Reply to @bnath001: Stress testing, shortfall and VaR are three of the techniques for risk assessment/management in finance. In the retail investment context, stress testing is only recently becoming popular with companies like hiddenlevers providing the technology to advisors. Some stress testing tools have also been included in the software used by advisors for portfolio management. It is simulating for very specific scenarios regardless of the probability of such an event. It helps better understand the risks of their investment.
The shortfall assessment is what is typically determined by the Monte Carlo simulations often mentioned here. They are designed to measure the probability of falling short of a financial goal such as sufficient money to last until death. But they don't say what the implications are in specific scenarios even if low probability. And the scenario models especially in public tools are not usually as sophisticated as those used in stress testing tools to conserve computational effort - breadth over depth.
Value at Risk or VaR Measures the risk of a specific loss in a portfolio. What is the probability that a portfolio will lose $X in T time? T is usually short. This is more useful in financial institutions where a sudden deep loss might create systemic risks so used for minimum capital requirements, etc. For retail investing, it may be useful if you are trading on margins or options trading where thresholds trigger events not much otherwise.

Reply to @Mark: of course. It tests the assumptions people have made about volatility and risk tolerance. This is why I am a big fan of stress testing tools over shortfall or VaR tools and suggested it for @tp2006. You don't have to wait for days like this! It is one thing to look at volatility numbers and quite another to see portfolio value movements for real events. People always overestimate their capacity for drawdowns. Experiencing it or simulating it might let them manage such things better if the portfolio is a good one for the long term. That risk of drawdowns may be necessary to meet financial goals.

This is a very good discussion to have not just for @tp2006 but the whole board. It makes explicit the assumptions/biases behind fund suggestions which are usually left unsaid caught up in the specifics of a fund. It seems sometimes that even the fit and role for a portfolio and the investor is ignored while enamored with a fund. That leads to kitchen sink portfolios or the equivalent of all-star teams that flop.
It is useful to keep in mind that @tp2006 is 40yo with just $85k in his portfolio that needs to grow it over some 30+ years. The tool has also taken into consideration how much he earns and how much he is able to save annually, how stable his job is, etc. The output may seem surprising but is it the unemotional tool (granted someone had to program it) or is it the emotional us that is causing the disconnect? There are ways to find out starting with M* analysis. Hence the exercise.
Ted's suggestions are colored by his perpetual bias towards domestic equities and penchant for high beta sectors even if they are all highly correlated. It might be fine for a fairly active investor who is willing to jump in or out if it should become necessary but is it appropriate for a passive investor if that highly correlated assumption should come to grief and the investor sits there like deer caught in headlights? Stress testing tools like hiddenlevers make those scenarios and drawdowns explicit.
Regarding reaction to EM, other than Ted, this would not be the reaction 5 years ago so how much of that aversion to EM is colored by recent year or two. More importantly, is the fears of just looking at one sector in isolation justified in the context of the whole portfolio? Analysis of the whole portfolio will tell you that in terms of volatility and drawdowns.
Would using great owl funds increase the risk of underperformance and shortfall in one's financial goals? If so, should the investor prioritize that over volatility or understand volatility better so they can withstand the volatility better? Are the great owl funds as appropriate to a 40 yo as they are to a 60 yo?
These are difficult questions and there are no abaolute right or wrong answers but just because fund pushing is easier doesn't mean it is the right thing to do. It just hides the risks.
So, I encourage the board members to suggest portfolios with their mix of funds or allocation changes as Ted did rather than single fund suggestions and keeping the profile of @tp2006 in mind not molding him in your mind. They could have any selection of funds from the great universe but at least such suggestions would make the underlying assumptions explicit and they can be compared and analyzed against the base portfolio. Some of them may even turn out to be better than the model portfolio.
For example, one might suggest replacing the international allocation with one or two allocation funds to let the manager make that allocation decision. Perfectly valid thesis. And the effect can be tested by analyzing the whole portfolio. Does it risk severe underperformance? Does it provide small returns without reducing the drawdowns? Or is it just equivalent to more allocation to DM over EM or vice versa at higher fees? Or does it provide as good a return but manages volatility better in which case it makes sense to use it instead.
So the challenge for the board, come up with a better portfolio FOR @tp2006 (not for your circumstance) than one created by an algorithm and tell us why and the compromises. It may lead to a better portfolio than kitchen sink of individual fund stars.

Starting this as a separate thread for the portfolio construction exercise for tp2006 starting from his model portfolio that captures his circumstances and risk tolerance.

US Stocks Vanguard VTI ETF 21%
Foreign Stocks Vanguard VEA ETF 18%
Emerging Markets Vanguard VWO ETF 22%
Dividend Stocks Vanguard VIG ETF 13%
Real Estate Vanguard VNQ ETF 16%
Corporate Bonds iShares LQD ETF 5%
Emerging Market Bonds iShares EMB ETF 5%

Notes to @tp2006
1. This corresponds to a 50% domestic, 40% international and 10% bonds selected for your age, income profile and risk tolerance, etc. You are just starting out with a small amount in a retirement account and hence the not so conservative portfolio.
2. It answers part of your questions on how to divide the allocation. This tool splits it between asset classes that have the lowest correlation possible for your profile on a risk adjusted performance basis. Hence the domestic stocks split between total market, real estate and dividend stocks. The total market divides it for size according to market weighting within the US total market.
3. Now create this portfolio on M* as if you invested your entire portfolio on Jan 1. Get the composite statistics provided by M* for the portfio in the Xray, volatility numbers and post them here.
4. The exercise will be to either just keep this portfolio or tweak it maintaining the risk/volatility profile. Some small deviations won't matter much. For example, you can try to solicit find suggestions to replace VTI. Or you can ask people to create an equivalent or better portfolio and compare its characteristics. You can also try to map your existing portfolio to this and create a transition plan.
5. If you are feeling adventurous you can go to hiddenlevers.com and create a dummy free account. The information you provide including email address can be fake. You can only add 5 funds for the dummy portfolio, so just use the equity etfs. It is a.very painful site to use but allows you to stress test your portfolio for various scenarios from commodity crash, end of QE, demographics change, etc. What you are looking for is how the portfolio behaves in those scenarios so you can withstand it. So, for example, it might say that your equity part may go down by 50% in the last financial meltdown scenario. Can you stand it without panicking? If not, go back to wealth front dashboard and turn down the risk tolerance to get new allocations and repeat.
6. At the end of this exercise, you will have a portfolio that you can buy and monitor perhaps once a year at most and go through the same exercise again or beter just rebalance it.
7. For the amount of money you have you should be aiming for 3-8 funds total. You can get to this in many ways including a single allocation fund for two or more of those model portfolio funds or splitting another. But every fund you add should be justified in the context of the whole portfolio.
8. With a larger portfolio, you can create another pot for funds with alternate strategies, other asset classes, etc. But this is not worth it for the capital you have available at the moment.
The above is what a competent investment advisor might do if you paid money. If you don't want to do the above, then find an advisor or try to stick as close to the model portfolio as possible without getting tempted by the blue and red marbles being suggested, however intriguing the fund might seem and just throwing it in to create a kitchen sink portfolio.
Good luck.

http://www.sec.gov/Archives/edgar/data/1324443/000132444314000004/fusion_stickerprospectussai0.htm
497 1 fusion_stickerprospectussai0.htm SUPPLEMENT TO FUSION FUND PROSPECTUS AND SAI
AMERICAN INDEPENDENCE FUNDS TRUST
(the “Trust”)
SUPPLEMENT DATED JANUARY 24, 2014
TO THE
THE PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION (“SAI”), EACH DATED MARCH 1, 2013
AS SUPPLEMENTED THROUGH DECEMBER 30, 2013
FUSION FUND
(the “Fund”)
(TICKER SYMBOLS: AFFSX, AFFAX)
THIS SUPPLEMENT PROVIDES NEW AND ADDITIONAL INFORMATION BEYOND THAT CONTAINED IN THE PROSPECTUS AND SAI LISTED ABOVE.
On January 24, 2014, at the recommendation of American Independence Financial Services, LLC, the investment adviser to the Trust, the Trust’s Board of Trustees (the “Board”) approved the closing and subsequent liquidation of the Fusion Fund (the “Fund”). Accordingly, the Fund is expected to cease operations, liquidate its assets, and distribute the liquidation proceeds to shareholders of record on or about February 26, 2014 (the “Liquidation Date”).
Effective February 7, 2014, the Fund is closed to purchases by new shareholders and additional purchases by existing shareholders. The planned liquidation of the Fund may cause the Fund to increase its cash holdings and deviate from its investment objectives and strategies as stated in the Fund’s Prospectus.
Prior to the Liquidation Date, Fund shareholders may redeem (sell) or exchange their shares in the manner described in the Prospectus under “Redeeming From Your Account” and “Exchanging Shares,” respectively. Shareholders remaining in the Fund just prior to, or on, the Liquidation Date may bear increased transaction fees incurred in connection with the disposition of the Fund’s portfolio holdings.
If no action is taken by a Fund shareholder prior to the Liquidation Date, the Fund will distribute to such shareholder, on or promptly after the Liquidation Date, a liquidating cash distribution equal in value to the shareholder’s interest in the net assets of the Fund as of the Liquidation Date. The liquidating cash distribution to shareholders will be treated as payment in exchange for their shares. The liquidation of your shares may be treated as a taxable event. Shareholders should contact their tax adviser to discuss the income tax consequences of the liquidation.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

Hi tp2006,
Welcome to the club.
Sorry for my late reply, but I am not an active daily participant any longer. It’s not that the quality and sagacity of the investment exchanges have deteriorated; in reality the reverse is true. It is simply that I have morphed into a more passive investor and treasure the freedom from a heavy commitment to investment study, planning, and execution.
In that regard I hardily endorse the insights and recommendations proposed by MFOer Cman. He is precisely on-target with his current posting.
Active investing does offer its’ positive rewards, but they are hard to realize in practice. And the price for that speculative reward is a demanding time commitment. I particularly liked Cman’s cost/benefit analysis. Market returns are rather easily gained with an Index heavy portfolio. It is a portfolio’s excess returns (its Alpha), that must be measured against the time expenditure.
Historical data, when coupled to academic and industry studies, demonstrate that excess returns are often negative for an actively managed portfolio. In the rare instances when Alpha is positive, it is meager (perhaps a few percent), it is elusive, it is highly transient, and is subject to the most powerful law in the investment world, a reversion-to-the-mean pull. Odds are stiffly against consistent positive Alpha.
It took me a long time to learn that simple lesson. As a personal anecdote, I started investing in stocks in the 1950s. By the mid-1980s I converted to actively managed mutual funds. Today, my portfolio is about a 50/50 mix of active and passive mutual funds and ETFs. I am a slow learner. I plan to end with a 20/80 active/passive allocation in the near future. I like the excitement and challenge of active management just a little, and there are some investment categories that active management can profitably exploit with their selective skill sets.
I recommend you consider shortstopping my long learning experience by moving more directly into passively managed products.
Here is a Link to a recent WSJ article by Joe Light that supports my recommendation:
http://online.wsj.com/news/articles/SB10001424052702304419104579324871451038920
Mr. Light references an impressive Monte Carlo-based simulation study completed by Rick Ferri and company. Understand that Ferri is a passive Index proponent and an aggressive writer supporting that position. He is definitely a biased advocator. But his work is a useful resource when making any first-order investment decisions such as I’m now recommending to you.
Please take the necessary time to access this fine analytical series. Professor Snowball’s first two investment rules are necessary prerequisites when planning any financial matters. Here is the Link to Ferri’s extensive White Paper on the topic
http://www.rickferri.com/WhitePaper.pdf
Reading the White Paper does require a little patience, but it is well worth the effort. In its 25 pages, it emphasizes the advantage of a long-term time horizon and lays waste to the claim that multiple active managers enhance the prospects of excess rewards. His graphs vividly illustrate the asymmetric nature of active fund management returns: The negative outcomes far outweigh the positive outcomes.
The odds are stacked against the active manager. It is not that the active manager is not skilled at stock selection. He is. It is more likely caused by the management fee drag, the drain of active trading costs, and the improved competition from other very smart active managers and their well financed and talented organizations. It’s tough to win on this playing field.
Please read the Ferri paper. On a positive note, the paper’s Monte Carlo simulations do show a very low probability of perhaps a 2 % excess return outlook. Good luck on achieving that highly unlikely excess return. The risk exceeds the unlikely reward by a substantial margin.
Is that unlikely reward worth the effort? My answer is a firm “No”. There is an easy route to capturing market returns by assembling an Index dominated portfolio. Paul Farrell has endorsed that approach for decades. It’s called the Lazy-Man Portfolios. Here’s the Link that summarizes 8 such portfolios cobbled together by highly respected financial wizards:
http://www.marketwatch.com/lazyportfolio
You might want to consider these portfolios as viable options to an actively managed portfolio such as you presently own. A Lazy-Man option is surely attractive from a time saver perspective, and more likely will enhance your end wealth.
Please give it a few hours or days of open-minded and fair reflection. I wish you success in whatever decision you make. Remember, that decision need not be 100 % in one direction, and it is always open for revision. A Zebra can change its stripes in the investment universe.
I realize this is “old stuff” for veteran MFO members, but I believe you might find this review helpful. Sorry if I bored the loyal MFO contingent who are more actively motivated investors. I wish you guys success also.
Best Regards.

Reply to @tp2006:

Honestly, I don't see myself spending a whole lot of time actively managing my portfolio. Ideally re-balancing/reallocating 2-3 times a year is what I am looking for. So my thought was to pick a diversified portfolio that I can set on cruise mode for the next 3-4 months and see.

If you don't see any irony/contradiction in what you wrote above, you have come to the right place to feed your addiction and itchy fingers. :-)
If you want to be actively involved in potential re-allocation every 3-4 months or so (which is a perfectly valid investing strategy), you need different tools (for exit and entry Into funds) than latest fund recommendations and performance. Otherwise, you will be a fund collector not an investor who will soon resemble the person with 28 cats in the house.
This site should come with a big warning sign that fund recommendations here may damage your financial health unless used as part of a responsible and well-designed portfolio management technique.

Reply to @tp2006: That is a portfolio allocation for 2013. This is what happens when you read the latest suggestions. They are usually based on what happened in the last year or two so they all look like geniuses from backtesting. It is OK if you expect the next 20-30 years will all be like 2013 or you will be an active investor that will strategically alter allocations as markets change.
If you are prone to investing like collecting wine or toy trains and it is the hobby aspect of it that excites you, you have come to the right place. Soon you will be talking about your cellar selection and the difference between 2005 and 2010 bordeauxs. The fund pushers will keep you occupied.
If you don't want to fool yourself trying to take up another hobby disguised as investing for your future, you need a reset of your thinking first.
1. Investing has three components: Allocation strategy, fund selection, risk management. These accommodate any style of investing. You have to have a plan in all three dimensions. Start with allocation strategy.
2. Allocation strategy depends on your investing style, risk tolerance and personal financial circumstance as well as family context. At one extreme, you can be a passive investor that allocates for the next few decades and does minor tweaks once in a while. At the other end, you can be an active investor that allocates based on current trends and exploits every part of the market cycle. Both are valid approaches or anything in between.
3. For the situation you are in, you should spend less than 3-4 hours a year on investing most of it in the initial part setting up your portfolio for the next decade or two. The amount of money you have currently to invest doesn't justify spending more time than that. Do the math. Active meddling and spending a lot of time might increase your annual performance by 1% (usually it is much less or negative). In the best case scenario it will make you an additional $800. How much time do you want to spend on it? Your best return on investment at this stage is looking after your career and taking care of your family and being actively involved in your children's lives on a daily basis than spending time reading about funds. Financially, your goal at this point should be earning as much as possible and saving as much as possible and keeping your family healthy and happy.
4. The above suggests a primarily passive portfolio designed for the next few decades while you focus on accumulation. You can start worrying about spending time on investments when the annual returns on that investments start to be 4-5 times your annual saving in dollar amounts.
5. With that allocation strategy, you don't need much of a fund selection activity and the ETFs suggested by Wealth front might just be fine possibly tweaked based on availability of funds where you have your investments.
6. In that context, you don't need much risk management which is for more active investors. An annual tweaking or rebalancing is all you need.
If the above seems dull and uninspiring and it is selecting the red marble or the blue marble that gets you excited, join the club of fund pushers here. Safer than being adducted to internet porn, just don't mislead your wife or yourself that you are spending time looking after the future while you are indulging in your hobby/addiction. :-)

Reply to @catch22: He invests the proceeds from the sells in the buys in whatever percentage he wants.. Not that's not to hard for you to understand, is it catch22 ? I'm no longer going to give exact allocation amounts and specific funds without a financial advisor fee. Just kidding !
Regards,
Ted

I tend to agree with Scott's comments that you are lacking in international exposure. I'm also of the opinion that mid-caps are too easily trashed and dismissed by the financial press. You own Contrafund, maybe the Low-Priced Fund might be worth a look.

Reply to @Kenster1_GlobalValue: I'm not an investor in any of their funds but I love their cited quote:
“[Y]ou often hear financial professionals say such things as ‘forecasting market direction from here is exceptionally difficult’ in a tone conveying ‘gee, this is really strange.’ Well, I think forecasting the market over short-term horizons is always exceptionally difficult. If they said, ‘Our market-timing forecasts are mostly useless most of the time, but right now, they are completely useless,’ I suppose I’d be OK with it, but I’m not holding my breath that they will.”
-- Clifford S. Asness, "My Top 10 Peeves," Financial Analysts Journal, volume 70, number 1 (January/February 2014): ahead of print.

I am sure many have a significant part of their net worth tied in various equity and bond instruments including money market funds at various brokerages. Most of the funds are independently managed and so one fund cannot take out another. We also place a lot of trust in using money market funds for going to cash if the markets were to meltdown.
What if unforseen circumstances shutdown the liquidity/access of all of these instruments and the actual value of what they would be unpredictable until the crisis blew over which may take months or a year or more.
Do you have financial contingency/evacuation plan to weather such a situation for as long as it takes? Not talking about doomsday scenarios where you need ammo and your own plot of land. Imagine a financial virus/hacking that brings all trading and brokerages to a halt until they can figure out how to get things back to normal and no one knows what the value of your holdings will be when they do.
Serious question.

Morn'in scott,
You noted: "To me the Japan trade is really being a tourist (and the second things go wrong, all the tourists will flee) and trying a trade rather than investing. Might Japan stocks continue higher? Sure, but I do not see fundamental improvements in the Japanese economy, unfortunately. Also, how much do they need to import in terms of energy and other needs? A lot. Maybe cheapening the yen works well for a while, but do they run into problems eventually - I think they do."
>>>I don't believe there is much of "fundamental" going around these days in most markets. The central banks and currency exchange rates are driving monies globally, at least for the big players in the markets, IMHO.
It is my understanding that Japan and its business practices are more entrenched than many other developed countries. 2011 Olympus scandal
There are continued problems with their labor practices between the old and the young. A very closed society; at least in the aspect of immigration.
On the other hand, I respect the apparent honor system of the country; i.e., several years ago the CEO of Japan Airlines reduced his salary to $90k/year after JAL continued to have dismal financial results.
More recent (Dec. 2013), the entire (100 or so) PGA staff resigned, amid a mafia (Yakuza) scandal. I happened to witness a large protest while in Tokyo in 1969; which was reported to me as being backed/supported by Yakuza.
I noted last year here (didn't look for the post) about we I thought was a bizarre way of economic process in Japan.
1. Kill the value of the Yen.....inflating import prices on all products.
2. A new sales tax to take place in April, 2014
Don't know, but seems to be a funny way to run a country. A bunch of smoke and mirrors as far as I can see. The touchy, feel good stuff so popular these days; go'in around everywhere.
Maybe tis all a wink and a nod for the way business is done in Japan; and I surely don't have the inside on this society, with the exception of it being a most complex society very different from many aspects of U.S. society.
Investing in Japan may be as favorable as any other area globally at this time, in spite of the large equity run from Sept. of 2012.
Hey, take care........our house has to go stimulate the housing related sector.
Catch

I took profits from TRAMX and put it into one of my core domestic funds: PRWCX, another TRP offering. I like TRAMX. Bought it in the summer of 2012. It's been good to me. I think Oliver Bell, the Fund Manager, has a feel for the pulse of things over that way. Nigeria is in that fund, Qatar, etc. The fund has been rising since late in 2011, when he took over.
Large caps are as big a proportion as mid-caps and small-caps combined.
M* says there are 7 bond holdings, including these, within the top 25 holdings:
-Samba Financial
-Saudi Basic Industries
-Al Mouwasat Medical Serv.
-Yanbu National Petrochem.

Reply to @msf: I am so dense. I never realized that the "Sales Fee" was meant for the "Sales Person," which is a broker or financial advisor as opposed to the fund house proper.
If M* contained more of your good detail in their write-ups msf, that would be a good thing. It would at least help fuel the healthy debate on mutual fund loads and fees in general.
I believe that most mutual fund investors are not sophisticated investors, MFO board members excluded, of course =), except in my case. So, I am indeed predisposed against loaded funds.
Even worse I think now that you've made me realize these loads may get paid even if there is no broker or adivsor or middleman involved. I suspect fund houses do not refund back the load in such cases.
Ouch.
I cringe at the thought of say a young investor or elderly widowed spouse (well intended but likely unsophisticated investors) taking the advice of a broker offering up loaded funds. The 5-7% comes off the top. Then, the exercise is repeated each year after M* releases its new Fund of the Year Award...again to a loaded fund. And, there goes another 5-7%. What a racket!
Yes, it does indeed bother me that M* continues to give gold ratings to loaded funds, which is a defacto endorsement of this indefensible practice. If we can't count on M* to call attention to such sales fees, who can we count on?
On Fairhome, I do indeed take the "neutral" as a ding, as it 1) seems to a contributor to a silver rather than gold M* metal, and 2) seems inconsistent with levels given to funds like AMOBX:


versus


I just don't get it.
Fairholme has no loads or 12b-1 fees and just a single share class, while Morgan Stanley has loads, 12b-1 fees and multiple share classes. How can AMOBX be given a better price rating than FAIRX? It actually charges a full 1% 12b-1! And, the "neutral" parent rating did not prevent AMOBX getting the gold rating.
Alas, the inconsistencies of the M* rating system can drive us all crazy, so I try not to fret too much, failing in this case.
Glad to see MS took steps to improve the leadership of this team since 2004. Like you say, it's done pretty well, but I would rather be in FMILX or SEQUX, or maybe even FCNTX or ELFNX, which have better 10-, 5-, and 3-year numbers, also a great 2013, have lower fees, and no loads!
(I just noticed that FMILX has a "neutral" price rating also and it has a lower fee than any of the Morgan Stanley Focus Growth share classes, which again incredulously gets a "positive" price rating.)
Enough fun. Hey, gotta get back to my homework for Mr. Studzinski.

Glad to see The Japan Fund (SJPNX), while being closed (thanks Ted) isn't on the liquidation list.
That fund has a long, storied past (summarized below). It serves to show what a truly independent board of directors can do, firing fund families rather than being held hostage by them.
Looking at the current SAI, it seems The Japan Fund now shares the same board with the other Nomura funds. So it may not have the same flexibility now.
MFWire's profile of The Japan Fund:

The fund was organized in 1962 as a closed end fund and was advised by Scudder Stevens & Clark starting in 1987. At that time Scudder converted the fund to an open-end format. After a series of deals which saw Scudder first merged with Kemper Funds and then sold to Zurich Financial and eventually Germany's Deutsche Bank, the fund trustees fired Zurich Scudder as the advisor and hired Fidelity in 2002. The trustees moved the fund again in 2008, replacing Fidelity with Nomura.

Howdy mikes425,
You noted: "It's painful to watch bond funds mute any returns on the equity side. Hype or not as far as the near-term financial noise - it is impacting me daily in the NAV losses on positions like the BTZ - and anything with the long-duration components - seems these instruments that are supposed to be offsetting volatility have become the 'most' volatile in the second half of 2013 and YTD."
In December, 2008 the reverse statement would have applied; "It's painful to watch my equity funds mute returns on my bond funds." Yes, things change; sometimes very fast and deep. But, not unlike today, the past year; the changes are slower and sometimes more difficult to "notice". Equities rode a high horse in 2013, that few knew would happen; and some bonds got a face slap.
Example: 2008
VITPX = - 36.9%
VBMPX = +5.1%
------- 2013
VITPX = + 33.6%
VBMPX = - 2.1%
I have not studied BTZ, so I do not know what the investment is supposed to provide and/or protect for or against. However, is it your understanding for yourself and/or via your FA that bonds with a long duration are not going to be volatile during a potential rise in interest rates?
As to bonds and equities; well, there are so many types and styles suited for various uses that it is difficult to comment broadly.
At one point after the market melt 5 years ago; we had a dedicated investment in a long duration bond fund for 1 year. This was an okay place to invest at the time; and our house made good money, but I would not travel there today.
Two other bond sectors we had held for several years; FINPX, ACITX and FNMIX had provided decent returns. All of these funds were terminated in May of 2013. All of them started to show weakness and it was time for them to go. Note: TIPS return have been decent for the start of this year.
Our house has had its share of "butt kickings" from investments and some lucky periods, too. Tis a varied and complex process to attempt to maintain a decent average return over a long time frame.
In June, 2008 our house was 90% equity among about 13 funds and had been so since the late 1970's. By the middle of June, 2008 we were 87% bonds. Got lucky with the charts and intuition. Mid 2009 found a mix of equity and bonds, with the majority of bonds being in the high yield sector. We still have several of the high yield bond funds today.
As to your portfolio mix in either the equity or bond areas; the most direct notation I can provide is to look for overlap among funds that would enable you to reduce the holdings. As to the TIPS fund holdings; these are likely already held in some other active managed bond fund. Although TIPS are doing okay this year, so far. For bond funds, I would likely stay with an active managed fund and pay the added expense, unless you or someone knows exactly what type of bonds are traveling a given path based upon expectations by someone. Equity sectors can be covered in a broad fashion with any number of indexes for U.S. or foreign exposure.
Take your time, a deep breath at least 10 times a day; and you should be able to sort your holdings to your satisfaction and benefit.
Regards,
Catch

It's painful to watch bond funds mute any returns on the equity side. Hype or not as far as the near-term financial noise - it is impacting me daily in the NAV losses on positions like the BTZ - and anything with the long-duration components - seems these instruments that are supposed to be offsetting volatility have become the 'most' volatile in the second half of 2013 and YTD. The FAs of the world seem to be content to offer platitudes about not worrying if you're in it for the proverbial 'long haul' but meanwhile, there's no accumulation going on- just flat to negative returns. This week is a perfect example. Equity funds rebound while Bond funds go negative - yet most trading days Bond funds - at least those I have - have been going Down in-concert with equity funds - vs remaining flat or moving up as a sort of hedge - and i guess i understand why. An FA would propose that one still 'needs' to be in these fixed income holdings as sort of insurance - but i don't see them behaving that way and it seems the trend is for them to generally underperform.
What's been said here all makes sense and it's just a matter of trying to act on this in some strategically sensible way. Re: consolidation of the two VG short term funds - would you be referring to merging the entire intermediate fund into the short-term (VFIDX)? Wasn't quite clear on that. To sell out of some of the ETFs that Ted mentions - if not done in one 'wholesale move' - i'd be curious as to which might take priority to be liquidating out of the soonest to avoid further principal losses going forward...in other words, which are the biggest 'red flag/dump-it-now' candidates that essentially serve no good purpose and are only likely to decline if held for months to come.... Thanks for putting up with me - i only check in here periodically due to work demands ... but i'm trying to 'start somewhere' and
begin taking some steps even if it is on a gradual basis.

Reply to @MJG: >>>> I have been a long advocate for these workhorse financial tools, and have been surprised at the reluctance of an MFO minority who persistently resist application of these proven tools. Thank you for referencing these noteworthy Monte Carlo simulation programs.<<<<
I am in a great mood tonight. Found several old historical cemeteries on my off trail hike today. So, this is not meant in a mean spirited tone, albeit it may sound like such. We have been through this before. But what you don't and never will get (can you say inflexible) is some of us have no need whatsoever for Monte Carlo mumbo jumbo. That's because instead of obsessing about retirement probabilities/tools/statistics, etc., we were obsessing with an *insane focus* on the markets and compounding our trading/investment capital to such an extent that all that stuff would be meaningless.

Thanks David, I appreciate your point re: the "index" effect of too many funds. The FA (hourly - not AUM type) seems to feel I am well and appropriately diversified with this 'collection' but these points have raised serious
questions - or moreso reinforced those i've had of my own. I do want to reformat as needed to get this straightened out but must admit that i feel more comfortable with some sort of guidance to help me carry it all out because i prefer to delegate -or work with someone to make sure such a major revamping is done carefully and - as i say, with tax implications taken into account.
I am a performer/freelancer so it makes me feel a little more at ease working with someone with some financial expertise to assist in trading decisions. I have all assets held in a brokerage account (three non-taxable and one (largest) taxable account.
Perhaps it's time to take this discussion to my local branch manager for some help in turning this around - that is, bringing the points discussed here to the table and having the brokerage at least help execute a plan of action. I have let this slide for a few years too long, largely out of a complacency and i guess - believing in the FA and feeling he has been more objective than commission-types - in working on an hourly basis with me.
This all amounts to a pretty major life decision that i can't afford to rush or take without careful forethought but the 'consensus' about my situation here and on another forum seems to dictate i need to make some significant changes, and again i appreciate the sensibility of what has been pointed out here.
I recognize this is not designed to be a place for one to ask for - nor should i expect someone to take the time to provide a specific personal investment 'plan' per se, so i really appreciate everyone's generosity in being as detailed as you have been.
With this said, though ideally i'd like to begin a DIY management approach - if anyone does have recommendation of where i might find an FA or 'facilitator' to work with on a one-time or occasional, hourly basis (uncommon as that type of advisor is) - who might share the 'simple' philosophy you've suggested, i would welcome any suggestions on that as well.
Thanks again,
Mike