upon which to make an investment decision. It should not be assumed that future investments will be profitable or will equal the performance of any investment examples discussed. Past performance is no guarantee, nor is it indicative, of future results.

Morningstar Fund Manager of the Year/Decade Nominations and Awards

FPA has received certain nominations or awards by third-parties as reflected herein. Investors should review the criteria for each nomination or award as reflected on the third-party’s webpage.  More detail is provided below.

The 2009 Morningstar Domestic Fund Manager of the Decade award is based on risk adjusted results over the past 10 years (2000-2009), and other considerations, including the risks assumed to achieve the results, the strength of the manager, strategy, the firm’s stewardship, and asset size. Both individual fund managers and management teams are eligible, and being a previous winner of the Morningstar Fund Manager of the Year award isn’t a prerequisite. Morningstar’s fund analysts select the Fund Manager of the Decade award winners based on Morningstar’s proprietary research and in-depth evaluation.

The nominee for the Fund Manager of the Year award is presented each year to recognize a manager's past achievements. The Fund Manager of the Year award winners are chosen based on research and in depth qualitative evaluation by Morningstar’s Manager Research Group. Nominations are made by Morningstar manager research analysts, then narrowed to a list of finalists by each asset-class team. The entire analyst team meets to debate the merits of the finalists in each asset class. Voting commences immediately after each asset-class meeting, and nominees receiving the most votes are the winners. The award is presented to fund managers who have distinguished themselves over the past calendar year and have achieved strong risk adjusted historical performance through the careful execution of a solid investment strategy and responsible fund stewardship. Morningstar’s Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. For more information, please see https://go.morningstar.com/Morningstar-Awards.

The Morningstar Analyst RatingTM is not a credit or risk rating. It is a subjective evaluation performed by the manager research analysts of Morningstar. Morningstar evaluates funds based on five key pillars, which are process, performance, people, parent, and price. Analysts use this five-pillar evaluation to determine how they believe funds are likely to perform relative to a benchmark, or in the case of exchange-traded funds and index mutual funds, a relevant peer group, over the long term on a risk-adjusted basis. They consider quantitative and qualitative factors in their research, and the weight of each pillar may vary. The Analyst Rating scale is Gold, Silver, Bronze, Neutral, and Negative. A Morningstar Analyst Rating of Gold, Silver, or Bronze reflects an analyst’s conviction in a fund’s prospects for outperformance. Analyst Ratings are continuously monitored and reevaluated at least every 14 months. For more detailed information about Morningstar’s Analyst Rating, including its methodology, please go to http://corporate1.morningstar.com/AnalystRating.

The Morningstar Fund Manager of the Decade and Year nominations and awards, as well as the Morningstar Analyst Rating for a fund should not be used as the sole basis in evaluating a fund. Morningstar Analyst Ratings involve unknown risks and uncertainties which may cause Morningstar’s expectations not to occur or to differ significantly from what they expected.

©2020 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted by Morningstar to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Additional Disclosures

References to geographic location of the companies that the Fund holds is as of June 30, 2020.

The information noted about the Fund’s private credit investments or private loans is as of June 30, 2020 and is for illustrative purposes only, and is not intended to imply any future performance of the Fund. The reference to ‘mid-teens returns’ is the weighted average Internal Rate of Return (“IRR”) of those investments. The weighted average IRR is based on the size of all investment level IRRs plus net income from private loans that were committed but not invested. Weighted average allocations are based on firm level allocations. Of the 40 investments the Fund has made since 2009, 35 have been exited and 5 are still open. IRR is calculated from the ‘Initiated’ date through the ‘Exited’ date for exited investments, and through June 30, 2020 for open investments. IRR is presented net of all underlying manager or sourcing fees, but gross of FPA management fees and expenses, which would reduce these returns. The IRR noted herein should not be construed as, and is not indicative of, the performance of the Fund. 

Source for Warren Buffet Quote: Fortune Magazine, February 19, 2001, ‘The Value Machine Warren Buffet’s Berkshire Hathaway is on a buying binge. You were expecting stocks?’, Interviewer, Carol Loomis.

‘Margin of Safety’ is a principle of investing in which an investor purchases securities when they believe the market price is significantly below its estimated intrinsic value. In other words, when the market price of a security is, in an investor’s view, significantly below their estimation of the intrinsic value, the difference is the margin of safety. Using the margin of safety principle may help to reduce downside risk. Note, determining a company’s “true” worth or intrinsic value is highly subjective. There is no guarantee that the methods used to evaluate intrinsic value will be accurate or precise or that an investment made using this principle will be successful. Margin of safety does not imply future performance or profitability.

References to the Fund’s “equity portfolio” refers to the Fund’s long equity holdings, which excludes the long portion of any pair trade. The long equity segment average weight in the Fund was 70.2% and 69.2% for Q2 2020 and YTD through 6/30/20, respectively. Long  equity portfolio statistics noted herein do not represent the results that the Fund or an investor can or should expect to receive. Fund investors may only invest or redeem their shares at net asset value.  

References to current and prospective earnings yield are based on FPA calculations as of June 30, 2020 and uses data sourced from  CapIQ, Factset, and/or Bloomberg. The 5% earnings yield on the Fund’s equity portfolio noted refers to the earnings per share for the most recent 12-month period divided by the current market price per share as of June 30, 2020.

You should consider the Fund’s investment objectives, risks, fees and expenses before investing. The Prospectus contain this and other important information which should be read carefully before investing. 

Please click here for Standardized Performance for FPA Crescent Fund. Please click here for the Fund’s Q2 2020 Commentary, which also includes a full list of the Fund’s holdings as of June 30, 2020. Past performance is no guarantee, nor is it indicative, of future results.

The FPA Funds are distributed by UMB Distribution Services, LLC: UMB Fund Services 235 W Galena Street, Milwaukee, Wisconsin 53212

For further details, please click here.