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FPACX off to a slow start

I know we are only one month into the new calendar year but, a bit surprising that FPACX has performed so poorly compared to other moderate allocation funds and given it's high cash stake of 44%. Other MA funds that are off to a slow start as well such as OAKBX and DODBX have far lower cash stakes.


  • edited January 2015
    From FPACX 4Q Commentary
    Given the market’s run,
    you may wonder if we were wrong to have not been more fully invested.
    You would have been much better off investing in an index fund rather than with an active manager,particularly one with our conservative bent. In fact, 2014 was the worst year for active managers since 1997. Part of the reason just 14% of managers outperformed the market is that there was little breadth.

    Large-cap stocks dominated
    Apple alone, the largest market cap company, rose
    40% and added 1.3% to the S&P 500’s return. However, the average stock didn’t fare nearly as well, returning more than eight percentage points less than the S&P 500.
    The narrow breadth didn’t break any records but it was reminiscent of 1999 when the S&P 500 was up 21.04% and yet more than half the stocks in the index declined in price.

    High Yield
    Oil has declined by more than half in the last year. With energy companies representing
    14 %-15% of the high-yield bond index, it shouldn’t come as a surprise that we are beginning to troll the energy sector. We have a few prospective investments on the table but have only pulled the trigger on one thus far. We’d like to be assured of a return of our capital without having to make too large a wager on the price of oil

    Should oil prices remain low for some period of time, we expect additional opportunities to increase our investments. Our chosen path is littered with the bonds of the forced seller, which is how we ended up with large exposure to the debt of finance companies in 2008/9. The bonds of oil-related businesses have yet to reach prices that offer the best combination of yield and collateralization and a significant margin of safety given conservative expectations for the price of oil.

    Not only is the stock market at a new high but so is the dollar and that’s despite continued low interest rates. It does beg the question: Are stocks in developed economies only as good as their respective central banks allow them to be?
    At some point, the market intervention will end, hopefully plying us with
    opportunity, but we are careful for what we wish for.

    FPACX 4th Q Fact Sheet Cash & Equivalents 45.1%

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