FUND Q&A-First Pacific's Ende favors individual picks

NEW YORK, July 10 (Reuters) - Investors who focus on
individual company prospects, rather than broad sector choices,
stand a better chance of seeing strong returns amid the
still-uncertain U.S. economic environment.

According to Eric Ende, partner at Los Angeles-based fund
management company First Pacific Advisors, focusing on the
strength of individual companies helps his firm avoid sectors
with commoditized businesses, unattractive returns and those
lacking transparency, such as banking.

As a small/mid-cap manager, with about $800 million under
management, the sweet spot for Ende's flagship FPA Perennial
fund FPPFX.O is between $1 billion and $4 billion in market
capitalization.

At the close of June, the FPA Perennial fund was handily
beating the Russell 2500 index, notching a 19.6 percent
year-to-date return versus 8.7 percent for the index, which
tracks the performance of the smallest companies in the Russell
3000 Index .RUT.

Below is a snapshot of Ende's interview with Reuters this
week, his portfolio sector weights and highlights of his stock
picks:

Q) HOW MUCH DOES THE MACROECONOMIC PICTURE INFLUENCE YOUR
INVESTING?

A) "We are not trying to get ahead of changes in the
economy that are six months, a year, or even two years out.

"We are very much kind of company-by-company. We want to
find companies that earn these high returns and will continue
to earn high returns.

"The most important thing is that we've avoided a financial
meltdown. In terms of the economy the decline has clearly
slowed. Hopefully, we're bottoming."

Q) WHAT ARE YOUR MISGIVINGS ABOUT THE FINANCIAL SECTOR? YOU
HAVE VERY LITTLE EXPOSURE TO IT.

A) "It's not a nice thing to say, but I don't see a really
great history of smart people operating these businesses.

"On the banking side, every 10 years you discover that
banks have all been doing the same thing, and it's a bad
thing."

- TOP FINANCIAL PICK: Florida-based Brown & Brown Inc
(BRO.N) - down 11 percent on the year, versus a drop of 18
percent in the Dow Jones U.S. insurance index .DJUSIR. "We
have a minor position in a insurance broker. It doesn't take
credit, investment and underwriting risk. Compared to other
financials it's very, very different," said Ende.

First-half performance of Ende's top portfolio holdings:

Life Technologies (LIFE.O) +79 pct

Scan Source (SCSC.O) +27 pct

O'Reilly Automotive (ORLY.O) +24 pct

Charles River Labs (CRL.N) +29 pct

Noble Corp (NE.N) +11 pct
(Reporting by Ellis Mnyandu; Editing by Padraic Cassidy)