The Few, the Proud, the 30-Year Veterans With Good Results

 FPA Capital marked its 30th anniversary as part of the FPA family last week by boasting it had also been the top-performing domestic-stock fund over that span. The fund, with a Morningstar Analyst Rating of Silver, gained nearly 15% annualized from July 11, 1984, when FPA bought the fund from Transamerica, through July 15, 2014. Meanwhile, the average U.S. stock fund with a record that long gained about 10.8%, the S&P 500 11.6%, and the Russell 2500 Index 12%.

It’s a remarkable achievement, but it comes with a small asterisk. The fund has stuck to the same high-conviction, concentrated, value-oriented approach for three decades, but Bob Rodriguez, the manager responsible for most of that track record, stepped back from day-to-day management of the portfolio in late 2009. So, while current managers Dennis Bryan and Arik Ahitov share Rodriguez’s philosophy and approach--albeit without his enthusiasm for delivering fire and brimstone sermons on the markets, monetary policy, and fiscal programs--they do not own the entirety of that 30-year record. Bryan, who has worked on the fund for about 20 years, has been a named manager since 2007, while Ahitov became a manager in 2013.

Regardless, that's an impressive feat. In fact, very few funds have a strong three-decade record with at least one manager at the helm. But some do exist. Here are a handful of rated domestic-stock funds that meet that standard. All have come within hailing distance of FPA Capital’s results.

The Silver-rated  Royce Pennsylvania Mutual’s (PENNX) 11.8% return during that 30-year period ended July 15 is better than the domestic-stock fund average and the averages for the small-value, small-blend, and small-growth Morningstar Categories, which ranged from 11.3% to 11.5%. Chuck Royce has run this fund since he founded his firm Royce & Associates in 1972, though comanager Jay Kaplan has managed about 30% of it for the past 11 years. Throughout, they have remained focused on micro- and small-cap stocks with attractive balance-sheet quality, high returns on invested capital, and earnings stability, trading at 30% to 50% discounts from their estimates of the businesses’ worth.

The tenures of the nine-person investment-policy committee running Gold-rated  Dodge & Cox Stock (DODGX) range from one to 37 years. John Gunn is the only team member whose tenure began before 1984 and who has been a listed manager for the entire period in which this fund gained 13.3% annualized, 3 percentage points better than the average large-value fund. The fund’s financial-crisis losses disabused investors of the once-widely held notion that this contrarian value fund was slump-proof. Even considering that stumble, however, its patient approach has been profitable for those who have stuck with it. In the 30 years ended July 15, 2014, it would have turned $10,000 into $428,000.

From his trademark plaid shirts to his penchant for loading up in areas such as cable and media stocks, where he finds a lot of value, Wally Weitz is another iconoclastic investor. His Gold-rated  Weitz Partners Value (WPVLX) has gained 12.9% annualized in the 30 years ended July 15, 2014--also better than the average U.S. stock fund and the S&P 500. It, too, has required patience at times. Unconventional funds like this one inevitably look out of step now and then.

Richie Freeman has exemplified patience at his fund. His large-cap growth fund has consistently posted low-single-digit annual turnover rates in his more than 30 years at Silver-rated  ClearBridge Aggressive Growth (SHRAX). The fund has produced an annualized gain of 13.5%, and in that time the ride has often been bumpy. The fund has tended to lose more than its peers and benchmark in down markets, but it more than makes up for it over the long term. That’s to be expected, given the fund's penchant for high-expectation stocks like biotech. He and Evan Bauman, comanager since 2009, have done a good job finding and sticking with companies that fulfill their expectations eventually.

 Berwyn has gained about 11.2% during the 30 years ended July 15, 2014. The Silver-rated fund’s longest-serving member is Bob Killen, a co-founder and current CEO of advisor the Killen Group. This has never been a one-man show, though. Two of Killen’s three have worked with him for several years--Lee Grout since 2002 and George Cipolloni since 2005. The team still runs a compact portfolio and says it would close the $400 million fund if size and inflows began jeopardizing its ability to buy financially sturdy, cash-generating small companies that have run into transient problems.

  - source: Morningstar Analysts

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