Hi Professor David and MFOers,
With apologies to its author Elbert Hubbard, thank you for your Message to MFOers ( originally to Garcia). Your messages, in almost real time, of what’s what at the annual Morningstar Conference should permit us to take the investment initiative. So far that hasn’t happened. That’s not your fault. It’s like we are seated in the conference rooms with you.
It’s really not surprising that a fair review of the proceedings is almost always a mixed bag. Are the insights gleaned from the presentations worth the time and effort? Typically, these conferences generate a jumble of rubbish and a few gems. The wheat must be separated from the chaff.
For years (like 15), both my wife and I have been attending and even occasionally participating in the annual Las Vegas MoneyShow. Each year we question if the learning is worth the price. Yet each year we return with an optimistic mind-frame. Hope springs eternal. Fortunately we usually return home with a few nuggets of wisdom. So I suppose my answer is “yes”. Although the promises and expectations far exceed what is ultimately delivered, it is still a worthwhile time investment.
The Morningstar agenda at this conference is clearly directed at financial professionals. That suggests that the presentation bar should be set a bit higher given the likely sophistication of the audience.
Based on your summary reporting, the bar standard is unacceptably too low, or perhaps, the presentations are so generic or fuzzy, that the bar height can not even be accurately defined. That too is bad, but it is not a shock either. If the presenter actually had a special forecasting insight or investment preference, he/she is not likely to freely reveal it to a non-subscribing audience. If I were the presenter, I would reserve this gem for my paying clients.
I find it somewhat puzzling why a few MFO members are so short-tempered and even hostile towards Morningstar’s limitations, errors, and costs. Research and data collecting costs money. Folks are imperfect and blunders are made despite the best organizational, structural, and double-checking safeguards. Accepting that reality, I adopt a more forgiving posture. Even my Toyota was delivered with several minor flaws which the manufacturer quickly corrected.
I’m not advocating the elimination of skepticism. A skeptical attitude is needed when making all investment decisions. However, it has a limit to its usefulness. It has the usual diminishing returns characteristic. At some point, it detracts from permitting a timely decision from being made.
Morningstar is one of the preeminent mutual fund data sources available to us individual investors. Overall, it has served us well. How do I know this?
It has a growing legion of loyal customers who trust its services. It attracted a huge number of professionals at this session who were willing to invest time and to pony-up 795 dollars to attend these sessions. Its sponsor and exhibitor lists are impressive. It has a history that dates back to when Peter Lynch managed the Magellan fund. Morningstar must be doing something of service to the investing public.
Since it is a successful enterprise, it must be a win/win scenario for both the buyer and the seller. Otherwise money would not change hands. Morningstar is prosperous and expanding; it continuously tries to improve its products. Certainly not all of these experiments are successful or equally useful for its disparate customer base.
Early in its history, Morningstar was very weak on analytical talent. Originally they hired professionally trained writers while passing on market analytical/investment types. Eventually, Morningstar recognized that shortcoming and integrated Ibbotson into their team. As an elite provider of investment data and analyses, Morningstar is committed to keeping its edge. Sometimes their efforts work; sometimes these efforts fail. It is up to their users to assess the merits of these exploratory projects for their special circumstances.
It is far too easy to be a constant critic. The bad is overemphasized while the good is swept away without acknowledgment. If the Morningstar presentations are too dull or too inept, the answer is simple enough: abandon the ship.
As usual, Warren Buffett had a succinct and wise way of putting it: “ Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
Regardless of its shortcomings, I plan to continue using Morningstar as a primary mutual fund data resource. In the end, it is my responsibility to critically examine that data to judge its reliability prior to making a decision.
Your description of Bill Gross’s weird behavior is reminiscent of a like event at the recent Las Vegas MoneyShow. At that event, Ken Fisher made a presentation that seems to be a mirror image of Gross’s misstep. It was totally not decipherable and made no sense whatsoever. To be generous, everybody has a bad day. Perhaps it was caused by the Chicago air compared to the Newport Beach air? Nope, these guys are just being human.
We are often Fooled by a Random Success. I capitalized the phrase because I coupled a Nassim Taleb saying with a contribution from an old friend. Even tossing 10 consecutive heads doesn’t mean we’re in control. Luck is always an investment component. For what it’s worth, we each have a 1 in 1024 probability of tossing 10 straight heads. Not likely, but doable.
Professor, please keep the report flow coming. I wish I were there with you.
Best Regards.

Not all that long ago I considered Mr. Gross one of the brightest minds in the financial world. This story along with all the others that have floated out there does make me wonder what happened to him? He is 70 years old so it could be possible that a medical condition is evolving in him though I don't wish anything of the sort.
Perhaps it is time for him to enjoy life while he can.

@Maurice - In the FireFox Preferences, under 'Privacy':
• check the Accept cookies from sites box.
• do not check the Accept third-party cookies box
• set Keep until: to ask me every time.
It's likely that you already have a long list of cookies with various settings, in your case probably mostly 'blocked'. Click on Exceptions to see that list. You can now do one of two things: if you know what cookies that you would like to permit, you can comb through that list and change the settings. That can be a real pain, though, so it might be easier to just eliminate all of those cookie settings and start all over.
If you do that, with the settings as given above your browser should now automatically reject all of the third-party cookies, which are the advertising, tracking and other junk stuff that you really don't want.
Now each time you go to a new site you will of course be assaulted with a flurry of new cookie requests. Here's a suggestion on how to handle those:
First, accept cookies only from those sites that you want to allow. These may be either Session Only or may have an expiration date, typically rather far in the future.
Second, you may visit sites that you want to take a look at, but not allow cookies if you can help it. The problem there is that many times some operational feature of a site will not function properly without those cookies. So here's a compromise that usually works-
• Allow at least one, typically the first one, for Session Only
* Deny all of the rest, especially any cookie that has an expiration date other than Session Only.
You will wind up with cookies on your browser, but hopefully only from sites that you have approved. If you frequently use your browser for checking bank balances, financial holdings, or other similar operations this is about the best compromise that I've been able to work out.
If you do inadvertently allow cookies that you want to delete, you can go back through the preferences to that list, and block them there.
Hope this helps a little.
OJ

FYI: A blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts," Burton Malkiel famously argued in his classic 1973 book, A Random Walk Down Wall Street.
Regards,
Ted
http://online.barrons.com/news/articles/SB50001424053111903927604579634603846777722#printMode

@rjb112
$439---"like" wow. It wasn't so long ago (or was it?) that I recall a $100/yr rate. I had no idea. I dunno, for what you get--- would "deplorable" be too harsh? At some point, the little indignities stack up until .... change is required. [I just watched part of a Senate hearing today, where a rep from TD Ameritrade was compelled to admit that almost all retail investor trade orders were sent into a queue used by HF traders. How often? Most of the time, for quite some time. And how often was it more to TDA's financial benefit when they did it this way? Virtually every time, the rep answered. (sigh)]

Why David, how can you question their sincerity, how can you harbor any doubts of their abject devotion to your financial well-being?

Could it have anything to do with the fact that they charge me $439 for a three year subscription?

Why David, how can you question their sincerity, how can you harbor any doubts of their abject devotion to your financial well-being?
Move toward the light, David, just move toward the white light.
"Client solutions"
Manage "client dynamics"
Why do these phrases trigger tiny involuntary twitches, and have me feeling it is imperative I should immediately emit a primal scream and dash into the darkness? :) I dunno, it's a puzzle.
@Charles No need to over-worry; sometimes they let the engineers and authors live.

I'm not so sure she was upbeat in her conference as she was clear that the status quo goes on. (aka "nothing to see here, move along" aka "This is not the inflation that you are looking for" aka "This is not the bubble you are looking for, either, while we're at it", etc.)
Even CNBC was skeptical of some of her answers (how dare the financial comedy network question zee Chairwoman, even Steve Leisman of all people....)
http://www.zerohedge.com/news/2014-06-18/those-soaring-food-and-gas-prices-fed-has-name-them-noise
Amused by this comment in the comments section: "It's all discretionary...as in, it's up to the discretion of whomever is telling you the inflation rate, whethere or not to actually present the inflation rate to you."
Made actually a lot of changes today, but I will say these changes do not have me getting more conservative.
Fedex did have very good numbers this morning. I continue to like UPS/FDX and the rails (although CP has gotten ahead of itself.)

Many (most?) people who use MFs for fixed-income investing do so in diversified vehicles that to a greater or lesser extent are also multi-sector. There are also some who are more contrarian, who rotate successfully/opportunistically from one fixed-income asset class to another, as good value arises from dislocations. Some do both.
This blog briefly notes the positives of both, in the context of how each approach could be impacted by measures the Fed Reserve is "considering" as part of a financial crisis action plan:
http://blog.alliancebernstein.com/index.php/2014/06/17/multisector-plan-can-help-avoid-the-crowd-in-credit/
You see, according to the Fed trial balloon leakthinking, under dire circumstances, retail investors in some transparent, open-end mutual funds might stampede for the exits in large sector-specific funds (the horror!); the degree to which this spasmic disorder would threaten the banking system of the country is so unpredictable, yet similar in impact to what one might expect to come from the "shadow banking system," that one should create contigency plans for a run on these funds as if they are part of the "shadow banking system." At least that's the way I'm interpreting what I've read here and elsewhere about this contrivance discussion:
http://www.ft.com/intl/cms/s/0/290ed010-f567-11e3-91a8-00144feabdc0.html?siteedition=intl#axzz34uHmImp0
See what you think, esp. you dangerous single-silo credit allocators.

Of the value-oriented ones, it's interesting how very much better FLPSX does than HWMIX if you start in the summer of 2007, which is what I always advise.

Do you have a tool or financial calculator that you use to determine the total return of any mutual fund using whatever start and end date you want?
You can use Adjusted Closing prices from Yahoo Finance, but I'm not confident in the accuracy of this method.
It's easy to calculate percentage price change using any start and end date, but distributions [dividends, long and short term capital gain distributions] have to be added in to the calculation, making things more complicated. And you have to find out all the distributions that took place from the start and end date in question. The NAV goes down by the amount of any distribution.

Nice to see the few funds that I own that are on these lists were recommened to me by my financial advisor, funds that I would not have looked at if I was still picking only ntf funds and no load funds at my former brokerage house. She keeps earning her fee :)

The article is so typical of financial writers and publications, all about "what have you done for me LATELY". No wonder the average investor does so much worse than the funds she/he invest in.

Hi Ted,
It appears that you have decided to continue the march, at least for now. That's good. Thank you.
Indeed you have been doing this form of research for years, and I have benefited from it since the early FundAlarm days. Compared to your time on the job, Barry Ritholtz is a rookie. He was likely in the 4th grade when you posted your first listing.
I’m happy that you have elected to basically ignore the MFO naysayers except for your very perceptive summary sentence. This too reflects your overarching experience level.
I suspect some segment of these naysayers adhere to the following advice which was published about 7 months ago by Ritholtz titled “Reduce the Noise Levels in Your Investment Process”:
" (1) Constantly consume mainstream media. Financial television is an excellent source of actionable investing ideas.
(2) Play down data. It’s overrated. Stick with anecdotes from people you know personally and your gut instincts.
(3) Pay attention to pundits. They exist for the sole purpose of helping you reach a comfortable retirement.
(4) Get the inside dope. All of the important information about the stock market — especially when it is going to crash or rally — is known only to handful of secret insiders. If you can’t get their magic knowledge, blame them for any losses you incur.
(5) Stress about this. Exert lots of energy, spend lots of time and create lots of tension about all of the following: Federal Reserve and the Taper, the Dollar versus the Euro, the Tea Party and Congress, Hyper-Inflation, European Sovereign Bank Debt, Gold, China, Deflation, Austerity and the Hindenburg Omen.
(6) Don’t do the math. Numbers are vastly overrated, and probability analysis is for geeks anyway.
(7) Stay in your comfort zone. Focus only on those news sources that are in sync with your politics. Seek out sources that confirm your preexisting opinions and investment postures. Never read anything that challenges your beliefs.
(8) Think fast. Trading is where the big money is made! Don’t worry about the long term — it’s way off in the future. Measure your success in hours and days, not years and decades.
(9) Have a Super Happy Fun Time. There is no reason that you cannot also have a good time with your retirement account: It’s tax -deferred, so you have no capital gains consequences. Have fun with it — that’s what it’s there for anyway!
(10) Ask: What Have You Done For Me Lately? Never listen to people with good long-term track records who may have had a losing period. When Warren Buffett underperformed in 1999, you should have written him off. Investing is about recent performance!"
Of course, Ritholtz was just showing off his sarcastic side. He meant and believes just the opposite. He called this subsection of his article “How to Get More Noise and Less Signal”. I love it! In this arena you and Ritholtz share some common characteristics.
Thanks once again for doing this arduous task. It has saved me and many other MFO members countless hours of searching time while wisely directing our attention to meaningful candidate articles that will positively inform us in most instances.
Continue to continue the march.
Best Wishes.

FYI: Copy & Paste 6/13/14: Jason Zweig: WSJ
Regards,
Ted
Investing graybeards like to say that "bull markets climb a wall of worry." This one has been sleepwalking up a wall of boredom.
As of this Friday, the S&P 500 has gone 980 days without a 10% decline, according to Birinyi Associates, the fifth-longest such stretch on record. This past week's nervousness, set off by the insurgency in Iraq and the surprise defeat of U.S. Rep. Eric Cantor, is thus the perfect pretext for investors to think about what they will do when the market takes a serious beating.
For, sooner or later, it surely will—and those investors who have honestly prepared for it will stand the best chance of surviving unscathed. In a downturn, you won't be the same investor that you are now—unless you rely on rules and procedures, rather than willpower alone, to regulate your behavior.
New research shows that the kind of stress brought on by a collapsing stock market fundamentally changes how people make financial decisions.
In a series of recently published experiments, Mauricio Delgado, a neuroscientist in the psychology department at Rutgers University in Newark, N.J., has found that even a moderate amount of sudden stress can make people more sensitive to losses and indifferent to small gains.
In these experiments, people are put under stress by immersing their dominant hand in ice water (at about 39 degrees Fahrenheit) or wearing an arm wrap cooled to the same temperature. Shortly thereafter, most people show an impaired short-term memory and an elevated level of the stress hormone cortisol. Stress in the world outside the laboratory, often brought on by social interactions, is almost certainly more intense than this simple simulation in the lab, says Prof. Delgado.
People are then asked to choose between simple gambles with varying odds and different amounts of money at stake. Under stress, participants gravitated toward bets giving them a higher probability of making a smaller amount of money. When gambles paid off, brain scans show, the natural response in the reward areas of the brain was blunted by stress.
"Exposure to stress makes people more loss-averse and diminishes their overall sensitivity to reward," says Prof. Delgado. "And if a reward is of low magnitude, [people under stress] often don't care about it very much."
Thus, at the very moment when falling prices make assets more attractive to own, most investors are likely to focus on how much they are losing in the short term—rather than on how much they stand to gain if they hang on for the long term.
They are also likely to fall back on emotional—or what Prof. Delgado calls "habit-based"—decisions. "Stress tends to exacerbate your typical biases," he says. "If you usually make conservative choices, it will make you more conservative." And if you typically make risky choices to avoid locking in losses, he says, stress "will make you more risk-seeking." Other researchers have found similar patterns of behavior.
That helps explain why investors who swore they would never sell often end up fleeing to cash when stocks drop, while others add more to their positions than they ever anticipated.
In calm times, like the markets of the past few months, it's hard to imagine how you will feel when all the arrows turn to red from green. What's more, even in the heat of the moment, when your body and brain show the signs of acute stress, you might not be consciously aware of the pressure you are under.
So it's vital to make sure you have procedures in place now to control your future stress.
Start by asking yourself where the potential is greatest for nasty surprises. One obvious vulnerability: Companies that have rung up a long string of consecutive earnings increases are likely to fall much more steeply than average once their profits falter. If imagining the stock price falling by, say, one-third doesn't make you want to buy more, then you probably should consider selling now.
Force yourself to consider the total value of your portfolio, including all other assets, rather than just focusing on the price of your latest loser. That is often called "thinking like a trader," although you don't have to be a trader to do it.
By netting all your gains and losses against each other, research by several economists and psychologists has shown, you can reduce the intensity of your emotional response to falling prices. Be sure you have set up a spreadsheet or portfolio-monitoring software that displays the value of your overall portfolio more prominently than any individual holding.
If you haven't recently "rebalanced," selling a bit of whatever has gone up the most and adding the proceeds to whatever has gone down the most, now is an ideal time.
Taking moderate action now, while markets are still calm, should help you avoid doing something reckless when investing turns suddenly stressful.

David, how do you handle over zealous, groundhog day, ever repeating, broken clock posters?? It's hard not to engage them in sometimes contentious discussions.
Edit: OK, edited former post. I guess the best way and most harmonious for the board is to simply avoid such posters by not clicking on their posts.

Junkster, Appreciate your editing. I thought the earlier swipe at a former poster was unfounded and unkind. But, I'm with you in the essence of the rhetorical question you ask of David. I enjoy contention. IMHO contention is very much a part of being a "vibrant" board. Do we really want sterility? As qualifiers, I think this contention should be directed (1) at issues rather than personalities and (2) towards members you are reasonably confident can handle that kind of give and take. By that I mean don't run somebody into the ground who you believe will suffer injury as a consequence. Use some common sense in whom you choose to pick a fight with. I'll confess to having unwittingly gone overboard in contentiousness in the past. Part of the learning curve here is to learn when to stand up and when to stand down.
I do agree with David's admonition not to attack someone's portfolio - unless, that is, they have specifically invited criticism. But if somebody simply has the b**** to lay it out there as an example of their thought process and not as a model for imitation; than decorum, I believe, should dictate that we not attack their investment choices. Years ago I emailed a humble apology to a board member after criticizing his/her unusually high cash level during a board discussion. It had dawned on me sometime later (duh) that should the markets crater and this person and their spouse loose a large portion of their life savings, it would be they (and not me) that would suffer the financial consequences. Maybe all of us should keep that fact in mind.
It's a great board with some great minds. Let's keep it great. Regards

@STB65:
Many financial planners and financial advisers will not use high yield bonds in the mix, as they behave more like stocks and not much like Treasuries. They don't diversify away stock risk. And reducing stock market risk and diversification is the reason they are using bonds in a portfolio. So take for example David Swensen, who wrote Unconventional Success: A Fundamental Approach to Personal Investment by David F. Swensen (Aug 2, 2005). He goes into great detail about why he only recommends Treasury bonds in the bond allocation. He is the portfolio manager of the Yale endowment. Or Larry Swedroe, author of multiple books and articles. He will only use extremely high quality bonds in the bond allocation. Again, because junk bonds don't provide the diversification and risk reduction they are looking for. Take a look at how high yield bonds performed during the financial crisis of Oct 2007-March 9, 2009. Junk bonds performed like stocks, both on the way down and then on the way up after March 9, 2009.
I have tremendous respect for Rick Ferri, who does include junk bonds in his allocation for clients, and also Larry Swedroe, who does not. And also for David Swensen, who, although I do not believe he has financial planning 'clients', wrote his book to advise the non-professional investor about how to construct their portfolios. David Swensen in his book recommends 15% in TIPS and 15% in Treasuries, 20% in REITS, the other 50% in globally diversified stocks (and he specifies the stock breakdown by US, developed foreign, and emerging mkt)

FYI: Copy & Paste 6/13/14: Zachary Karabell: Barron's
Regards,
Ted
Editor's Note: Karabell is head of global strategy at Envestnet, a leading provider of wealth management technology and services to investment advisors.
We live in a world that emphasizes risk. That is true in general, but is especially so in the financial world. Since the financial crisis of 2008–2009, financial professionals have been acutely attuned to risk—and for good reason. Too many felt they were caught off-guard and unprepared by the near-implosion of five years ago. That in turn followed volatile periods from the Internet bubble of 1999 into early 2000, through the events of 9/11, and then a sharp market contraction until October 2002. After nearly 15 years of drama, it is hardly surprising that the financial world is primed for risk.
Hardly surprising, but a problem nonetheless. The heightened sensitivity to hidden risk muddies analysis, and can potentially lead to mispricing of assets and hence, less-than-optimal investment decisions.
The current yields and attitudes towards both high-yield ("junk") bonds and emerging-market debt are prime examples. Both are seen as risky assets with both known and unknown pitfalls. The International Monetary Fund (IMF) in April warned that many investors in emerging-markets bonds may be unaware and unprepared for a combination of slowing growth and rising rates that could impact many portfolios negatively, especially given the surge of money into emerging-markets bonds since 2008. There is now $76 billion in retail mutual funds focused on the space, up from $12 billion before 2008. The IMF also emphasized the increase in issuance, with $300 billion in emerging-market corporate bonds coming to market last year alone. That is frequently interpreted as a sign that the market is—to use a common cliché—"getting frothy."
But is it? It is too easy these days to make the argument for bubbles, bubbles everywhere, and for overpriced assets at every turn. In light of a volatile 15 years, where the downs have felt more severe than the ups, such arguments are intuitive and have emotional resonance. That does not, however, make them correct.
A Matter of Perceptions
Both high-yield ("junk") bonds and emerging-market debt are perceived as inherently more risky than many more vanilla investment options. There are at least two types of risk: greater chance of loss (more downside) and greater volatility. Compared with, say, blue-chip large cap companies such as IBM (IBM) or Walmart (WMT), or with investment-grade bond portfolios, or with U.S. Treasuries, junk and emerging-market debt are understood as riskier and hence provide higher returns to lenders in the form of higher-interest rates. They are also susceptible to price swings that can be intense.
Last June of 2013, when then chairman of the Federal Reserve (Fed) Ben Bernanke hinted that the Fed would begin to pare its bond-buying program, emerging-market debt sold off very hard, with prices dropping in many instances by more than 10% in the space of weeks. The reason was not a sudden change in the fundamentals of Turkish or Brazilian bonds, but rather the market perception that those bonds had seen strong inflows based largely on the presence of so much money in the global system as a result of Fed policies. The concern was that when the Fed began to trim the easy, easy money, those bonds would see both outflows and a drop in demand.
And yet, a year later, the Fed is aggressively trimming its bond-buying program, having reduced its monthly purchases almost in half and on a glide path to reducing them entirely by year-end. Emerging market bonds, meanwhile, have recovered all of what they lost in June 2013 and yields are actually lower after the recent run since May. The market interpretation that these assets were simply a derivative of a Fed bubble was wrong.
Of course, it may only be temporarily wrong. Another shock to the global system could well prove the risk interpretation correct. The ever-present concern that all financial assets are still being artificially boosted by central bank liquidity won't fully dissipate until central banks tighten globally. With the actions by the European Central Bank (ECB) announced on June 5, however, we are nowhere near an end to these policies. In fact, the ECB, led by its president Mario Draghi, is now embarking on its own policies of quantitative easing just as the U.S. Fed is pulling back.
Combined with the easy money policies of Shinzo Abe in Japan, we are in for a considerable period of significant liquidity. And then there is the surfeit of liquidity in sovereign wealth funds—well in excess of $5 trillion—and in corporate balance sheets which add trillions more. If you are waiting for a liquidity squeeze, you might be waiting for a long, long time.
The market price for high-yield and emerging-market debt suggests that the prices being paid and the rates being offered for these instruments are not pricing in much risk. Low-rated bonds still bear the moniker "junk" from a time in the 1970s and 1980s when low-rated or questionable businesses simply could not get financing from banks at any price and had to pay much more generously to investors to compensate them for the risk.
Today, however, many, many low-rated bonds have only a slightly higher level of actual risk—as defined by default risk—than bonds considered "safe." Over the past three years, the default rate for bonds rated "junk" (i.e. those rated 'BB' or lower by Standard & Poor's, or 'Ba' or lower by Moody's) has been only a few percentage points worse than those rated investment-grade. Except for a spike in 2009, in fact, when low-rated bonds had a default rate of more than 8%, so-called "junk" bonds have had a default rate of less than 5%, and in the past few years less than 2.5%. The very lowest ratings, C and less, have had higher default rates, as to be expected. But bonds with a B rating have had default rates of less than 1.5% since 2003.
The picture is similar with emerging-market bonds. Yet both emerging market and high-yield still trade at a significant premium to treasuries and investment-grade corporate bonds. Yes, those spreads have been compressing, and as more money has poured into these bonds in the past few years, they have compressed further.
The modest spread between high-grade bonds on the one hand and emerging markets and high-yield on the other is itself taken as an indication that investors may be investing too much in higher-risk assets. As more money has poured into funds that invest in those assets, prices have risen and yields have therefore dropped. The question for many now is whether those yields are appropriate given the nature of the risk.
Staking the Middle Ground Between Risk and Return
There is, of course, no easy answer here. There is the very low default rate, save for the worst credit quality. There is the reality that many emerging-market bonds, whether corporate or sovereign, are issued by countries and companies that are risky only because countries such as Mexico, Turkey, and South Korea were once considered riskier. And there is the fact that we live in a world suffused with capital with low inflation, which means that legitimate entities do not need to pay exorbitant rates.
If you believe that we remain in an artificial lull of easy money provided by central banks, that rates will rise sharply soon enough, that markets will roil, and that there is some new crises just beyond the advent horizon, then yes, emerging market and high-yield debt will suffer disproportionately.
If not, however, these assets may not have significantly greater downside than U.S. Treasuries and investment-grade corporate debt even as they carry a risk premium that assumes they are. Until the investing world stops fixating on risk and focuses more prominently on return, that will remain the case.

Kinda cherry-picked their interval there, dontcha think? 1989-2014
Also, did the review not consider the "dividend capture" strategy, that arose in some funds--- to one degree or another--- in the mid-2000s? That worked well until the financial crisis of 2008/9; thereafter... not so well would be putting it mildly. :) sigh

@jlev I understand your sentiments. That's why I added the caveat--- catch it at the right price--- because that would be the only way I could stomach the roller coaster. But that's the REIT index all over anyway, isn't it?
An additional concern has arisen for me recently re.PETAX: the distribution yield. It was great for quite awhile after the financial crisis, but lately... not so much. If it should prove to be highly variable as well, at certain times, then that would take away one of the positives of going with this fund as (a part of) one's real estate investments. IMO.

So it looks like Ian Lapey is out as lead portfolio manager of third avenue value fund.

Something is wrong here. I own TAVFX, and my kneejerk reaction is simply to sell it. It's in an IRA so there are no tax considerations. This is a big, big deal. I'm surprised there is so little discussion here or so little information on the web.
On the other hand, nothing drastic is likely to happen soon absent something drastic in the market itself. And based on what Marty Whitman has said, if I sell now I will be selling a basket of stocks stocks
1. At yooge discounts to their readily ascertainable net asset value
2. that have a super strong financial position
3. That Third Avenue management believes can grow at at least 10% per annum compounded.
(Seems as though the buyer would be getting the better end of that deal.)
On the 3rd hand :) there are certainly lots and lots of funds with an equally bright-looking future.
I feel like there is a dearth of information here, and I am really not liking the situation. As there are no tax consequences I am likely to say adios and start afresh.