The award-winning Queens Road Funds will be administered and marketed by First Pacific Advisors (FPA), a Los Angeles-based institutional money management firm, FPA announced.
Bragg Financial Advisors, a family-owned RIA based in Charlotte, N.C., will continue to be the investment advisor for the two Queens Road Funds, said Steve Scruggs, principal manager of Queens Road Small Cap Value Fund (QRSVX) and Queens Road Value Fund (QRVLX). The Queens Road Small Cap Value Fund was named the best-performing mutual fund in the Morningstar Small Value Category for the one-year and three-year periods ending March 31.
“While index investing has become very popular, our disciplined process has significantly outpaced the Russell 2000 Index year-to-date, as well as over the past 15 years,” Scruggs said.
FPA and Bragg, both of which are employee-owned, were created to realize long-term, risk-adjusted returns. Scruggs will remain the portfolio manager for both funds.
The Queens Road Small Cap Value Fund is rated five stars overall by Morningstar in its small value category and has beaten its Russell 2000 Value benchmark net of all expenses by approximately 200 basis points per year since its inception in 2002. The fund has received a Gold Morningstar Quantitative Rating. The Queens Road Value Fund is rated four stars overall by Morningstar in its large value category and has beaten its S&P 500 Value benchmark net of all expenses since its inception in 2002. Queens Road Value also has received a Gold Morningstar Quantitative Rating.
With FPA’s administration, the funds now will offer an institutional share class with materially lower expenses, placing them in the “below average” Morningstar fee group in their respective institutional share class categories, the company said. Queens Road Small Cap Value’s institutional class expenses will be capped at 0.89% for three years, 25% lower than its current share class’s expenses. Queens Road Value’s institutional class expenses will be capped at 0.65% for three years, more than 30% lower than its current share class’s expenses, the funds announced.
Scruggs said in an interview that the value fund is currently overweighted in industrials and technology, which is where he sees investment opportunities. The two funds held up well during February and March, he added.
“The fear that everyone was feeling in March put the markets on pause for a time,” Scruggs said. “But the potential rebound is very promising. There has been a drop in personal income of 5% to 6%, but consumption dropped 20%, which translates into an actual overall savings. What we are seeing now is that things are slowly getting back to normal. From an economic perspective the markets and the economy look strong.”