Thanks, but I'll take BCOIX over this fund.
Nearly identical in most metrics (duration, credit quality, credit breakdown, number of bonds/bonds in top 10%, country breakdown). TIORX is long and short in cash, but with same net cash as BCOIX (no shorts).
Differences that pop out include:
- TIORX has more securitized bonds and less corporate (as discussed in article)
- TIORX has high turnover (308%, mentioned in article) vs. 34%
- TIORX costs twice as much (0.62% vs. 0.30%)
- TIORX has lower SEC yield (2.31% vs. 2.61%)
With the notable exception of 2008, BCOIX generally outperforms. In 2008 it underperformed by 4.64%, but made that up and more with its 2009 9.08% outperformance. In all other recent years, performance figures were much closer.
It is fair to look back this far, as BCOIX's management started in 2000. Though the article implies that Higgins (starting in 2011) is the only manager of TIORX, the prospectus says: "The following persons manage the Fund on a day-to-day basis: ...Higgins ... since 2011 [and] ... Cerra ... since 2003." Both are listed as "Managing Directors". Neither the prospectus nor M* says anything about 13 managers.

msf,
BCOIX over DBLFX (less Corportate Bond and more US Treasury)?
Mona

To paraphrase: Vanguard knows better than its shareholders what is in their best interest.
How patronizing.
When Vanguard says that it must maximize returns, is that returns over the next quarter, or over the next decade? Penny wise and pound foolish comes to mind.
Vanguard seems to be saying that it is required to vote this way to meet its fiduciary duties. It is thus tacitly accusing Allianz, Wells Fargo, DWS, Schroeder (which submanages VINEX and VWIGX), and others of breach of fiduciary duty.
http://www.ecowatch.com/is-your-mutual-fund-a-climate-change-denier-or-climate-champion-1882190571.html
(The figures in the article linked to above show that exact voting percentages depend on how you count. Nevertheless, the split among fund companies is clear. Thanks to Lewis for the info on Blackrock's change of heart, since its 2015 voting performance was 0%.)
It gets worse. From a 2014 article (writing about 2014 and earlier votes):
"Industry giant Vanguard remains sole mutual fund to ignore climate-related resolutions for 11th-straight year. ... Vanguard ... has failed to cast a single vote in support of a climate-related resolution in 11 years."

Thanks, but I'll take BCOIX over this fund.
Nearly identical in most metrics (duration, credit quality, credit breakdown, number of bonds/bonds in top 10%, country breakdown). TIORX is long and short in cash, but with same net cash as BCOIX (no shorts).
Differences that pop out include:
- TIORX has more securitized bonds and less corporate (as discussed in article)
- TIORX has high turnover (308%, mentioned in article) vs. 34%
- TIORX costs twice as much (0.62% vs. 0.30%)
- TIORX has lower SEC yield (2.31% vs. 2.61%)
With the notable exception of 2008, BCOIX generally outperforms. In 2008 it underperformed by 4.64%, but made that up and more with its 2009 9.08% outperformance. In all other recent years, performance figures were much closer.
It is fair to look back this far, as BCOIX's management started in 2000. Though the article implies that Higgins (starting in 2011) is the only manager of TIORX, the prospectus says: "The following persons manage the Fund on a day-to-day basis: ...Higgins ... since 2011 [and] ... Cerra ... since 2003." Both are listed as "Managing Directors". Neither the prospectus nor M* says anything about 13 managers.

Not exactly an answer to your question but "lower returns going forward" seems to be the latest buzz phrase. Actually has been around many years and popularized by the likes of Jeremy Grantham long ago and others (especially value managers) Last year's punk returns really had them howling the era of low returns was upon us. But last I checked the market was still powering ahead and at all time highs. Sort of reminds me of post 2008 when a bunch of funds were rolled out pandering to the fears of another 2008. Now I guess the marketing machines will be pandering to the low returns going forward fears. As an aside, your aforementioned MWATX (not MWTAX) looks good and has performed well over the years - certainly no low returns in that fund.

Hi @MikeW,
Thanks for the question.
For me, I am thinking of again rebalancing my portfolio and trimming back my allocation in equities. According to last Friday edition (July ending) of the WSJ the S&P 500 Index is selling at a TTM P/E Ratio of 25.0. For me, most equities are too richly priced for me to even think of adding to current positions (much less opening new positions) as I am in the trim mode keeping equities at about 45% of my asset allocation.
Now, if we should get a good pullback (10% range) in the near term I most likely will become a buyer in equities and add to some current positions; and, then perhaps after the rebound lighten up in some other positions. With this, a rebalance within my equity allocation itself.
Thus far, PMDAX has been a great fund for me; and, one that I have owned for about five years. It makes up about 60% of my small/mid cap sleeve found in the growth area of my portfolio. The other two small/mid cap funds that I own in this sleeve are ABSAX and PCVAX.

@Ted,That would be 2333 @ a 7% rise from 1:00 PM C D T SP 500. Your Cubs have you dreaming of a once every 100 year event !! That would approximate 3 deviations in Jeremy Grantham's view of reversion to the mean. Mr Grantham agrees with you on your optimism towards a continued rise in U S market.
Last World Series title.108 long years ago.
1908 Chicago Cubs Won World Series (4-1)over Detroit Tigers
Cubs Franchise History
http://www.baseball-reference.com/teams/CHC/

Immigration and Brexit
Jeremy GranthamJuly 2016
[On the investment front the equation remains the same: pushing stock prices higher are the twin forces of the Fed’s policy and corporate buybacks. Trying to push prices down is an impressive array of everything else: disappointing productivity, growth, and profit margins together with all
our domestic and international political uncertainties. And now Brexit! It is a testimonial to the strength of those two bullish forces that they can steady the US market near its high, regardless, apparently, of what is thrown at it. I therefore remain, on the basis of those two remarkable pillars of support, for at least one more quarter where I have been for the last two years; despite brutal and
widespread asset overpricing, there are still no signs of an equity bubble about to break, indeed
cash reserves and other signs of bearishness are weirdly high. In my opinion, the economy still has
some spare capacity to grow moderately for a while. All the great market declines of modern times
– 1972, 2000, and 2007 – that went down at least 50% were preceded by great optimism as well as
high prices. We can have an ordinary bear market of 10% or 20% but a serious decline still seems unlikely in my opinion. Now if we could just have a breakout rally to over 2300 on the S&P 500 and a bit of towel throwing by the bears, things could change. (2300 is our statistical definition of a bubble
threshold.) But for now I believe the best bet is still that the US market will hang in or better, at least through the election.
P.S.: Having admitted my error in commodities, I would like to clock in the
seventh anniversary of my “7 Lean Years” prediction for the economy back in 2009. The speed of the
recovery, and particularly productivity gains, has been very lean indeed.]
https://www.gmo.com/docs/default-source/research-and-commentary/strategies/asset-allocation/immigration-and-brexit.pdf?sfvrsn=11

@Tony
>> double your money ever 5 years... At a 20% return per year, you would more than double your money every 4 years
Right; rule of 72 applies fairly closely except at the extremes (annual rate x years = ~72), and if you're unfamiliar with this handy notion, just google.
In the example = ~3.6y for doubling.

From my post in January 2016
EVBAX
Gaffney increased her exposure to energy bonds overall in the fourth quarter from 11.2 percent to 16 percent, with the fund's bets on high-yield energy bonds increasing from 3.3 percent to 5.8 percent.
She reiterated a call she made in October to Reuters that a number of her fund's holdings could gain by 30 percent or more over the next two years.
Investors pulled $856 million from Gaffney's fund last year, slashing the fund's assets by over 40 percent to $780 million from a peak of about $2 billion last February, according to Lipper data.
Per M* today 8/02/2016
Category
Multisector Bond
Total Assets
$ 659.2 mil
Lipper's Tjornehoj said that managers may eventually be right, and energy spreads will narrow. "But by that time they may have very little money in the portfolio to crow about."
http://www.foxbusiness.com/markets/2016/01/20/bond-funds-remain-confident-as-crude-rout-worsens.html
Original
Loomis Sayles Is Bullish On Junk Debt
http://www.mutualfundobserver.com/discuss/discussion/comment/74133/#Comment_74133

Punch Bowl More than Half Full ?
Net flows into ETFs totaled $52.6B in July, according to FactSet, with just about every asset class seeing fresh money, particularly U.S. equities, which drew in $30.1B.
U.S. fixed-income saw a robust $11.6B of inflows - a possible source of concern for some analysts, noting high demand for both "risk-on" and "risk-off" assets. It wasn't just Treasurys though, as the data shows plenty of demand last month for investment-grade corporate paper, emerging-market bonds, and high-yield debt.
http://seekingalpha.com/news/3198724-etf-inflows-soar-july
Graphics from @Ted's original article from MarketWatch


http://seekingalpha.com/article/3994368-major-asset-classes-july-2016-performance-review
BEIJING (Reuters) - A raft of global risks that could adversely affect the United States remains on the horizon and requires close monitoring, Dallas Federal Reserve Bank President Robert Kaplan said on Tuesday.
Kaplan, along with several other Fed policymakers, has urged renewed caution in trying to lift rates again...
"I am closely monitoring how slowing growth, high levels of overcapacity and high levels of debt to GDP in major economies outside the U.S. might be impacting economic conditions in the U.S.," Kaplan said at an event in Beijing.
In his second appearance within a week, Kaplan, a centrist at the U.S. central bank, repeated that he continues to back tightening monetary policy in a gradual and patient manner.
Chief among his concerns is sluggish U.S. growth exacerbated by a changing world in which economies are more globally interconnected.
"It's going to take many years and maybe decades for China to manage through overcapacity and high levels of debt to GDP," Kaplan added. "I think sudden jarring traumas ... may make that adjustment more challenging."
On Monday New York Fed President William Dudley, a permanent voter on the Fed's rate-setting committee, said that while it was "premature" to rule out a rate increase this year, negative economic shocks were more likely than positive ones.
https://www.yahoo.com/news/feds-kaplan-urges-patience-raising-rates-points-global-115047772--business.html?ref=gs
A Brief Note From G M O's Ben Inkster in their 2nd Quater Newsletter
"So what can we do to protect portfolios ..."
"a deeper analysis of what led returns to be disappointing for
the asset classes that have lagged may help investors avoid the error of abandoning decent assets just when their time may be about to come."

This is the nature of the discount-rate-driven gains for asset classes such as equities, bonds, and real
estate. Beyond the discount rate change, it is still true that US equities have done surprisingly well,
emerging equities surprisingly badly, and so on. But even if those “surprises” are permanent (and
our guess is that for the most part they are not) the fact that the valuation of US equities has risen
guarantees that the future returns to US equities from here will be lower than they would have been
otherwise, and the same is true for all of the long-duration assets whose discount rates have fallen
over the period.
The most shocking hole that will be blown through people’s portfolios is if discount rates rise again
fairly quickly. Even if the circumstance is one in which the global economy is doing well, the impact
of a 1.5% increase in the discount rate on equities from here is a fall of over 30%, which would
almost certainly be enough to swamp the earnings impact of the decent growth. For bonds, of course,
there would be no possible counter to the discount rate effect. For a portfolio that is fully invested in
long-duration assets (i.e., consists of a combination of stocks, bonds, real estate, and private equity),
the possible performance implication is on the order of the falls experienced in the financial crisis –
perhaps a 20-33% fall depending on the weightings – despite the fact that the global economy was doing just fine.
So what can we do to protect portfolios against this possibility? One answer would be to hold cash, which, as a zero-duration asset, would be a beneficiary of rising discount rates. The trouble with cash, of course, is that if the discount rates do not rise, it is doomed to deliver little or nothing. What
we would ideally like is to hold a short-duration risk asset – one where if nothing changes we are getting paid a decent return but where a rising discount rate will not destroy multiple years’ worth of
returns. We believe alternatives fit the bill pretty well. If things hold together, we should expect to
make money from activities such as merger arbitrage or exploiting carry trades or global macro. If the
world does surprisingly well and causes investors to raise their expectations for discount rates, these
strategies should be largely unaffected and could still make money. If we head into a severe recession
or financial crisis, they will presumably lose money, as we saw in 2008, but that is no different from
other risk assets. To be clear, I’m not arguing that the returns to alternatives are likely to be a lot
higher than we have seen since 2009-10. Alternatives have been mildly disappointing since 2009, doing almost 1% worse than one might have expected. The more sobering truth is that the 4.2% return they have achieved since then simply looks pretty good given the other choices on offer, and
their lack of vulnerability to rising discount rates is a comfort in a world where almost everything in
a traditional portfolio is acutely vulnerable to discount rate rises should they happen.
Today does not look like a great opportunity to reach for risk, despite the temptation in the face of unprecedentedly unattractive yields on government debt.....
The charm of alternatives today is that we believe they should perform similarly in either the
temporary or permanent shift scenario, and there are almost no other assets with expected returns
above cash for which that is the case. The problem with alternatives is that they are more complicated
to manage than traditional assets, generally have higher fees associated with them, and require more
oversight. Normally, those problems are enough to make them less appealing than traditional risk
assets such as equities and credit. Today, however, they seem well worth the extra effort. Their
generally disappointing performance over recent years, rather than a sign to dump them once and for
all, should probably be recognized as a signal of their potential utility in the market environment we face in the coming years.
There is no panacea for the low returns implied by asset valuations today. Anyone suggesting
differently is either fooling themselves or trying to fool you. But piling into the assets that have been the biggest help to portfolios over the past several years, as tempting as it may be, is probably an even worse idea than it usually is. And a deeper analysis of what led returns to be disappointing for
the asset classes that have lagged may help investors avoid the error of abandoning decent assets just when their time may be about to come.
https://www.gmo.com/docs/default-source/public-commentary/gmo-quarterly-letter.pdf?sfvrsn=30
A Q R funds
http://quicktake.morningstar.com/fundfamily/aqr-funds/0C000021ZL/fund-list.aspx
Arbitrage funds
http://quicktake.morningstar.com/fundfamily/arbitrage-fund/0C00001YYL/snapshot.aspx
Long-Short Equity: Total Returns
http://news.morningstar.com/fund-category-returns/long-short-equity/$FOCA$LO.aspx
Multialternative: Total Returns
http://news.morningstar.com/fund-category-returns/multialternative/$FOCA$GY.aspx

My concern would be I don't think my trading skills are sufficient to double my money over a 20 year time frame every 4-5 years like my $7 cost basis provides me. Not many opportunities present themselves in the stock market to do that. My theory centers around long term compounding versus trading in and out. Dividend cuts etc would change my mind but since 2008 this one hasn't cut.

i did, in practice, purchased several CEFs during 2008/2009, which made for a significant return in the following years. they consequently moved to premia and i had to exchange them for what i thought was a better relative value. each year, different class of CEFs is underpriced (while 2008/9 it was the entire universe). 2011 saw a huge downdrift in munis. 2012 affected not-agency RMBS. 2013 was unkind to all income producing stuff, most of which just recently recovered. preferreds stayed down for two years before rallying in 2016. right now, there is little value in CEFs as discounts approach those in 2012, i.e. non-existing... i have sold a few, but am still long a bunch...the question is always, if you sell what are you reinvesting in? when everything is expensive (except for some 'real asset' stuff) I just stay the course with the existing positions and some dry powder.

Central banks globally continue to "play". Bank of Japan recently did not further reduce bond yields with market intervention, but expanded their ability to purchase Japanese market etf's (equity) specifically designed for the Bank of Japan to purchase. The ECB, among other ongoing purchases is also purchasing eurozone corporate bonds. I have no idea with what our Federal Reserve is involved within the market place.
Gotta go help at high school band camp.
Most interesting times continue.....
Catch

Japan is showing the way in many ways.
Europe might get a little help with the decline in the Euro and Sterling but not much.
The US Fed is talking about raising rates - are they nuts or trying to help the world more then the USA?
I have high yield bonds and the dividends are decreasing. I've been using the dividends to purchase other funds such as PREMX. Have you seen DSL's take off!
I think think in a few years people will be exclaiming Wow! you are a getting 4% dividend payment!

"...(at a 20% cost basis yield) you would double your money ever 5 years..." At a 20% return per year, you would more than double your money every 4 years (1.2 raised to the 4th power equals 2.07+).

Okay, that last remark got me curious, so I checked. In its category (the one I'm guessing Ted used - M* 30%-50% allocation), there were two funds that had worse 5 year records.
One has continued its bottom 2% performance except in the past few months - PRADX (NTF at various brokers). M* rates it a bronze, ostensibly because it is a real return fund. (Sometimes M* tacitly acknowledges the limitations of its classification system.)
The other is a familiar fund - PRPFX. For a fund that is supposed to offer stability (by investing in a broad mix of asset classes: gold/silver, Swiss francs, natural resources, growth, and US bonds), it has certainly gotten led around by gold. 98th percentile over 5 years, but top 1% over the past year.

msf, agreed. Another thought...even if a bear market emerged and your NAV dropped to $55 from $100, (at a 20% cost basis yield) you would double your money ever 5 years perhaps negating the risk of holding through the $45/share loss. IOW's would this be approached differently if an investor never believed his $40 cost basis would ever be breached? I am looking at my old research notes from the depth of 2008. HYV was yielding 22.9% DHF 21.3% SBW 16% HYT 22.1%. Incredible. I am not recommending the funds. No need to comment on the funds...simply examples of yields during that brief period of time. The one caveat is cuts in dividend thru economic cycles.

During 08-09 some of these funds sold off substantially to all time lows/discounts with 20% yields. If an investor were lucky enough to buy them then, should the funds be sold at large profits or held forever? (thinking the NAV may never go that low again and yields may never go that high again). The consensus is sell because once the funds recover you are getting 8-10 years worth of dividends in the profit. However, if you do sell, you are now faced with establishing a new cost basis to provide income during those 8 years that is near impossible to replicate. Thoughts?

As an investor in Oakmark funds for the past 20 years or so, specifically the international funds, I am not happy to hear this. Both OAKIX and OAKEX performance has suffered recently and I am fairly certain that asset bloat with OAKIX at 23.5 billion AUM and OAKEX at 2.4 billion AUM has been a factor on this poor performance. OAKEX in particular hasn't beaten it arrivals for last 1 yr, 3 yr, 5yr , or 10 yr periods. But I believed in the management and stuck with them all the years albeit cutting back on my exposure to OAKEX to about 25% of my original investment. But I think this may finally bring me to sell the remaining holdings in the fund. I originally invested in OAKEX to get small cap international value/blend exposure which was not offered in my 401K selections which only had foreign LC and Emerging Market as investment options. But now I believe their are several better options in the SC International arena. Funds such as ICMIX, ISMRX, and SBSHX all appear to be more compelling options in the international SC area with ICMIX probably being the standout option IMHO. So while I am glad that Oakmark believes that have some many good investment options, I am saying good bye to at least to OAKEX. So be warned since I am planning on selling OAKEX next year they probably return to stellar performance against their peers - just my luck. Disclosure I currently own 4 Oakmark funds - OAKLX, OAKWX, OAKIX, and OAKEX.

I'm not that familiar with Intrepid... What is it that you like so much about them, other than performance?

Meh. Not seeing what size has to do with it, pro or con.

"Investors have poured $3 billion into the fund over the past six months and its assets have nearly doubled in the past three years"
Don Kilbride runs a concentrated portfolio of around 45 high quality stocks. Theoretically, by closing the fund, he can continue to beat the index by investing in his best ideas at a price point that he finds acceptable. Kilbride either believes that he can not effectively employ more assets at this time or he believes that he is bringing home enough income.
Of course, the management team of PRBLX seems to feel differently by keeping their fund open, but the fund is also 1/3rd the size of VDIGX.
Mona

The US 10 year below 1.5%
I took a look at HYG and the trend in its dividend pay out down 21.4% in 4 years from Aug '12 to June '16
https://finance.yahoo.com/quote/HYG/history?period1=1343620800&period2=1469851200&interval=div|split&filter=div&frequency=1d
I don't see that trend changing. The implications are not good for all the new retirees looking for income.
Where people are searching for yield?
http://www.marketwatch.com/story/emerging-market-debt-funds-just-had-a-record-4-week-buying-boom-2016-07-29

As an investor in Oakmark funds for the past 20 years or so, specifically the international funds, I am not happy to hear this. Both OAKIX and OAKEX performance has suffered recently and I am fairly certain that asset bloat with OAKIX at 23.5 billion AUM and OAKEX at 2.4 billion AUM has been a factor on this poor performance. OAKEX in particular hasn't beaten it arrivals for last 1 yr, 3 yr, 5yr , or 10 yr periods. But I believed in the management and stuck with them all the years albeit cutting back on my exposure to OAKEX to about 25% of my original investment. But I think this may finally bring me to sell the remaining holdings in the fund. I originally invested in OAKEX to get small cap international value/blend exposure which was not offered in my 401K selections which only had foreign LC and Emerging Market as investment options. But now I believe their are several better options in the SC International arena. Funds such as ICMIX, ISMRX, and SBSHX all appear to be more compelling options in the international SC area with ICMIX probably being the standout option IMHO. So while I am glad that Oakmark believes that have some many good investment options, I am saying good bye to at least to OAKEX. So be warned since I am planning on selling OAKEX next year they probably return to stellar performance against their peers - just my luck. Disclosure I currently own 4 Oakmark funds - OAKLX, OAKWX, OAKIX, and OAKEX.