Robert (Bob) Rodriguez, former managing partner at asset-management firm FPA, shared insights and opinions regarding various market-related topics in an interview recently published in Advisor Perspectives.
Here are some highlights:
- On mean reversion: Rodriguez emphasizes that a mean reversion will occur. He shares his belief that the “standards in the industry are being compromised; monetary policy has so totally distorted the capital markets. You are now into the eighth year of a period that is unprecedented in the likes of human history.”
- When asked, “What is driving the flow of mutual fund assets to passive strategies and what can or should fund companies do in the face of this trend,” Rodriguez says that active managers “have not demonstrated a value-add to an appreciable extent over the last 20 years.”
- “How did the discipline of value investing as you practiced it at FPA change over the course of your career, particularly since the financial crisis?”: Rodriguez argues that the speed of news delivery is a factor. “I don’t believe that judgements have improved,” he says, “just the speed has accelerated and the time frames of patience have shortened.”
- On “smart beta” strategies, he argues, “I have never seen a quantitative strategy succeed longer term. They are predicated on models. The models are predicated on history. When history changes, they have to develop a new factor model.”