Key Morningstar Metrics for FPA Global Equity ETF
- Morningstar Medalist Rating: Silver
- Process Pillar: Above Average
- People Pillar: Above Average
- Parent Pillar: Above Average
FPA Global Equity ETF’s FPAG inimitable investors lead a distinctive approach.
This exchange-traded fund is effectively a carve-out of the equity portfolio from FPA’s flagship allocation fund, FPA Crescent FPACX. However, there are a couple of notable differences; this equity-only ETF will only invest in companies down the market-cap spectrum if liquidity is sufficient (for instance, companies with a market cap between $5 billion and $10 billion). Plus, it will be fully invested with a cash allocation of typically a few percentage points. A common link is the team’s focus on compounders—businesses that are generally leaders in their industries, possess a competitive edge, and have solid balance sheets and shareholder-centric management. The resulting 30-50 stock portfolio is value-oriented and quality-focused. FPA isn’t afraid to stick its neck out, so it will also look different from its prospectus MSCI ACWI benchmark. In February 2025, communication services, led by top holding Meta Platforms META, was 16 percentage points overweight, while technology was 12 percentage points underweight.
Brian Selmo and Mark Landecker have been comanagers here since the December 2021 launch of the ETF and the May 2017 inception of the longer-running separate account, which the ETF mirrors. The duo has plenty of management experience as comanagers on FPA Crescent since June 2013 with FPA stalwart Steve Romick. Romick was a listed manager here until January 2025 but was taken off to prioritize his time elsewhere within the firm.
While the strategy possesses FPA hallmarks, its return profile is a little different. Being fully invested, there is little cash to damp volatility, so downside protection isn’t assured. The flip side is that it offers more participation in rising markets.
FPA Global Equity ETF: Performance Highlights
FPA Global Equity ETF is off to a promising start. From the ETF’s launch through January 2025, it outpaced its prospectus benchmark by 2.4 percentage points annually, and the category benchmark, the MSCI ACWI Value Index, by more. Further, the longer-running separate account has also delivered good results, gross of fees.
While the stated mission is market-beating returns over full market cycles with similar risk, the strategy’s volatility (measured as standard deviation) has been roughly 15% to 20% higher than both benchmarks over the ETF’s tenure to date.
FPA as a firm has tended to win by not losing, but that’s not guaranteed here. As this ETF is fully invested, the lack of cash has meant it has lagged in downturns over its short life. From its inception through the end of January 2025, it captured 104% of the MSCI ACWI’s losses, as well as 106% of the MSCI ACWI Value’s. Conversely, it has bettered both benchmarks in upturns.
The managers’ quality-focus means solid returns aren’t limited to value-led markets despite their value leanings—they won’t invest heavily in deep-value names and tend to avoid speculative growth. Since its launch, the ETF has outperformed the core and value benchmarks when value has outperformed growth. It has outperformed the value benchmark in growth-led markets and has kept a decent pace with the core benchmark, despite the headwind from not owning the likes of Nvidia NVDA.
