FPA Queens Road Value Fund · NASDAQ:QRVLX
FPA Queens Road Value Fund — FPA Short Duration Government ETF — Investor Presentation (December 2024)
24 slides from FPA Queens Road Value Fund's investor presentation, Dec 18, 2024
Slide 1: FPA Short Duration Government ETF (FPAS) Webcast Presentation
L P rs, is o d v c A (FPAS) i f i FPA Short Duration Government ETF a c P December 18, 2024 Webcast Presentation t i r s F Follow us on:
Slide 2: Agenda
Agenda L P ■ Why we launched a bond ETF ■ Fund overview rs, ■ Pre-submitted and live questions is o d v c A i f i a c t P F i rs 2
Slide 3: Why our clients want ETFs
Why our clients want ETFs L P ■ Administrative/operational ease. ■ Cost of trading versus mutual funds on some platforms. rs, is o ■ Some clients prefer ETF-only portfolio (even though little or no tax advantage over a fixed income mutual fund). d v c A i f i a c t P F i rs 3
Slide 4: Risk versus reward
Risk versus reward Short Government funds are typically less volatile L P 5.0 Risk/reward of various bond categories/indexes/funds rs, 4.0 FPA Flexible Fixed Income is o 5-Yr Total Annualized Return (%) 3.0 d v Nontraditional A FPA New Income Bond Funds 2.0 i f i cShort-Term Bond Funds 1.0 a c Bloom
Slide 5: Funds overview
Funds overview P FPA New Income Fund FPA Flexible Fixed Income Fund FPA Short Duration Government ETF Institutional Share Class (FPNIX) Institutional Share Class (FPFIX) L (FPAS) Investor Share Class (FPNRX) Advisor Share Class (FFIAX) Seeks to provide long-term total return, Seeks to provide long-t
Slide 6: U.S. Treasuries Stress Test as of 12/31/21
U.S. Treasuries Stress Test as of 12/31/21 U.S. Treasuries 100bps Stress Test L P 6.00% 5.00% rs, 5.24 o 4.10 4.00% is 2.96 Yield / Total Return 3.00% 2.00% 1.00% 0.73 1.73 0.96 d v 1.11 1.26 A 0.38 0.38 0.38 0.00% -1.00% -2.00% i f i -0.26 c -1.00 c -1.78 a -3.00% -2.54 1 year 2 year 3 year 4 year
Slide 7: FPAS duration as of 11/29/24
FPAS duration as of 11/29/24 U.S. Treasuries 100bps Stress Test L P , 9.00% Yield^ rs 7.79 8.00% 100bps stress test return* 12 month return, 100bps decrease in interest rates* 6.92 7.00% 6.00% 6.02 is o Yield / Total Return 5.13 5.00% v 4.28 4.28 4.28 4.15 4.09 4.07 4.02 4.05 4.00% 3.00% 2.00% 3.19
Slide 8: Process
Process ■ Consistent, transparent process L P ‒ Fund’s duration determined by the longest duration bonds that should produce a breakeven return if risk-free rates rise 100 basis points over the next twelve months (“100bps Stress Test”).1 rs, ‒ This is the same 100 bps Stress Test used for the manage
Slide 9: Bloomberg 1-5 Year U.S. Treasury Index has had relatively static duration
Bloomberg 1-5 Year U.S. Treasury Index has had relatively static duration over the past six years 2-Year US Treasury Yield vs Index Duration L P 6.00 rs, 5.00 4.50 5.00 is o 4.00 4.00 d v 3.50 Duration (yrs) Yield (%) 3.00 c A 3.00 2.00 i f i 2.50 1.00 a c 2.00 P 1.50 0.00 rs t 1.00 F i 2yr Treasury
Slide 10: Average short-term bond fund has also had relatively static duration
Average short-term bond fund has also had a relatively static duration over the past six years 2-Year US Treasury Yield vs Morningstar Short-Term Bond Category Duration L P 6.00 rs, 5.00 4.50 5.00 is o 4.00 4.00 d v 3.50 Duration (yrs) Yield (%) 3.00 c A 3.00 2.00 i f i 2.50 1.00 a c 2.00 P 1.50 0.0
Slide 11: The duration of FPA New Income Fund is flexible and actively-managed
The duration of FPA New Income Fund (FPA’s mutual fund) is flexible and actively-managed 2-Year US Treasury Yield vs FPA New Income Fund Duration L P 6.00 rs, 5.00 4.50 5.00 is o 4.00 4.00 d v 3.50 Duration (yrs) Yield (%) 3.00 c A 3.00 2.00 i f i 2.50 1.00 a c 2.00 P 1.50 0.00 rs t 1.00 F i 2yr Tre
Slide 12: Process: Stress Test is formulaic and actively-managed
Process: Stress Test is formulaic and actively-managed 2-Year US Treasury Yield vs Stress Test Duration L P , 6.00 5.00 rs 4.50 5.00 o 4.00 is 4.00 Duration (yrs) 3.50 Yield (%) 3.00 d v 3.00 2.50 A 2.00 2.00 1.00 0.00 i f i c 1.50 1.00 a c 2yr Treasury yield (LHS) Duration of Stress Test (RHS) t P
Slide 13: Process: Stress Test is formulaic and actively-managed
Process: Stress Test is formulaic and actively-managed ▪ Active portfolio management could create different duration risk profile vs an index L P ‒ The historical table below does not represent any investment portfolio, does not reflect valuations or other features of our investment approach, and is
Slide 14: FPAS key characteristics
FPAS key characteristics L P rs, Yield-to-Worst (YTW)1 FPA Short Duration Government ETF is o Bloomberg U.S. Treasury 1-5 Year Index v 4.02% 4.17% Effective Duration A 4.3 years d 2.6 years f i c Portfolio currently comprised of Treasuries and cash. i a c t P i rs As of 11/30/2024. Source: Bloomberg
Slide 15: FPAS differentiation
FPAS differentiation L P Why could FPAS potentially produce more attractive returns than peers on a risk-adjusted basis? ■ Primary potential driver of differentiated performance → Duration Management rs, ■ Opportunistic exposure to Agencies and other Investment Grade Securities (capped at 10%) is o
Slide 16: Summary
Summary ■ FPA’s Short Duration Government Strategy is designed for an ETF; therefore, no capacity constraints L P and full transparency ■ FPAS looks very different from the index (4.3 years Fund duration vs 2.6 years for index)* rs, ■ Potential use cases is o ‒ Potentially a substitute for or compli
Slide 17: Question & Answer
L P rs, is o d v c Question & Answer A i f i ac t P F i rs 17
Slide 18: FPNIX performance – net of fees
FPNIX performance – net of fees L P ITD (Since , Performance (%) as of 9/30/2024 QTD YTD 1 Yr 3 Yr 5 Yr 10 Yr 15 Yr 20 Yr 30 Yr 40 Yr 7/11/84) rs FPA New Income Fund (“FPNIX”) 3.82 5.73 9.74 3.21 2.72 2.46 2.28 2.71 4.23 6.03 6.26 Bloomberg U.S. Agg Bond Index 5.20 4.45 11.57 -1.39 0.33 1.84 2.60 3.
Slide 19: FPFIX performance – net of fees
FPFIX performance – net of fees ITD (Since L P , Performance (%) as of 9/30/2024 QTD YTD 1 Yr 3 Yr 5 Yr 12/31/18) rs FPA Flexible Fixed Income Fund (“FPFIX”) 3.86 6.34 10.71 4.12 3.81 3.90 Bloomberg U.S. Universal Index 5.20 4.91 12.08 -1.05 0.70 2.10 CPI + 200 1.03 3.46 4.47 is o6.84 6.26 5.96 d v
Slide 20: Important Disclosures
Important Disclosures posted on FPA's website at fpas.fpa.com. L P These slides are intended as supplemental material to the 2024 FPA Short Duration Government ETF (the “Fund” or “FPAS”) audio presentation and transcript that is This presentation is for informational and discussion purposes only and
Slide 21: Important Disclosures (continued)
Important Disclosures (continued) P NO INVESTMENT DECISIONS SHOULD BE BASED IN ANY MANNER ON THE INFORMATION AND OPINIONS SET FORTH IN THIS PRESENTATION. YOU SHOULD VERIFY ALL CLAIMS, DO YOUR OWN DUE DILIGENCE AND/OR SEEK ADVICE FROM YOUR OWN PROFESSIONAL ADVISOR(S) AND CONSIDER THE INVESTMENT OBJEC
Slide 22: Important Disclosures (continued)
Important Disclosures (continued) P Important Disclosures for Hypothetical Stress-Tested Results and Estimated Principal Cash Flows L The hypothetical and estimated data provided herein is for illustrative and informational purposes only. No representation is being made that FPAS will or is likely t
Slide 23: Important Disclosures (continued)
Important Disclosures (continued) P Morningstar Bond Categories Nontraditional Bond portfolios contain funds that pursue strategies divergent in one or more ways from conventional practice in the broader bond fund universe. Many funds in this L group describe themselves as “absolute return” portfoli
Slide 24: Glossary of Terms
Glossary of Terms P Credit ratings range from AAA (highest) to D (lowest). Securities rated BBB or above are considered investment grade. Securities rated BB and below are lower-rated securities (junk bonds). High-yielding, non- investment grade bonds (junk bonds) involve higher risks than investmen
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