mrc70, you make a point, but if M* insists on including global funds in their international category for these meaningless awards, they should identify the award as such. All they would have to do is call the category Global/International, and that would at least make it honest. As for asset bloat, many of the funds are already huge in size, and some are already closed when they receive the award. Perhaps it was a bigger deal years ago, but it can sometimes be the kiss of death. Anyone remember Julis Baer International? Their asset base grew so big, the fund essentially imploded. My observation, once again, is that these "awards" have much less impact than they used to, especially since the market-share gain of index funds and ETFs. But we know the fund companies will market them as long as they can.

Some of the criticism is unnecessary. Folks should read what M* is saying before coming to the conclusions. They have already explained why Global funds are categorized under International. I will attach the explanation later when I have time, but they said that they have to add Global funds to one of the existing category as they don't want to create yet another award category. What is best category to include Global than International, as most Global funds hold foreign stocks anywhere from 50 to 70%.
I saw lot of criticism for not giving the award to PRWCX in allocation fund category. They gave the award to that fund mgr just 3 years ago, They can't start giving the award to the same manager again and again, esp. in such short intervals.
As far as why AQR funds not in Alternative category, M* does not look just one year performance while giving this award, though last year is utmost important. They also look at consistent long term performance of the fund and its manager(s). AQR funds/shop is relatively new and that could be reason why they were not considered.

That extra 1% by not rebalancing resulted in a stark difference with the non-rebalanced portfolio worth more than double the one which was frequently rebalanced at the end. I'm shocked 1% compounded could make that kind of difference.
However, from 1926 - 2009 is a longer investment horizon than most of us have (approximately 83 years). To achieve the identical result one would need to have accumulated all the money initially invested by age 12 and than to have waited until age 95 to withdraw a single penny.
Anybody here fit that description?

On toxicity. HSGFX is actually up about 6% YTD - now that the last MFO holdout has abandoned the fund. Otherwise, to earn a positive return with that fund you'd have to go back to inception 16 years ago in 2000 (+2.6%).
Forbes - A sometimes candidate for President.
Amazon's Kindle subscribers also complain about ads on that site making reading difficult - even when paying a subscription fee.
Score +1 for Megyn Kelly - not that I give a damn.

Like most years, M* blew a number of these. Brown Capital has been closed for a couple of years, but they neglected to mention this. ANWPX is not an international fund. Even M* calls it a Global Stock fund, with holdings almost evenly divided between U.S. and foreign stocks. They clearly overlooked true international fund such as WAIOX (9.4% gain), DRIOX (12.6% gain), TGVIX (6.7% gain), and SGOVX (2.3% gain), all of which were remarkable in a year when EAFE was negative. And then there is MAPIX (4% gain when China killed EMs and much of Asia. Then PTSHX as the best bond fund? At least with NEARX you would have gotten a better return and not been taxed, if M* was looking for a good short-term bond. Heck, I could have been in CDs the last 2 years and been ahead of PTSHX. What were they thinking? And no AQR for alternative. I think VMNFX is an ok option, but it is not a true market neutral fund. I will stop throwing stones. In the end, these so-called awards a really nothing more than publicity events for M* and for the funds named.

Lot of moving parts to the Theranos story which is evolving continually.
Walgreens has stopped its expansion plan pending further data/clarification. Safeway deal fell through as Safeway walked away.
Cleveland Clinic has distanced itself stating that it has not tried or evaluated the methodology or the product.
CEO promised to release the results of studies after the first WSJ article but has not done so.
The Board keeps changing its composition and has had some influential people but questionable choices. The Stanford professor who was initially on the advisory board and gave it credibility has quit the board. The lead scientist killed himself many years ago and his wife has claimed that he was ranting "Nothing is working at Theranos".
There is no management team except the founder CEO and a COO who is considered a sycophant and of dubious ethics. Has been accused of asking employees to use only the comventional machines for results submitted for FDA approval based on some emails.
Most of the tests are currently being done either using conventional equipment from Siemens etc or outsourced to third party facilities paying many multiples of what they are charging their customers, in other words burning VC money.
The star VC in its lineup DFJ is trying to distance itself stating that it only provided the initial seed money and did not participate further. Crunchbase states otherwise. A VC in Google Ventures came out to say why it didn't invest in Theranos and Theranos shot back it rejected them.
It is a very complex situation even in Silicon Valley which is used to a lot of hype and not at all black and white brilliant/fraud/scam clarity outside world wants.
My perspective without any private or inside knowledge about this secretive company but with having been in the startup grind through good and bad times:
It is a story SV badly wants to be a success for everyone's sake but privately afraid that it might become a black eye.
It has all the characteristics SV wanted, a female Steve Jobs, a disruptive technology company that had real value to society unlike Snapchats and such, fight against established and dominant industry, etc, etc. It can be very lucrative for the area with a successful IPO which would prop up other unicorns.
It did a lot of things startups fail to do and so fail even with a good product. It marketed itself well. Did the right outward facing development in anticipation. Realizing that like Uber, the biggest hurdle would be regulatory in nature, stocked up on high powered individuals on its board which at one time included Henry Kissinger. Knowing that the defense industry could very well be the biggest and most lucrative customer for this product, got people with military and government connections into its board. It raised enough money so that it would have a long runway.
It struck a partnership with Cleveland Clinic to gain credibility and got a marquee customer Walgreens. The media adored the Founder CEO.
Everything was going great, except the product itself...
The founder Holmes seems to be one of those rare individuals (have never met her myself) that are able to talk otherwise reasonable people into doing or believing what she says. People say that it is because she is a young and pretty woman. It goes much beyond that because I have seen similar power in a few people (even worked with one of them) that weren't women or pretty. It is the same charismatic hold cult leaders have where followers suspend disbelief. But even industry leaders fall for this. The reality distortion field that people attribute to Steve Jobs has components of that. When I saw this firsthand with the person I worked with, I just couldn't believe it. At first I thought it was some kind of hypnotic trance or some kind of blackmailing when this person got fairly influential people to do amazing things for the company where they didn't have to do anything. Most successful CEOs have some of this but not always at that level.
Having been in the ups and downs of startup cycles, I am not going to claim this to be a fraud scheme even with things falling apart as I have listed above. Startups are like baseball teams with bandwagon fans. When things are going great, everyone wants to be associated with you. When thiñgs aren't so great, they won't return phone calls or invite you to come to their hospitality suites in ball games as they used to and some will even start to badmouth. It is all part of the game.
What I suspect happened is that the promise and potential even within the CEO's mind quickly outdistanced the product development. It happens. When Elon Musk started Tesla he was very naive about what is needed to build a production car but was in love with the promise and potential of the technology. Had to face the realities very soon and went through a similar phase, throwing the initial founder out, being accused of running a scam, etc. But the product eventually caught up sufficiently to survive.
It is a bit more extreme in the case of Theranos because the persuasive powers of the founder seems to have started the hype/promise rolling faster than I suspect even she anticipated. Because lining up these things typically take a long time you don't want to wait until the product is completely ready, except she may not have realized her own powers to get things moving.
It is like the scene in IronMan when Robert Downey Jr, discovers the power of the propelled suit and bounces around without much control but enjoying that power nevertheless. And once you have that ball rolling, you don't want it to stop. Just hope that the product catches up. It had all the ingredients of a market waiting for you with fame and fortunes and all you had to do was carry the ball past the goal posts.
It is my suspicion that the product development ran into serious problems in not being able to deliver on the initial promise for all the tests they wanted to do. It is not clear whether they were simply unable to do the tests or whether the test results were not reliable enough to commercialize. Whatever it is, the CEO had very little choice at that point other than to buy time hoping the product would catch up so they started to use conventional machines and outsourcing tests losing money and being extremely secretive about it.
People may fault her for it but this is what happens in Biotech all the time even with many of the public companies, people here may have in their portfolios knowingly or not.
The best case scenario is that the the original nano product of testing with a pin prick improves enough to become a reality like a fully battery powered car like Tesla did, or the company pivots to have a hybrid still promising the disruption in pricing and partly using its secretive technology and partly a more efficient conventional technology or the company just falls apart running out of money since it is unlikely they can raise any more money without further conclusive and peer reviewed proof.
Silicon Valley is holding its breath and pinching its nose because it is starting to stink a bit. More than reputation is at stake.
It might very well make for a better movie than a company.

I've been following Theranos for awhile now, as its technology has the opportunity to be uniquely disruptive to the delivery of healthcare services both inside a hospital/clinic environment and outside as well.
The technology does have a 'black-box" quality to it, as it hasn't gone through routine peer review testing, but is relying instead on the FDA for this verification. This has a local flavor for me, as the Cleveland Clinic stepped forward to establish a partnership with Theranos, with the Clinic doing this testing and verification external to the FDA.
If this turns out to truly be a viable technology and the company goes public, it may be the most anticipated IPO in years.
Here is a reasonable recap of the company:
https://www.washingtonpost.com/news/to-your-health/wp/2015/10/16/a-comprehensive-guide-to-theranos-troubles-and-what-it-means-for-you/
press

@msf read the section titled "How is the Congress in involved in reviewing final rules?" in the link that you posted.

There are regs that remain temporary for years or decades. Can't think of any now, but there are some well known IRS regs that were never made "final".
What the IRS says about those rules: "Temporary regulations are issued to provide immediate guidance to the public and IRS and Counsel employees prior to publishing final regulations. Temporary regulations are effective when published by the Office of the Federal Register. "
https://www.irs.gov/irm/part32/irm_32-001-001.html
Edit: closer read - Congress must explicitly vote to disapprove the regulation. As you pointed out, if one party so votes, the other will oppose, so regs won't be disapproved. That's why the Republicans keep trying to pass REINS (Regulations from the Executive In Need of Scrutiny Act):
https://www.congress.gov/bill/114th-congress/house-bill/427

FYI: A number of mutual fund managers who dumped their shares in energy companies before oil slid to 12-year lows now see themselves avoiding the sector for years to come rather than picking up shares trading at their cheapest levels in years.
Regards,
Ted
http://www.reuters.com/article/energy-funds-idUSL2N1552J0

One thing to keep in mind: the many kinds of deferred annuities "guaranteeing" 5, 6, 7% are not "bought" by consumers. Consumers are SOLD these things. They are way too complicated for anyone to just go out and request one. The opposite extreme are immediate, fixed annuities, which do have a place in some folks cash flow plans. And someday, these will have attractive rates once again. And also keep in mind that while the proposed regs have been written, the interpretation of the regs has not even begun yet. Just like the thousands of pages in the Dodd Frank act, it could take our friends in Washington months, if not years, to issue the how-to for this one.

Either I'm reading the DOL proposal wrong or the news article is an insurance industry PR piece.
If you want a "short" summary, here's the DOL fact sheet:
http://www.dol.gov/ebsa/newsroom/fsconflictsofinterest.html
My two line summary: Fiduciary responsibility will now generally apply to advice on IRAs (so if brokers intend to avoid that responsibility, they'll have to stop selling IRAs altogether, which won't happen), and virtually nothing gets special treatment or singled out. If annuities lose market share, it's because they are often not the best investments (especially inside of IRAs), not because they're being picked on.
I'm still wading through the proposal - which is long and takes several readings to appreciate. With that qualification (i.e. I may not know what I'm talking about), here are some responses to the article:
- "annuity retirement accounts [would be added] to the list of investments for which brokers [have to act as fiduciaries]"
Sure, and so would mutual funds, and anything else in an IRA. What's being changed is that if you get individualized advice on an IRA (or 401(k)), the adviser would now be considered a fiduciary, regardless of the investment. The proposal says:

Today, ... many ...advisers have no obligation to adhere to [fiduciary standards], despite the critical role they play in guiding ... IRA investments. Under [the Internal Revenue] Code, if these advisers are not fiduciaries, they may operate with conflicts of interest that they need not disclose and have limited liability under federal pension law for any harms resulting from the advice they provide. Non-fiduciaries may give imprudent and disloyal advice ...
With this regulatory action, the Department proposes ... a definition of fiduciary investment advice that better ... protects plans, participants, beneficiaries, and IRA owners from conflicts of interest, imprudence, and disloyalty.

The proposal goes on and on about how high cost funds are costing IRA investors a percent or more a year. I don't see any similar criticism of retirement annuities.

The underperformance associated with conflicts of interest--in the mutual funds segment alone--could cost IRA investors more than $210 billion over the next 10 years and nearly $500 billion over the next 20 years. Some studies suggest that the underperformance of broker-sold mutual funds may be even higher than 100 basis points, possibly due to loads that are taken off the top and/or poor timing of broker sold investments

- "The extra work required by the new rules ... would likely push brokers away from selling annuities and toward mutual funds and other fee-based investments"
The extra work imposed by the new regulations would apply to all IRA investments, so annuities wouldn't be disadvantaged. As a result of industry comments, DOL streamlined the regulations to reduce the overhead. DOL acknowledges compliance costs:

The Department nonetheless believes that these gains alone would far exceed the proposal's compliance cost.... For example, if only 75 percent of the potential gains were realized in the subset of the market that was analyzed (the front-load mutual fund segment of the IRA market), the gains would amount to between $30 billion and $33 billion over 10 years.

- "They feel the government is favoring mutual fund companies like Vanguard over insurers"
The proposed regs allow advisers to keep their front end loads, their wrap fees, etc. so long as they are reasonable under the circumstances.

Investment advice fiduciaries to IRAs could still receive commissions for transactions involving non-securities insurance and annuity contracts, but they would be required to comply with all the protective conditions [that apply to mutual funds]

For the full set of DOL docs, see: http://www.dol.gov/ebsa/regs/conflictsofinterest.html

@rlyke12
Indicators of size...hmm, that's a toughy. And I would agree with msf that unrealized CGs (and, for that matter, unrealized losses) aren't very useful either. However, there is a situation where you can tell, if you notice sizeable CGs building up in a fund and are using that as a reason to get out or not invest in it, whether concern about a large CG distrubution is warranted. But you have to be willing to do the homework!
Let's say a fund has a bad year, or has a so-so year, with some or a lot of capital losses but no CGs realized. Rather than let the realized losses go to waste, mutual funds can "carry them forward," for many years (up to 5?), but they have to designate to the IRS how much and in which years they will be used. So, let's say a fund's bad year was 2010, with realized losses of $200M; they designate future usage of $50M for 2013, $70M for 2014, and $80M for 2015. You come along as an interested new investor in the fund in 2015, but see that fund has had a good 4 yr run and appears to be in harvesting mode, i.e. realized CGs are up to $50M, and it's only June. Maybe you should wait until Jan., you think, to avoid the tax hit. After all, why should you pay tax on someone else's CG?
And that is where all that minutia, in the SAI and in the back pages of the annual and semi-annual reports becomes quite relevant to your concern. Losses carried forward to what years are listed in detail there. So, in the above example, you go to the SAI, find this "old history" of which you were unaware, and find out that CGs tax is not one of the variables in play for deciding whether you should invest now or wait--- for 2015, most all of it is gonna be cancelled out at year's end.

IMHO the only somewhat reliable indicator is if there's been a management change to a new manager with a different investing style. For example, I'd expect a larger distribution with a management change at Fidelity than at T. Rowe Price where there's an effort at smooth transitions and continuity.
The larger distributions this year (2015) were not unexpected, because the market went up so much in 2014 and funds didn't seem to distribute much that year. That meant they were sitting on securities that had gone up a lot, and so were candidates to be sold off in 2015.
But ... while funds tended to have larger than average distributions, there were some funds with outsized gains, and I couldn't even guess at any common factor. So I'll beg off regarding indicators of size, beyond what I've already described.
More generally, you can look at figures like M*'s tax cost ratio to get a sense of a fund's typical distributions. That should correlate somewhat with turnover. I don't find a fund's unrealized capital gains particularly predictive - a fund may own the same appreciated securities for many years, even as it trades in and out of others.

My takeaway is to watch whether Berwyn Income Fund, with current AUM in the neighborhood of $1.7B, will become an asset gatherer for the acquiring firm.
Most striking was a phrase in the TriState Capital Holdings (TSC) release that its subsidiary, Chartwell, hoped to "meaningfully accelerate growth in client assets..."
That's never a good sign. (Remember, Berwyn Income Fund closed in 2010-2011, when it could not find new investment opportunities)
As for Berwyn, it says neither the objectives, invest team or process will change. And it says "total fund expenses are to remain unchanged for two years."
***
Also, the offerings of Berwyn and Chartwell appear somewhat redundant.
Chartwell's two mutual funds: small cap value (CWSIX-$1.7B market cap) and short duration (CWFIX- mostly BB-rated corporate bonds).
Berwyn: Berwyn (BERWX-$620m market cap) and Berwyn Income (BERIX- >%50 corporate bonds, BBB to B )
I presume the acquisition settles succession issues for the boutique firm - Berwyn CEO and president Robert Killen, and the principals are well acquainted, only a few miles apart out on the Main Line of Philadelphia.

In my understanding from reading the investing habits of the politicians over the years, they just suck at it or aren't relevant to retail investors. One, they don't have the time because they are busy raising funds. Two, most are independently wealthy enough that they can have asset managers take care of it at obscene fees and not suffer for it. Three, some of them actually worry about conflicts of interest (ok, I can hear the snickering from readers) to be at arm's length.
Interestingly enough, there seems to be a significant difference in who manages assets for the wealthy between east coast and west coast. While GS, MS, etc may be in fashion for old money on the West Coast, almost all of my interactions with West Coast wealth (in raising angel funds and providing company financials and valuations for their records) has been via accounts managed by either Merrill Lynch or Charles Schwab advisors, none so far with the tradional investment banks. Many of them with independent financial advisors that use these platforms.

Hi Dex,
I am surprised by the “lamppost” quote that you attributed to John Murphy. He is a longtime committed technical analyst who has authored several fine market technical analysis books. I met him several times a few years ago, and he is a true believer of the technical analysis approach to investing success.
I have been exposed to the lamppost saying several times, and I suspect it would be more appropriate to credit it to baseball announcer Vince Scully. I suspect the quote is dripping with sarcasm. It is witty but is not real wisdom. I prefer the quote from George Bernard Shaw: “It is the mark of a truly intelligent person to be moved by statistics,”
Certainly statistics can be handled badly and misused to distort the results, to corrupt the actual findings. These are perversions that can be detected by numbers detectives.
The marketplace is awash in data. It is overwhelming. Statistics are simply a way to organize that data, and graphs are simply a way to succinctly present that data. Statistics and their graphs are useful tools to help the decision making process.
How do you choose a fund manager? I do seek low costs, but I’m also guilty of seeking and choosing a manager who has an impressive record compared to a number of applicable benchmarks.
When a baseball manager selects a pinch-hitter, he is likely to consult the past records of his hitter options against the current pitcher. When I cross a street against the light, I subconsciously assess the likelihoods of getting hit by the oncoming traffic. There are endless examples of everyday application of statistics, both consciously or subconsciously.
Statistics not only matter, they matter greatly in most of life’s decisions.
Thank you for your comments. I’m sure they attracted attention, and I want as many MFOers as possible to have the opportunity to consider the referenced J.P. Morgan resource. It’s a treasure chest of market data that are nicely summarized in a chart format.
Best Wishes.

Please focus on the summary chart presented on page 10 of the referenced document. It shows S&P 500 returns dating from 1980. The most compelling aspect of the Figure is that it demonstrates “S&P 500 intra-year declines vs. calendar year returns” for each of these recent 36 years. That’s enough data to be statistically relevant. This is a keeper chart.

From the debts of a terrible recession and including the longest (?) bull market in history of the US stock market, is not statistically relevant.
Investors' axiom: The value of analysis is inversely correlated to the number of charts used.
Statistics (charts) are used much like a drunk uses a lamppost: for support.
Encyclopedia of Chart Patterns, John Murphy.

Hi Guys,
Much has been written and discussed relative to the miserable equity market performance year to date. We’ve experienced such sad performance many times historically, but not at the opening bell announcing a new year. Does this signal an exceptionally unhealthy year for the market?
Maybe, maybe not! Projecting equity returns is an art/science mixture that not many folks have mastered. Certainly not me, and certainly not many of the acknowledged experts. That too is sad, but statistically true.
A few seasoned and wise investors caution us not to be over-reactive to this dire start. Don’t allow concern to turn into fear to morph into panic.
Market volatility has long been the bogeyman that promotes profit losing decisions for investors who can’t simply “do nothing”. Often, just standing still is a proper response. Why? Because volatility is just an embedded characteristic of the marketplace. There is plenty of evidence that supports extreme volatility within an annual market cycle.
Here is a Link to a J.P. Morgan report that provides a serious historical perspective:
https://www.jpmorganfunds.com/blobcontentheader/202/900/1158474868049_jp-littlebook.pdf
It is J.P. Morgan’s annual report on “A Guide to the Markets” for 2016. The report incorporates many charts that an investor might find helpful in quelling fear and panic. If you are even mildly statistically inclined, you’ll love the presentation material. It is a gold mine of useful data. You get to interpret these terrific data charts based on your own experiences, goals, preferences, and biases.
Please focus on the summary chart presented on page 10 of the referenced document. It shows S&P 500 returns dating from 1980. The most compelling aspect of the Figure is that it demonstrates “S&P 500 intra-year declines vs. calendar year returns” for each of these recent 36 years. That’s enough data to be statistically relevant. This is a keeper chart.
Note the 27 years of positive annual equity returns and compare the returns columns to the “red dots”. The “red dots” denote the intra-year decline during each year.
If you were an especially loss adverse investor, it is likely that you might have abandoned the S&P 500 even when the annual reward was highly positive by year’s end. Market volatility or noise could have frightened you to make a rash, imprudent decision. The courage to staying the course during these years was well rewarded.
Note also the rather subdued downside volatility recorded over the last 5 or 6 years. The behavioral wizards might suggest that the recency bias from those experiences has preconditioned a worried investor to be overly reactive as volatility reestablishes itself once again.
I sure can’t predict what the market returns will be this year. But the referenced J.P. Morgan curve suggests that some patience is warranted. Market volatility is now high, and that by itself could be a warning signal. Conflicting signals are the rule and not the exception in the investment world. That contributes to risk, and that’s precisely why there is an equity premium of 5 to 6 percent.
Stay cool, stay healthy, and stay the course. I plan to do all three. Unfortunately, plans, execution, and outcomes often diverge.
Honestly, you likely need more than the J.P. Morgan report, but I wanted your attention. Sorry for the exaggeration, but I didn't want you to miss this really good stuff.
Best Regards.

BUFSX was a really nice fund for many years when it first started out. I was drawn to their investment thesis based on demographic shifts, and it worked for many years....until it didn't.

Hi @heezsafe
I find these numbers (M* performance link below) to be in line for 2015 and 1 year total return numbers.
Placement of this fund to other similar funds still finds performance to be very good, eh?
One could have and some have done much worst in this bond category for the past 1, 3 and 5 years returns.
http://performance.morningstar.com/fund/performance-return.action?t=PIMIX&region=usa&culture=en_US
Regards,
Catch