Defined pensions are a thing of the past. Only about 5% of workers have them and 50% of those work for gov't.

Speaking of fuzzy statistics, this number sounds way off. Pensions are declining, but not nearly that fast. As of 2011, 18% of private sector workers had traditional pensions, and 78% of government workers had pensions. (I've no doubt the figures have dropped in the past five years, but not by 3/4).

You are correct. I was thinking of union members.

Somewhere I've still got M-W's 2nd unabridged, on onion skin (from my parents). The last edition before they started including slang. If I can find it (not likely), I'll see what it says.
If one insists that average means (no pun intended) arithmetic mean: What was the average annual return of a fund that produced 50% and -50% returns over the past two years? 0% or -13%? Sure it's still a mean, but it's not the "usual" mean.
As for me, I'm still bothered by flammable. I get inflamed whenever I hear it :-)

Defined pensions are a thing of the past. Only about 5% of workers have them and 50% of those work for gov't.

Speaking of fuzzy statistics, this number sounds way off. Pensions are declining, but not nearly that fast. As of 2011, 18% of private sector workers had traditional pensions, and 78% of government workers had pensions. (I've no doubt the figures have dropped in the past five years, but not by 3/4).
http://www.bls.gov/opub/mlr/2012/12/art1full.pdf

The only way I see people surviving with such small net worth is,social security, food stamps etc and living hand to mouth. 46 million use food stamps.
This should give those of us with substantial net worth, SS and pensions pause to appreciate what we have.

That's a more accurate statistic. It's even worse that it looks when you consider that several millions of those people need food stamps while working. I agree with the sentiment - though IMHO it is better to try to give a hand up (however one feels that is best done) than to simply be thankful for one's own situation.

Hi Ted,
Many thanks for the SPIVA reference. It was a reminder of days past.
Not many years ago I eagerly awaited the SPIVA reports. Not so much so these days. I became weary of the same old, same old performance persistency registered by the active mutual fund manager community. The percentages changed a little and the categories morphed a little, but the basic story was always consistent.
Active fund managers find their benchmark Index just too great a challenge to beat. That's the persistent statistical story over decades. The current SPIVA releases document that seemingly never ending storyline. Typically 80% to 90% of active fund managers stumble below their benchmark targets.
As a result of the consistency of the SPIVA findings, I stopped reading their reports. They seemed redundant and almost interchangeable. Your reference documents that the active fund manager performance has not changed much over time. It remains in the dismal class with few exceptions.
Thanks again for this reference and the countless others that you graciously provide. You are the glue that holds this discussion board together.
Best Wishes

If the figure above is representative of US general population, we are in trouble unless the they have a healthy social security and generous pension. Over the past 20 years define pension plans have largely been replaced by define contribution plan, i.e. 401(k) and 403(b).
I work for a company that offer both a pension plan and 401(k), but the pension plan grows slowly (invest conservatively and I have no control) and the company's contribution is too many (1% of my salary). The bulk of the company's contribution goes into my 401(k) and that I am grateful.

Great article. Many of the investments in the endowment are quite complex and very difficult for smaller investors to own (assuming they would want them). Minimums tend to be high and there's lots of legal restrictions imposed by IRS or SEC which impede liquidity and add tax liabilities for small investors.
If (for the above reasons) these investments are not in a financial assets manager's basket of offerings to begin with, it's difficult for the manager to add them to a target date fund.
Article suggests that a target fund dated 30 years in the future is comperable to a college endowment in investment horizon. I'm not sure that's true. However, assuming it is ... what percentage of small investors in that age group (say 20-35 years of age) actually elect to invest through target date funds? Is there a sizable market there to make such a diversified offering profitable for the financial services provider?
---
More thoughts after sleeping on this one: A big difference (which I think the M* article largely ignores) is that humans age - and that this life-long transition must be taken into account over one's ever changing investment horizon. That's where target date glide-slopes come into play. Most rational advisors wouldn't allocate an individual's money as aggressively at age 60 as the would at age 30-40. However, with a university endowment there would seem to be no need for such a glide-slope. Assuming the university continues to grow and prosper, it's endowment investment horizon should remain constant - allowing an aggressive broadly diversified approach for many decades - even centuries. Do I have it right? Or am I missing something in highlighting this difference?

I say investors should try to stick with it ... as hard as that may be to do. " I think as a former dedicated value investor that it is just too hard. Buying what is performing doing well and switching when its not is probably a better strategy for most investors. the difficult of sticking with value funds which have under performed like in the last 5-7 years is just too difficult for most investors. They wind up selling out before the trends change and most the rebound.

Thanks MJG. Been thinking about this very situation. Lots of "value" managers under-performing vs SP500 last 5-7 years. Hard to know exactly why. Some of them blame ZIRP. Others acknowledging that the value premium is something you can only count on over the long run, the length of which is also hard to specify. Ten years certainly seems like "the long run" ... indeed it is compared to holding time of most individual and even institutional investors! But, not so sure it is for any one strategy or another. Some value managers are actually pointing to the under-performance as evidence that they are on the right track! And, it's hard to knock them. And I've heard others say that some value metrics have actually performed OK. In any case, like JoJo26, I too believe the value premium will ultimately persistent. If a manager is consistently executing a startegy, and you agree with that stratetgy, I say investors should try to stick with it ... as hard as that may be to do. Hope all is well. c

Most active managers do not outperform their index. Why any more research is needed? Maybe we will also see research paper on other performance metrics that will reach similar conclusions.
I should have spent couple more years and got a PhD. Searching once is nothing. Searching twice is "Re"search.

FYI: Burton Malkiel has been saying the same thing about investing for more than 40 years. What’s new is that a big chunk of the financial industry now admits he was right all along.
In 1973, Malkiel, a Princeton professor, published the first version of his investment guide, A Random Walk Down Wall Street. He wrote that “a blindfolded monkey throwing darts at the stock listings could select a portfolio that would do just as well as one selected by the experts.” Since most investors can’t beat the market average over time, he argued, they’d be better off in some kind of low-fee fund that simply held all of the stocks on a widely followed index. Problem was, no such retail fund existed.
Regards,
Ted
http://www.bloomberg.com/news/articles/2016-09-22/the-professor-who-was-right-about-index-funds-all-along

This is a not-uncommon occurrence, and realistically, there's little one can do but approve the new contract.
Mutual funds legally do not "belong" to fund families. They are "independent" companies ("registered investment companies") that "hire" the management company (fund family) to manage them. The contract between the fund and the management company automatically terminates when the management company is sold.
What usually happens is that the new owners of the management company (here, People's United Bank) offers a new management contract, where the same people continue on as managers. The contract usually says that for some period of time, nothing will change.
Your choices are to accept the contract, in which case little will change in the short term, and possibly nothing or a lot in the long term, or to reject the contract. Reject it, and the fund is left with no managers. It will either have to try again to get approval for that contract, find another management company (and new fund managers), or dissolve the fund. Rock and hard place.
There's a current ER limit in place (1%) through March 2017. The new agreement seems to be promising to keep this in place for two years. On a quick skim of the proxy, I didn't see anything said about whether the managers committed to staying on with the new company, and if so for how long.
Edit: forgot to add - it looks like People's United Bank offers free coin counting (for account holders). Nice to know since TDBank got rid of their machines.

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???