So I an not interested in FPRAX, since FPACX gives me global exposure. However I have been wanting to pull the trigger on FPPFX for a while. Problem is where as Value Funds have been having a field day, this sucker is stinking up the place. I thought may be new manager, but this chap's been with FPA for over a dozen years.
Anyone own either of FPRAX or FPPFX?

This thread in years past, and/or CapGainsValet, were quite helpful. Even if this thread was somewhat chaotic in content, that's what the search function in your browser is for. :)

Hi Guys,
I don't believe that Ted posted this reference yet, but It just might impact the manner in which you do portfolo asset allocation.
Here is the Link to a recent article in a Wealth of CommonSense::
http://awealthofcommonsense.com/2016/09/is-the-value-premium-disappearing/
The article questions the sustainability of the value premium discovered decades ago by Fama and French. Over the last 10 years, it has not delivered the expected returns in the US marketplace. The author asks if it just a perturbation or a permanent sea change. He comes down on the perturbation side.
So do I. Trend deviations occur, even over a fairly long term period. Unless the investment world has dramatically changed, history demonstrates that a regression-to-the-mean is the most likely long term projection. Extrapolation into the future is always hazardous duty, but that's the name of the game when investing. Value products are still and will remain a portion of my portfolio. Regression reliably happens.
Best Regards.

FYI: As markets have grown steadily more efficient in recent decades, it has become more difficult – and expensive – for fund managers to deliver excess returns relative to benchmarks, or “alpha”.
Even though investment fund flows into passive strategies have accelerated steadily in recent years, active strategies still account for fully 70% of the $15 trillion in U.S. mutual funds. But active and passive are not the only choices. We are also seeing a booming trade in “smart beta” – an imprecisely defined cluster of rules-based strategies that avoid traditional cap-weighted index construction and seek profits amid market factors and inefficiencies
Regards,
Ted
http://lipperalpha.financial.thomsonreuters.com/2016/09/active-passive-and-smart-beta-whos-winning/?elq=6a3fe31c696445ed923814b3e87dbf10&elqCampaignId=166&elqTrackId=CAAB29B325AC713511E713F32E02F308&elqaid=1815&elqat=1&utm_campaign=Newsletter_LipperAlphaInsight_FundInsightsWeeklyUpdate&utm_content=Newsletter_FundsWeekly_September20&utm_medium=email&utm_source=Eloqua

I thought the evil website had calendar year returns on the performance page going back 15 years. Should be enough, no? Or if you really care about returns in 1980, that might be hard.

Wow. A blast from the past. The very first story in the very first issue of the Observer was entitled "Successor to 'the worst best fund ever.'" The story started this way:
They’re at it again. They’ve found another golden manager. This time Tom Soveiro of Fidelity Leveraged Company Stock and its Advisor Class sibling. Top mutual fund for the past decade so:
Guru Investor, “#1 Fund Manager Profits from Debt”
Investment News, “The ‘Secret’ of the Top Performing Fund Manager”
Street Authority, “2 Stock Picks from the Best Mutual Fund on the Planet”
Motley Fool, “The Decade’s Best Stock Picker”
Mutual Fund Observer, “Dear God. Not again.”
The first sign that something might be terribly amiss is the line: “Thomas Soviero has replaced Ken Heebner at the top.”
...
The fund managed the highest returns of any fund in the preceding decade (nearly 15% annually during "the lost decade"), yet its average investor either made little (about 3% in the no-load shares) or actually lost money (a small negative return in the Advisor class shares).
The fund has had a rough past four years. Assets are down 50% from their peak. Mr. Soveiro had been expanding the franchise but has lately been forced to (or has chosen to) give up his role in other funds. And now, not surprisingly, this.
David

I've had an account with Fido for years and never used the fixed income analysis tool before. It provides a good summary of my bond fund key data points. I like the estimate of how rising/lower interest rates could affect the funds' values.
Thanks for posting Ted.

My experience with OSTIX is that it rarely disappoints. It may never be at the top in great years for fixed-income. But Carl Kaufman, Simon Lee and their team have done an outstanding job of doing what the fund is supposed to do, year after year. They are extremely careful and picky about what the fund owns, and are comfortable with a rather big cash position. OSTIX is a core hold in many client accounts, and we have used it pretty much since it first started, based on the manager's history.

What makes you think your "replication" methodology will play out the same over the next 3 years???

From that list, MAPOX: over the 3 years through July 2016, underperformed a simple ETF portfolio of ~29% CORP, 26% SDY, 22% VIG, 8% KBWB, and a few smaller positions, by a cumulative 2.2% and at similar volatility. Where are the "superior risk-adjusted returns"?

Interesting point that foreign entities are leading. Reminds me that the first things I read about the insurance industry's waking up to climate risk were about Swiss Re's perspective on it, if I'm recalling correctly - that was several years ago.

@LLJB
Here's link to Patrick O’Shaughnessy's Commentary page. He's a true student of the markets. And, here is link to the paper he briefed in Chicago Friday, Alpha or Assets?
Market cap index investing certainly making a lot of smart money managers look not so smart these past several years. Everyone would have been wise to simply invested in VFINX or VBINX back in 2009 and forgotten about it.

Value investors, which have all the academic findings to back-up the strategy's premium, have underperformed during this period. Hard to say exactly why. Some argue it's the cheap money that enables investors to chase growth stocks, which would otherwise be "unaffordable," if you will. Others argue since all assets have been "artificially inflated," again because of ZIRP, there has not been much distinction between value and growth ... everything is expensive!
It's interesting to think of the market cap index as the first quant fund. And, in fact, because it is market cap, it's actually a momentum strategy.
Yes, I'm skeptical of many money managers, fund families, and attendant fees. Published misuses of investors by firms like Edward Jones abound. Heck, look at what Wells Fargo did recently! I hate front loads, back loads, 12b-1 fees, and multiple share classes. I have made my dislike of American Funds known for all these reasons. Assets are sticky, so asset gathers abound.
All that said, I remember Peter Lynch once saying that just because an investment wins, does not mean it was for the right reason. And, just because it underperforms, does not mean it was for the wrong reason. I do think there are money managers and shops out there that are really trying to do the right kind of investing for all the right reasons.
I know David's mission for MFO is to help investors identify those very opportunities, especially when they are under-the-radar, like the individuals and firms you mentioned.
@MikeM2
I did not make it over to the Fidelity booth, unfortunately. But will keep eye out for Fidelity's new offering.

Awhile back we decided to use index funds and ETFs in our taxable accounts to minimize year end distribution. Sometime active managed funds paid out sizable distribution even in bad years.

Please not muhlx. The guy calls himself an economist and I got fooled by his tripe for years. He does not even understand the basics of stocks, bonds and interest rates. You have several funds you can bottom fish with.

Chock full day.
More than 650 total attendees at the conference, including more than 500 registered attendees (mostly advisors), more than 80 sponsor attendees, nearly 40 speakers, and more than 30 members of the press. Up somewhat from last year.
Morningstar will soon start giving forward looking "aptitude" medal ratings to exchange traded funds. Will use same 5 Ps methodology as open ended funds. About 300 will be rated along with open ended funds in same category. EtF AUM now at $2.4T. While no plans yet to merge conferences, I believe it is inevitable for June and September Morningstar Chicago conferences to merge.
Lots of discussion of value and momentum strategies today. Fama calls the latter the premier anomaly in investing. AQR's Ronen Israel discussed facts and fiction. Despite that everybody knows benefits of each strategy, AQR believes it is fact that premia in each exist will continue.
One of Morningstar's brigthest, Alex Bryan, moderated a session on largely same topic by Gary Antonacci, Meb Faber, and Wes Gray. All disciples. Wes, probably the hardest core "believer" in pure value. But, data backs-up momentum as well. Why do these strategies persist? Because they are so utterly painful to stick with. Gary, however, uses an "absolute momentum" overlay (based on 12 month SP500 total return vs risk free) to mitigate drawdown, which he argues is more steady than simple moving average methods.
Met with John Ameriks, head of Vanguard's Quantitative Equity Group. He believes that a big reason "quants are winning" is that they provide a rules-based methodologies so investors better know what to expect. Unlike, say, the sometimes surprising behavior of active investors, like Fairholme's Bruce Berkowitz. John's group has 25 analysts and has been in existence for 25 years. At $30B in AUM, lots of responsibility here.
In a panel on "best ideas," Rich Bernstein, John West of Research Affiliates and Mark Yusko of Morgan Creek Capital Management seemed mostly conflicted. Bernstein believes cyclical equities and perhaps equities as a whole, will continue their bullish run. Expects excess returns the next two years for industrial's. But, the catastrophe will be bonds. Yusko, the most vocal, believes US stocks will crash in next year or so. Doomed based on valuations and demographics. He thinks that the only thing investors do well is invest in the last thing that worked. So, investing in index funds going forward will be catastrophic. While he dropped names like Seth Klarman of Baupost, Yusko's positions seemed to me ... hmm, what's a good word ... malarkey. West was most tempered of the trio, touting Research Affiliates benefits of all asset diversification, which always takes the 10 year view.
Took several other interviews, including a couple EtF managers that focus on EM consumers and Millennial consumers. Can you believe that? The PM at Iowa's Prinicpal, named Paul Kim, formally at PIMCO, seemed pretty impressive to me. More to come.
Looking forward to morning talk by Patrick O’Shaughnessy, entitled Alpha or Assets. As well as interview with Vanguard's Head of Equity EtFs and walking the exhibitor booths.
c

Shiller's strategies seem to be working well and I'm actually surprised because most of these new funds by the quant/trend followers/13F filings/s&p under it's 200 day moving average guys seem to be under performing more than I expected. Shiller's indexes almost seem like a free lunch at this point.
QVAL, QMOM, GVAL, etc have just been tanking over the last two years, but then I'm reading articles from these guys that momentum and value strategies can under perform for up to 10 years, sometimes longer!?!?! And ALFA just got slaughtered when it went market neutral. If it's always best to buy when a fund's outlook seems darkest, then I'm loading up on MUHLX.

Very easy -- there are lots of ways to come up with a "better" (less volatile, less risky, lower fees -- name your wish) plan when you know in advance what you want the answer to be. I did computational modelling professionally for years and I can assure you that taking a set of choices, locking them up in a safe for a year and then looking at the results is entirely different from combing through data from a year ago and choosing a data set that would have done SO MUCH better with "your" "alternative/better" choices from a year ago. It's easy to "predict" the present from the past, another story to predict the future from the present (or the past, for that matter).

Over the 3 years through Jul 2016, JNVSX could have been substituted by a fixed portfolio of ETFs (~22% FXR, 19% TDIV, 17% SPHQ, 11% XRT, 9% IHF, 8% VIG, and a couple of smaller positions) that had a ~4.4% higher cumulative return at a comparable volatility. See goo.gl/2Z3V5Q

Another way to substitute DFSVX, published a year earlier than this article -- see goo.gl/7RzdsC
For the 5 years through Aug 2016, DFSVX could also have been substituted by a fixed portfolio of ETFs (~41% IWN, 14% RZV, 10% PSCT, 9% XRT, 8% PRN, 8% KBE, 6% PXI, and a couple smaller positions) with a similar cumulative return and lower standard deviation.

Seems like the to time to be "steering" investors towards indexing, passive, and ultra diversification is when markets have been through a reasonable decline. Not at a time when:
1) the largest stock market ( U.S.) in the world is richly valued and forward return expectations as measured by many metrics are low
2) many world bond yields are sparse
3) the average investor within a few years of retirement age, who are deficient in retirement asset accumulation ( a large percentage ), will need some sort of high alpha, active / strategic & capital preservation portfolios in order to "catch up" and maintain a reasonable retirement lifestyle.
Don't hear anyone pushing for an overweight in emerging market / European bourses either which would seem to be logical and inverse to point #1.