Seeing little opportunity in stocks these days, Robert Rodriguez, chief executive officer of First Pacific Advisors and manager of the small-cap value FPA Capital Fund, is nearly 40% invested in cash. Whereas in 1995 he had no more than 4% of the fund’s assets in cash, that’s now 37% and rising, Dow Jones reports. "The opportunity cost of holding liquidity today is among the lowest levels in 20 years," he said.

Rodriguez looks for stocks that are leaders in their industry but going through turmoil and therefore trading at 60% or less from their 52-week highs. Normally, he said, this turns up 200 out of the 2,000 small-cap stocks, but this year, the screen has produced only five stocks. Frustrated, he has only added one new name to his portfolio since the beginning of 2003, is adding to his existing holdings and is closing the fund to new investors on Thursday. Looking out over the next five years, Rodriguez expects to continue to have a large proportion of his fund in cash. Currently, the fund’s biggest sector weightings are consumer services, energy, industrial materials and business services, according to Morningstar. FPA Capital Fund’s performance over the past five years has been stellar, beating the S&P 500 by 16 percentage points for an average return of 13%. Year-to-date, the fund is up 6%, 4.9 percentage points above the S&P 500.

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