Hi @Mark,
Actually my annual payout including dividends, interest and capital gains distributions has averaged since I have owned the fund 12.9% based upon my cost basis. My total return per share has an averaged annual return of 15.4%. In addition, I am finding that the pent up unrealized capital gains within the fund are just under 20%. So if you buy now you'll be buying your distribution, so-to-speak.
That's one of the reasons I have been building cash for the past couple years. Stock are currently richly priced by my standards. And, if you pay too much your returns will be thin. That's one of the reasons I like to buy the downdrafts. While the weak investors are selling I'm putting my buying britches on as I did when I purchased this fund.
Thus far my buying strategy has worked well for me.

Skeet, as I have noted many times on this board almost all of my investment portfolio is geared toward income be it interest or dividend payments but primarily the latter. I find it interesting that you used the last six years in your investment claims since two of those years had returns of roughly 41% and 27% while the other 4 did basically squat. Furthermore, you use this years projected S&P yield of 1.7% to show disparity rather than it's historic 2.0% average for the last 6 years. Tell me, has LPEFX always had an 8.9% yield? I couldn't find anything in all of the records I was able to locate. I'm glad the fund has worked for you but I think uncle Warren is right for most folks.
By the way, I see that the 10-yr average return of this fund is right around 3.0% so you might want to be keeping a close eye out for the exit doors.

SPY and LPEFX about a draw even for past six years for "total return".
http://stockcharts.com/freecharts/perf.php?LPEFX,SPY&n=1509&O=011000

Hi @Mark,
Apparently you are not a yield seeker?
One of the things that attracted me to LPEFX is its ability to generate income along with some capital appreciation. With this, it is part of my well diverisfied income generating portfolio. Through the past six years that I have owned LPEFX my average annual return has been better than 15%. So with a current yield of about 9% it, for me, has been better than most income funds. Now what is the yield on the S&P 500 Index? I finding it currently to be back of 2%. Hey, that is a pretty big dividend to yield spread of 1.7% vs. 8.9%. Compared to S&P 500 Index through my years of ownership I probally gave up some total return capacity but gained much more income over what I otherwise would have over holding the 500 Index. Don't get me wrong ... from time-to-time ... I've owned the Index too.
Form my perspective it has been worth it because of its ability to generate income. For others, like yourself, it might not have been.

Given the returns over the last 10 years by the S&P 500 index and the World Small/Mid Stock index why would you even bother. But hey, it's not my money.

@MikeM

I think it is safe to say there are 100's of different schemes or formulas within this alternative category. Which formula or fund will out-perform a balanced fund over the entire economic cycle and which one's will have their shining moments only when the economic stars align? Again a gamble.

I tracked AQR funds for several years and I don't see consistent patterns of out-performance especially during down cycles. Consider the high ER of these funds, a low cost balanced fund such as VTMFX is a better approach.

...after all that why not just own VTMFX:

Precisely bee!!! VTMFX or any other well managed balanced fund will out perform 95% of these magical alternative funds over a cycle.

Maybe @PBKCM would give us some insight on what might change the graph in their favor? The last 10 years have been a lot of good equity returns and most of the time has seen lower interest rates as well, but it wouldn't be a big surprise if there are situations where a balanced fund wouldn't have the options available to it that an alt fund would and that could change the relative performance. I'd just wonder what those situations are and how likely they are? After all, many balanced funds can and have moved to shorter durations to reduce interest rate risk and I'd presume most of them could even hold cash if they wanted.

I agree with your comments Hank and could have written the same only not as well. One thing that struck me was an NRA info source who stated that the AR15 was developed specifically for hunting. Must have meant people hunting as I've never seen an animal hunter carrying one and I've been at this almost 50 years.

FYI: What are the lives of the planet's wealthiest people really like?
Several years ago, sociologist Brooke Harrington decided to find out.
Hidden Brain
What's It Like To Be Rich? Ask The People Who Manage Billionaires' Money
She knew she'd have a hard time gaining access to the world of the über wealthy, so she did something unusual: She took courses to become a wealth manager.
In the course of this training, Harrington met other wealth managers, who agreed to be interviewed for her research.
She discovered that, in order to manage money for the super-rich, these professionals learn a lot about the private lives of their clients.
What they shared, Harrington says, shocked her.
Regards,
Ted
https://www.npr.org/2018/02/19/586457604/whats-it-like-to-be-rich-ask-the-people-who-manage-billionaires-money

Should we test the recent lows, in the near term, Old_Skeet will most likely do some buying. If not I am happy with my current positioning. I'm thinking by year end stocks will be higher. And, again if not, I can live with that too. Stocks have earnings and the ability to grow their value through increasing earnings and revenue while bond values, on the other hand, are married more to interest rate adjustments. Through the years stocks have been one of the best hedges against inflation although, at times, a rise in interest rates can cause stocks to stumble. But, stocks seem more likely to recover and appreciate over time in an rising interest rate environment more so than bonds.
In addition, building a CD Ladder also seems to be a good investment strategy in a rising interest rate environment.

Old_Skeet use to own this fund. In reducing the amount and number of funds held in the growth area of my portfolio, a couple of years back, this is a fund that I let go in the reduction process. However, I did keep it's sister fund HWIAX (Capital Income) which is held in the growth & income area of my portfolio. Although, David Green is not listed as one of its managers it follows much the same strategy on the equity side as HWAAX.

Cash may be King for short periods of time; but, held for longer periods of time it will become trash as purchasing power deminishes (over time) due to inflation. Folks, my strategy has been a simple one. I (and my family) have invested in appreciating assets through our years. Thus, we have bettered inflation. Plus, we banged a few bucks out of some short term (spiff) strategies. But, our big gains have come by being invested through the years.
My principal residence is worth more than 30 times what it cost my family in the mid 60's. My investments as measured by a stock and bond fund (bought in the mid 60's.) has grown by more than 80 times by what was first invested. As a measure of inflation creep a gallon of gas that cost 20 cents to 30 cents per gallon back in the 60's now cost around $2.50 per gallon and at times about doubble that.
So, hold cash if you wish believing that it is King. For me, it is not. However, I feel it reasonable to hold a certain amount of cash ... say 8% to 12% of net worth. With this, it seems reasonable for a mutual fund to hold 8% to 12% of it's assets in cash as well. After all, cash is an asset class.
I wish all ... "Good Investing."
Old_Skeet

Lewis From what source are you culling these facts? Thx.
Of 2,258 diversified U.S. equity funds, only 111 have 10% or more in cash—and their recent performance has been poor. Just 18% of those with five-year records have beaten their peers as of Feb. 10. Go back 15 years to include the 2008 crash, and the outperformance number jumps to 48%.

It's a customized search on Morningstar Direct.

You can do a similar search using M* premium, though my impression is that the M* Direct database is a bit larger than the "retail" database.
For "diversified U.S. equity funds", screen on category = U.S. equity (all)
Applying "distinct portfolio only" here shows 2116 funds, a bit less than Lewis' 2,258.
Next, add the screen: portfolio composition (%cash) ≥ 10%
This gives 122 distinct funds (curiously more than Lewis's 111, though off a smaller base).
Next, add the screen: trailing returns (5 year) not equal to "not available"
This eliminates funds without five year records, and leaves 88 funds.
To see many beat their peers' average, add: trailing returns (5 year) > category average
There are 29 such funds (33%).
Alternatively, one can see how many were above their peers' median, add:
trailing returns % (5 year percentile) < 50
There are 22 such funds (25%). The ones that beat their category average but were below the median are: MARNX, HHDFX, LLSCX, SLCAX, STMSX, WEMMX, TORYX.
You can substitute 15 years for 5 years in the above screens and get:
52 funds with 15 year records, of which 26 (50%) were above their peers' median, while 25 (48%) beat their peers' average.
RGFAX beat the midcap blend average, not the median, while ADGAX and AMCPX beat the large cap growth median but not the LCG average.
While playing around with these numbers can be fun, as Lewis described what's important is why the funds hold so much cash.

It's hard to see why one would seek out New Insights over Contra.
Years ago, the former was a much smaller, more nimble fund. It's still less than 1/4 the size of Contra, but at $30B, this is no mighty midget. Except for 2016, it has not performed better than Contra in a decade.
Not a clone of Contra, but with a lot of overlap (the largest 30 holdings in a 50/50 mix are owned by both funds), it has a lot in common.
With all of that, if one is interested in the fund, the institutional (lower cost, no load) shares of FINSX can be purchased (with a TF) at Vanguard, $2500 min ($1K IRA).

@Lewis From what source are you culling these facts? Thx.
Of 2,258 diversified U.S. equity funds, only 111 have 10% or more in cash—and their recent performance has been poor. Just 18% of those with five-year records have beaten their peers as of Feb. 10. Go back 15 years to include the 2008 crash, and the outperformance number jumps to 48%.

FYI: Solid concentration in top-performing stocks, including Facebook (FB,) Amazon (AMZN), Alphabet (GOOGL) and Bank of America (BAC), and a strong fund management team have helped Fidelity Advisor New Insights Fund (FNIAX) beat the S&P 500 and its large-growth Morningstar category in the past one, three and five years.
Regards,
Ted
https://www.investors.com/etfs-and-funds/mutual-funds/stocks-with-three-traits-help-lift-this-top-fidelity-funds-returns/
M* Snapshot FNIAX:
http://www.morningstar.com/funds/xnas/fniax/quote.html
Lipper Snapshot FNIAX:
https://www.marketwatch.com/investing/fund/fniax
FNIAX Is Ranked #70 In The (LCG) Fund Category By U.S. News & World Report:
https://money.usnews.com/funds/mutual-funds/large-growth/fidelity-advisor-new-insights-fund/fniax

FYI: The stock market has been shaken by turbulence in the last few weeks, something it hasn’t experienced in a few years.
Regards,
Ted
https://www.nytimes.com/2018/02/16/your-money/stock-market-tips.html

@Old_skeet I've owned the advisor shares version of the Franklin fund over 5 years, it is a nice fund. Bought it while at ML. Been toying with reducing that one plus VPU which I hold in another portfolio with interest rates rising as ive been slightly overweight in that sector anyway. Will wait a bit more but if I needed cash for a spiff where I would go.

I have owned this fund for several years. It continues to knock it out of the park. I did not know the manager is 70. I hope he does not retire anytime soon.

FYI: Real estate investment trusts, or REITs, are best viewed as stock/bond hybrids, since their valuations are sensitive to both interest rates and the economy. REIT shares badly trailed the Standard & Poor’s 500 index in the past year as the bond market fell, lifting the yield on the 10-year Treasury to 2.9% from 2.5%. As a result, REITs now could be flashing one of their strongest buy signals in years.
Regards,
Ted
http://www.cetusnews.com/business/REITs-Are-Sending-a-Powerful-Buy-Signal.rysN_NHvG.html