Hi. Hank,
I certainly do agree with much of what has been posted on this exchange, especially your last posting. On this topic, with the same prime time players (Jaffe, Natixis), this is the second time around the horn for you. I'll provide a Link a little later.
Just like no financial advisor is created equal, no financial writers are created equal either. And separate columns composed by each writer are not equal. Brilliance is hard to maintain on any timescale.
This Jaffe column might not belong on the brilliant side of the scoring, but it is not a dud either. Jaffe has been using the Natixis work for a long time. For example, you commented on a similar column about two years ago. Here is the internal Link to the column and your comments:
http://www.mutualfundobserver.com/discuss/discussion/13442/chuck-jaffe-proof-most-investors-are-clueless-david-giunta-pres-natixis-global-asset-management
It is not surprising that Natixis uses a hired firm to conduct their surveys. That's a common practice. We do the same when we hire mutual fund managers to fill our portfolios with companies of their choosing. Nothing unusual about interpreting results generated by an outfit that you hired. Natixis uses Core Data to do their survey legwork. Here is a Link that describes the Core Data organization and some of their talent:
http://www.coredataresearch.com/about/our-approach/
Core Data seems to have the capabilities to do worldwide surveys. It doesn't disturb me one whit that Natixis does its own interpretation of the data collected.
I certainly agree with you that the summary conclusions you listed are mundane if they were the only conclusions or stats presented. But they were not. Just about each page of the white paper provided some detailed statistics associated with both advisors and their clients.
I also agree that the referenced white paper was designed for financial advisors, and not for private investors. That does not diminish the value of the surveys. These surveys still identify shortfalls in both advisor and individual investor thinking and planning.
This takes us back to the Jaffe article that prompted this hot exchange: investors "are Probably Way Too Optimistic About Your Investment Returns". Most of the postings don't argue this assertion. In any final analyses, that's what it is all about. A casual charge that Jaffe and Natixis are BSers is far too extreme. Certainly any analysis or article has shortfalls. Exceptions simply do not exist.
Sorry for the delay in my response. My wife and I are celebrating her 77th birthday. It's been a grand day.
Best Wishes.

Dear S. Disturber, (aka, @Old_Joe )
Could be either or both, depending upon how well the advisors surveyed actually performed for their customer base; as the Natixis whitepaper is apparently directed at a captive crowd of company connected advisors.
I did read that "alternative investments" seem to be on the "next or current" hot plate of places for money to travel; if the client is in the $1-4 million dollar portfolio arena.
If and when an investment advisor can provide a true document to me of how they performed for portfolio type "x", over the past 10, 5 and 1year time frames, that would have been or is suitable for me today, I'll listen.
The most simple baseline would be to compare against the inexpensive VWINX.
Below in bold, from the 2015 whitepaper linked prior:
Investment Pragmatist: More than three-quarters of advisors believe that a
traditional stock and bond portfolio is no longer enough to effectively manage
risk and pursue returns. Fortunately, continual innovation has provided access
to new asset classes, new pricing structure and new portfolio tools, allowing
advisors to make practical decisions about which tool will best fit client goals
and investment objectives.
I wish these folks (advisors and clients) well with the alternative path.
The below fund link at about 40/60, equity/bond over the long term. Pick your own equity/bond mix, a built your own, eh? My own caution note for such a mix is that some bond types may blow up at any time, and I would always advise to be observant. 'Course, folks here are always paying attention, yes? And don't forget that the death of the 30+ year bond market bull continues to be issued by someone, somewhere; one would suspect. I recall its imminent death announcement here several years ago (the thread exists somewhere, eh?), but I don't have time for search; although I recall Mr. Snowball was involved in the discussion).
VWINX performance
VWINX composition
Lastly, I have had several pre-Halloween treats today; in order to sample the quality of what we will distribute to the young ones. Hopefully, this has not affected, greatly, my ability to think or write. 'Course, in reading this before posting; I sound a bit arrogant, eh?
Well, I know I am as smart and do as well as some financial advisors on this planet.
Sincerely and respectfully,
Mr. Catch

@Old_Joe I'm glad to see Paul Katzoff of IBD join the ranks of many financial writers who over the years have monitored FundAlarm and now MFO.
Regards,
Ted

There's probably less of a story here than what it appears. I bet the survey is skewed towards people who are saving for a retirement that is years away. Retirees likely would not give the same answer if they have shifted to a lower risk profile because they couldn't square such a high real return forecast with the reality of today's interest rate regime.
Nick de Peyster
http://undervaluedstocks.info

Who exactly are these "investors" who expect inflation + 8.5%? None around here, for sure. Sounds like more typical BS from Jaffe.
Who exactly are these "advisors" who expect inflation +"5.9%"? I just love pseudo-exact numbers like that in a context like this one. Not roughly 5.5%, not roughly 6%, but exactly 5.9%. Sorry MJG- just more BS.
Every responsible advisor that I've noticed in the last couple of years is using 4%, and that with some caution.

@hank You can upgrade that to IntelliSafe Autopilot if you wish .
Germany Says ‘Nein’ to Tesla Calling Its Tech ‘Autopilot’
In the next few years, shopping for a luxury car will mean parsing terms like Drive Pilot (Mercedes), Traffic Jam Assist (Ford and Audi), Driving Assistant Plus (BMW), Supercruise (Cadillac), Automated Highway Driving Assist (Lexus), and IntelliSafe Autopilot (Volvo). These terms describe roughly the same thing: a car that can hold its lane and maintain a safe distance from other vehicles.
As automakers develop cars that drive themselves for real, you can bet those terms will become more common—and more confusing, which explains why regulators are stepping in.
No one said progress is easy.
https://www.wired.com/2016/10/germany-tesla-autopilot

One of the reasons that I own the number of mutual funds within my portfolio that I do (currently forty seven) ... (emphasis mine)

Nice number 'Ol Skeet. 47 turns out to be both a safe prime an Einstein prime and is of considerable importance to mathematicians, astronomers, film makers, and many others.
--- Forty-seven has been the favorite number of Pomona College, California, USA, since 1964. A mathematical proof, written in 1964 by Professor Donald Bentley, supposedly demonstrates that all numbers are equal to 47.
--- The 47-year cycle of Mars: after 47 years - 22 synodic periods of 780 days each - Mars returns to the same position among the stars and is in the same relationship to the Earth and Sun. The ancient Mesopotamians discovered this cycle.
--- In the 2009 film Star Trek, the Enterprise was built in Sector 47 of the Riverside Shipyards, and 47 Klingon ships are said to have been destroyed by Nero's ship, the Narada.
--- During the 2012 election, Republican candidate Mitt Romney made a comment claiming that 47 percent of Americans do not pay any income tax.
https://en.m.wikipedia.org/wiki/47_ (On line 1, click related link. "This article is about the year 47. For the number, see 47 (number).")

FYI: (This is a follow-up article)
A nightmare scenario has haunted asset managers for years: What if the flood of cash that's poured into debt mutual funds since 2008 suddenly reverses, leaving a field of financial-market carnage behind?
Regards,
Ted
https://www.bloomberg.com/gadfly/articles/2016-10-18/mutual-funds-get-surge-pricing-for-costly-bond-flight

Hi Hank, Hi msf,
Thanks for your comments, especially those most recently made.
The active vs. passive management debate will remain a hot topic. While the overwhelming academic research concludes that passive is the winner on average and in the long haul, limited evidence suggests that active management can deliver superior returns and/or reduced risk over some periods. The secret sauce is to discover the right manager for the right timeframe.
That's not an easy task; what worked in the past need not work in the future. Fund manager Bill Miller is a great example. He outperformed his benchmark for 15 consecutive years and just a few years later scored in the bottom 1% of all active managers. Things change.
A successful active manager wins over some timeframe using a specific methodology that reflects his knowledge and his biases. Once again things like macroeconomic conditions change and the active manager is not flexible enough to either recognize the changes or to adjust his methods. That was Bill Miller.
If you favor active fund management, you must actively evaluate active managers. That's tough work, but necessary to capture the small percentage of fund managers who do beat their benchmarks. It's a changing group since persistence is not one of their basic characteristics.
Benchmarks are needed to challenge and test the quality of active fund management. For lhose funds that specialize in large companies, the S&P 500 Index seems to provide a respectable, albeit an imperfect measure.
I did know that a committee controlled the firms represented by the Index, and that a few changes were made annually based on rules and judgments. I am not aware of the weightings given to the formulaic portion of the decision process and the heuristic portion.
I am not adverse to having a human heuristic segment. For something as uncertain as company assessment and the stock markets, equations alone will never be perfect. But too much emotional heuristics can ruin a useful market tool. The balance is a difficult target, but the S&P 500 committee seems to have done an acceptable job. By rule, they must maintain a proper weighting in the 11 major sector categories. Nothing is ever perfect in the marketplace; a satisficing strategy must do.
Best Wishes.

This is a bit of a sidetrack, but is spurred by jstr's use of S&P as a prototypical index provider.
S&P's "indexes" do not have "systematic selection criteria", at least the way I would use that phrase: "entirely rules-based and containing no judgment".
See, e.g. "What Is an Index" http://alo.mit.edu/wp-content/uploads/2015/10/index_5.pdf
Unlike other index providers such as Russell, Wilshire, etc., Standard and Poor's has a human index committee that applies judgment in selecting securities for index inclusion. Notable is its criterion for removal: "lack of representation". This potential for subjective tinkering was out in full force at the peak of the dot com bubble:

The S&P 500 is often mischaracterized as a passively managed index of large stocks, but in 2000, its managers became seriously aggressive -- adding (and subtracting) four new stocks each month, on average. In the process, the index was systematically stripped of small and mid-sized value stocks from Jan. 28 to Dec. 11 in favor of large-cap growth stocks -- largely from the technology sector, and at exactly the wrong moment.

https://www.thestreet.com/story/1305526/1/make-a-bundle-on-the-sps-rejects.html
More recently, S&P made rule changes not to improve how well its index represented the market or the index's investability, but to improve S&P's bottom line:

In 2008 and 2009, S&P . . . tossed nine companies off the 500 for inverting. But four years ago [June 2010], S&P changed course, for business reasons. Companies were angry at being excluded, and index investors wanted to own some of the excluded companies. Moreover, S&P feared that a competitor would set up a more inclusive, rival index.

http://fortune.com/2015/11/23/pfizer-dow-jones/
Systematic selection criteria? Yeah, right.

Hi Guys,
Wow!!! You folks have terrific memories. You remembered a rather modest MFO exchange about a Warren Buffett recommendation that was made over 2 years ago. That's remarkable; especially when contrasted against my many memory shortfalls.
I went to the internal referenced link and was relieved to discover that I did not participate in the exchange. If I had, that would have been doubly embarrassing.
The most interesting thing I learned from reading your historical posts was that our intrepid linkster Ted possess a walk on water capability. Only a few of us share that talent.
Memory plays many tricks on us, mostly impacting our behavior and decision making in a negative way. Abraham Lincoln captured a proper perspective when he said " No man has a good enough memory to be a successful liar."
Thank you all for contributing to this honest and friendly discussion.
Best Wishes.

Nice catch, Catch! :)
I hope folks take a look at that thread from March 2014. (In particular, Ted hasn't aged a bit over those two and a half years!)
Thanks.

Hi Guys,
"My advice to the trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers."
That is a recent quote from Warren Buffett. Over many years he remains consistent in his investment recommendations. Here is a quote from his 1996 Shareholder Letter:
"Most institutional and individual investors will find the best way to own common stock is through an index fund that charges minimal fees. Those following this path are sure to beat the net results [after fees and expenses] delivered by the great majority of investment professionals."
I recently discovered a fine set of investment videos from an outfit in England. They practice what Buffett has been saying for decades for most investors. The presentation material is not very sophisticated, especially for most of MFO participants, but it includes many brief segments from famous US researchers. It's all about sensible investing which is the name of the firm that produced the video. Your enjoyment will most likely be tied to your preference for active or passive investing strategies. Here is a Link to one of their 1 hour videos:
https://www.sensibleinvesting.tv/passive-investing-the-evidence
Enjoy. Since I do a mix of both actively and passively managed mutual funds, I did enjoy it. I am slowly moving more of my funds in the passive direction.
Best Regards.

FYI: (Click On Article At Top Of Google Search)
The PNC Multi-Factor Small Core is up an average of 16.6% a year over the past five years.
Regards,
Ted
https://www.google.com/#q=Top+Small-Cap+Quant+Fund+Takes+a+Scientific+Approach+Barron's
M* Snapshot PLOIX:
http://www.morningstar.com/funds/xnas/ploix/quote.html
Lipper Snapshot PLOIX:
http://www.marketwatch.com/investing/Fund/PLOIX
PLOIX Is Unranked In The (SCG) Fund Category By U.S. News & World Report:
http://money.usnews.com/funds/mutual-funds/small-growth/pnc-multi-factor-small-cap-core/ploix

Suppose you have an advisor who charges 1% for managing your account and he gives you two choices for how he'll collect his fee:
1) He'll periodically skim money from your account, let's say on a daily basis, or
2) He'll delegate that to the fund company that will then skim money from the fund on a daily basis and remit it to your advisor
I think you'd agree that your return is the same either way. Same tithing, same schedule, it's just the collection mechanism that's different.
Case (1) is a wrap account with F-2 shares and a 1% fee. Case (2) is a commission-based account with C shares (1% 12b-1 fee, for the sake of argument all going to the advisor).
One would probably expect the returns of those two classes of shares to be reported differently. Therein lies the problem. Your return is the same, the payment to your advisor is the same, and yet one class' returns are different from another, simply because of the payment mechanism.
What this suggests to me is that to the extent possible, one should keep the payment mechanism out of the return data. I want the performance figures to represent how well the portfolio did, not what I paid or didn't pay to my advisor.
We can keep the advisor fees (which as OJ noted can vary) out of the equation for A shares. Unfortunately, they're baked into the equation for B and C shares. Even worse, you've got the reverse problem with B shares - the performance figures understate actual performance. That's because B shares convert to cheaper A shares after some number of years, but the performance figures assume the same higher expenses ad infinitum.
The 30th percentile estimate is likely in error, though I haven't checked. I'm guessing that when you multiplied the ending value by 94.25% (i.e. reducing account by 5.75%), you did not do the same for all the other front end load funds. Their performance figures should have been reduced as well.
FWIW, M* does incorporate the impact of loads in its star ratings. That's why AMECX is 4*, but AMECX.lw is 5*.

Oh, yeah. And remember the 1,000+ pages of the new regs were crafted by....you guessed it...attorneys! Yes, the rules are supposed to establish a "fiduciary" standard. But already, there is legislation to allow annuities back into the picture (think dollars from insurance companies and banks). And the solution for a number of companies, like ML, is to adjust their IRA business but continue to sell commission products and charge commissions for the non-retirement business. There will for sure be some fallout of the really egregious stuff, but I would not be surprised to see more and more adjustments to the rules like the annuity provision just passed. Meanwhile, independent RIA's who have been running fiduciary programs for years, must devote more and more hours to paperwork and other documentation. Between the DOL, the SEC, FINRA, and each state's regulators, the rules and requirements continue to multiply, many times contradicting each other.

@LLJB- In thinking on this a little more I recall that American has a sliding load scale for their A funds based upon the total amount invested with the company (I'm not informed as to any other classes). That "total amount" includes multiple funds held in both retirement and non-retirement accounts by a married couple. Another issue is that American reinvests dividends and gains without any load, whereas some other load funds charge the same load on re-investments (or at least they used to, from personal experience).
That makes it problematical for comparative load-adjusted returns, since the loads themselves would vary all over the map depending upon the situation. Still, a footnote for the worst-case load would be of some help, and I definitely agree that front-load funds should be "on their way out": the competitive market conditions now are nothing like they were 20 or 30 years ago.

@BobC- make that "several other posters at MFO". Many years ago I proudly defended the title of "cynic-in-chief" at FundAlarm and then here at MFO, but I regretfully conceded that title a couple of years ago to those a bit younger and possessing more energy.

Hi @Charles,
Let's look at the other side of the coin (so-to-speak).
I am an AF shareholder that paid the "one time sales load" many years back before there were a good selection of no load funds. As I understand these no load (F1) shares are for wrap accounts where an ongoing account wrap fee is charged rather than a one time upfront sales load. In talking with my broker I was told I will be good to go (as in the past) with my self directed ira account which would be grandfarthered with no wrap fee charged. Now, I am thinking that is indeed a good deal. Although, I can not put new money into this account after April 2017 (retired now so that is not important to me) I will be allowed to do nav exchanges within fund families owned in this account. And, to, of course, sell fund shares and to take distributions as I have done in the past. Since, all of my funds within this account are set for their distributions to pay to cash, at this time, sales are not necessary. It is uncertain at this time if I can buy new shares with my fund distributions unless I set the account up before April 2017 for reinvestment of fund distributions. Since, I am retired I most likely will leave the funds distributions set to pay to cash. While, my son, who is still working, will leave his account set for reinvestment of fund distributions.
Also know, some American Funds A shares can be bought back of the 5.75% sales charge you reference.
I'm thinking I've got a good deal ... no ongoing wrap fee for me. From my perspective I've got the better deal over what new investors will be getting today who invest in F1 shares and have to pay ongoing wrap fees.
Skeet

@Bitzer - I was commenting on the fee structure more than the component structure of these funds. Because I don't generally concentrate on target funds, and in particular not on funds that add such a large second layer of fees, I'm not familiar with the PIMCO funds beyond what I wrote.
However, since each family's collection of target date funds has a different glide path, narrowing down the cause of performance differences is a multi-step process. Start by comparing 2030 funds' allocations - does the PIMCO 2030 fund have a higher allocation than other 2030 funds to stocks (and did stocks do better than bonds), or vice versa? If the stock portion outperformed, was it because it had more (or less) international exposure/small cap/value than its peers?
If you reach the conclusion that the allocation (either stocks/bonds, or allocation within stocks or within bonds) was not the cause of the performance difference, then you need to look at the underlying funds. Did one of them have an unusually good year? If so, that's likely the cause, and you're down to the usual question: why did this underlying vanilla fund do well last year?
As far as good AF go, I have always liked AEGFX, and I agree with rforno about CIBFX. The latter has held up better than MALOX over the past several years and is cheaper to boot. Not that I've figured out how to purchase MALOX, though it does have a memorable ticker.