“The advantage we have is time frame. When I came into the business the average holding period for a mutual fund was seven years. Today it’s less than nine months.”

Rodriguez points out the radical shift in investment behaviors over time with his rhetorical question. Specifically, this translates into the way investors no longer hold mutual funds for as long of a time as they did before: when Rodriguez started his career in the investment business, investors would typically hold through much of the funds that they had invested in, withholding periods as long as an average of seven years (implying some form of far longer-term investment strategy, one that suggests accumulating growth over time); today, these withholding periods are reported as dropping to less than nine months; this indicates a sharp shortening of time spent in each investment, translating into a shift toward more transactional, immediate in-and-out of various fund genres; this translates into a short-term view on the parts of investors, who are, more and more, looking for those investments that can produce quicker gains, reacting faster to the ebbs and flows of the market. Rodriguez states that, for people like him, professionals in the investment business, knowing how to cope with this kind of behavior within a much shorter time frame has become a competitive advantage. They used to see an industry where businesses rolled along with the tides of the market over long periods, but today, they are coming to terms with a shorter time frame from the markets and adjusting as they must. This is their competitive advantage, as they anticipate how things work and roll with the changes, thereby becoming adept at exploiting the market in somewhat different time frames than before—the advantage of anticipating this behavioral shift and then adjusting during daylight.

Robert L. Rodriguez, CFA, Partner Emeritus

Bob joined FPA in 1983. Bob served as Portfolio Manager for FPA Capital, Inc. and FPA New Income, Inc. from 1984 until 2010, and was named Partner Emeritus after his retirement in 2016. Prior to joining FPA, he served as Senior Portfolio Manager, Chairman’s Department of Kaufman & Broad, Inc., and Portfolio Manager at Transamerica Investment Services, Inc.  Bob earned a Bachelor’s degree in Business Administration (Magna Cum Laude) and an MBA from the University of Southern California. He is a CFA Charterholder.

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