Yeah, lots of the active equity mutual funds at Vanguard show cap gains hits (eg., VGENX). But the related index mutual funds (eg., VENAX) do not. Nor do the ETFs with same share class (eg., VDE). Presumably this benefit is because of the concept of in-kind exchange.
But as these indices become more sophisticated and tailored, they are essentially becoming a formulated "active" trade...but without the cap gain penalty.
If this advantage is bankable, got to believe it increases favor of ETFs. 'Cause, nobody likes paying cap gains, especially on down years.

the distribution is precisely due to the fact that you (and many others) have bailed and caused forced selling.

If YAFFX (+12% distribution) is any indication, this year the tax man cometh.

Glad I bailed out of this fund earlier this year. Its supposed to do well in down years, but that hasn't been the case this year (-12% YTD). And now it's paying a hefty distribution? No, thanks.

Actually, the cause of the "forced" selling is poor performance. That happens when a fund doesn't live up to expectations.

One the the F P A folks admitted that they were amazed by the reaction of F P A Paramount (FPRAX) investors to the fund's conversion a couple years ago. They replaced the manager, raised the management fee, did a 180 degree turn on the portfolio, unleashed a massive tax bill and their investors not only didn't leave, they didn't even ask questions.
On the bright side, at least we'll never have a lanolin shortage. There are simply too many sheep around.
David

@heezsafe- Good point! WashMutual was a bank of course, so FDIC helped there, but the other two- didn't the US step up and "temporarily" for a couple of years cover the moneymarket accounts? The theory being that if a run once got started there would be no stopping it? I know that they did that, but not sure about what happened with respect to Lehman Brothers and Merrill Lynch. Lehman was an investment bank, so I'm not sure if they even had any "public" money market accounts, and of course ML was shoved into the lap of BofA.

the distribution is precisely due to the fact that you (and many others) have bailed and caused forced selling.

If YAFFX (+12% distribution) is any indication, this year the tax man cometh.

Glad I bailed out of this fund earlier this year. Its supposed to do well in down years, but that hasn't been the case this year (-12% YTD). And now it's paying a hefty distribution? No, thanks.

willmatt72
Other than the usual suspects, mostly individual REITs in the non-taxable account.
Having said that...I did find something which occurred a few years ago in my taxable account...in 2011. All of my funds with the exception of VGHCX all lost money. But my entire income sleeve of individual dividend paying stocks had a 11% gain. So while most folks wouldn't consider that subset of stocks to be diversifiers, I do. It may have been just a weird alignment of stars, but it did happen.

@ msf,
Wow - Just when I thought fund fees were becoming more reasonable.
At work years ago we first had Templeton Class A in our 403-B plan (4.17% front load) and than later they added T. Rowe Price no-load, which I switched to.
Guess I was "spoiled" by that experience.
I hope the OP is able to identify some options that won't gouge him on cost. If not, the Roth idea someone suggested might be a better alternative.

The one (more aggressive) choice that leaps to mind is T.Rowe Price's Growth Stock Fund (PRGFX) ... R-Class would allow you to own Class A equivalent at Oppenheimer without paying the customary (near 5%) load.

I'll try again to describe loads.
Would you be as comfortable suggesting the RRGSX share class of TRP's Growth Stock Fund? That's what is being offered. These are R shares, with an ER nearly double that of PRGFX (an extra 0.50%, to be precise). Oppenheimer R shares likewise add 0.50% and cost more than their load-waived A shares found in some other 401k plans (and also NTF at several discount brokerages).
This extra 0.50% is taken out year after year, even if one switches funds within the 401k, since the all funds assess this fee (or something close to it).
That's a load. It goes into the pocket of the plan administrator. The SEC calls it a load, FINRA calls it a load. Over a decade, it's going to cost as much as a front end load.
That S&P Mid cap index fund? Here's its financial statement and its M* profile. J class management fee is just 0.07%. But oh, those administrative fees (think 12b-1), they add 0.63%, bringing the total ER up to 0.70. That gravy goes to the plan administrator.
Briefly on the investment options - if you don't like the actively managed options, the index funds cover the major areas, large cap (S&P 500 index), mid cap (S&P Mid Cap index), small cap (Russell Small Cap index), foreign (International index). They're cheaper than the other offerings (even at 0.7% or so ER), and should beat lackluster funds.
If you want to add some bond exposure and actively managed allocations, several people here have written positively about Blackrock Global Allocation (MRLOX), notably BobC, but also Bee, VintageFreak, myself, and others.
Yes folks, posts on the internet live forever :-)

Hi proman. The 3 main drivers to winning the retirement savings game are to start saving early in your career, save as much as you can (10% of your income minimum) and have a diversified portfolio according to risk tolerance. I wouldn't agonize over fund choice too much. Fund choice IMO is a very distant contributor to the end-game compared to these other factors.
It would be my opinion that one of those Target Date funds would give you the allocation base you need. Use the retirement year as a guide, but make your decision based more on the funds stock/bond allocation. Take a look at how much these funds lost in 2008. Are you comfortable with short term loss knowing you don't need this money for another 30+ years? For example I see that the 2045 retirement fund, AOOIX, is about 78% stocks. It had a 1 year, 2008 loss of 33%. At 30 years old that might be a good choice for you, but you have to decide. If the fund is riskier then you can handle (based on 1 year loss potential) you may pull out at the very wrong time. If it doesn't have enough stock or risk at your age then you may be leaving a lot of money on the table 30 years from now.
Anyway, start with your allocation and then pick a few funds that get you to that allocation. And don't overlook the index funds when allotting, especially in the large cap area. And remember one fund like a Target Date fund might be all you need or at least be the core of your portfolio.
Save as much as you can and as soon as you can. That's the big deal. Good luck to you.
edit: oops, in my original post I used data from AAARX, the strategic fund. I changed the ticker to be AOOIX, the 2045 target date fund.

Virtually nothing. Our current 10% portfolio allocation to cash includes DODIX, TRBUX, a money market fund, and whatever sums we keep for convenience in a couple local checking accounts. (No savings account). Whether inside or outside the IRA, cash is considered part of our invested assets. All is included in allocation decisions (which tends to drag down annual return a bit).
We move 4-7% of our investments annually into our household budget (i.e. a checking account) to cover anticipated expenses throughout the year. During rare years, emergency expenses may require a bit more. Obviously, we pull money from the sectors that have performed the best.
Our investments are very conservatively positioned and broadly diversified. A loss greater than 10% in any given year is possible, but highly unlikely. With over half in Roths, tax issues are not much of a consideration either.
*The 10% allocation to cash does not include additional cash/short-term bonds held thru multi-asset allocation funds.

DLENX vs PREMX going back 5 years are almost even-steven. I see the TRP div. is more generous, too.

Great point FA!
When it comes to what they can invest in and in what amount I think those are termed "fundamental" policies and require a shareholder vote. The last one I recall was from D&C about 5 years ago when they proposed allowing DODIX to own substantial amounts of non-investment grade debt (junk). It passed.
But I'd imagine things like restrictions on shareholder exchanges, minimum investment amounts, redemption policies, etc. are considered "non-fundamental" and can be changed by the fund company without a vote. Sounds like OJ's fiduciaries are a bunch of busy-bodies, frequently altering the non-fundamental policies.
These things are easily downloadable and I do make it a point to at least skim through them once a year.

Dear friends,
As you know, I hold ETFs in the same regard as I hold, say, tasers in the hands of toddlers. Charles is, I know, far more hopeful of their potential for good. It might be selective perception on my part, but it seems as if there have been many more skeptical essays about them since the Monday crash than I'd seen before.
One argument that the term "passive investing" is a marketing fraud. John Rekenthaler does a nice job of pointing out that "passive/active" is not a simple split. There's a spectrum from truly passive (a cap-weighted broad market index) through covertly actively ("smart beta" and rules-governed active ETFs) toward more active (most "active" funds) to most active. I believe that even John's "passive" category is "active but lethargic." The S&P 500 is an actively managed quant fund whose the managers are employed by Standard & Poor's. They decide who gets in based on a combination of arbitrary rules, from market-weighting to float, profitably and market cap criteria. As a simple example, Avon was booted after 50 years. Why? Market cap was too small. It was then replaced by Hanes. The minimum cap is $4.5 billion, Avon was $3.2 billion, Hanes was $13 billion. So Hanes, a large and profitable firm, has been sidelined for years waiting for another firm in its industry sector to shrivel and get ejected. If Hanes was more representative of the market, should it have been added years ago? Maybe, but the rules say ... Should Berkshire Hathaway, excluded until 2010, have been added decades ago? Maybe, but the rules say ...
The prime arguments against ETFs seem to be:
1. their cost advantage is illusory. The fact that some ETFs are spectacularly cheap leads investors to assume that all are, which reduces their vigilance as they select investments.
2. they are structurally flawed. The uncoupling on market price from NAV during the crash was one signal of that. A recent article on hedge funds' strategies for gaming the ETF market is another.
3. they structurally encourage bad investor behavior. I smile whenever I read advocates list ETF's "advantages," one of which is always "easy to trade, like a stock." Uhhh ... right, but trading is bad for everyone except those who make money executing your trade.
I read two interesting essays this morning that add a bit of useful evidence to the discussion.
The Hidden Costs of Commission-Free ETFs lays out the costs of getting on platforms like Schwab and into their NTF programs. Schwab charges ETF advisers an $250,000 "shelf fee" plus 40 basis points to participate in the program. As a result, NTF funds including commission-free ETFs end up charging higher expenses. For every $1,000 you invest, you end up paying $2.20 more in annual expense for commission-free ETFs than for commissioned ones. If the commission is $9/trade, the break-even point is about $4,000 for a fund/ETF held one year; that is, if you intend to invest more than $4,000 and hold it for more than one year, you lose money with C.F. ETFs.
Most absurd ETF trade of all argues that about one-quarter of ETFs charge, before commissions, as much as or more than the average active mutual fund. Some of the data struck me as interesting, though the conclusion didn't. It strikes me as silly to compare ETFs with niche missions (that's typical of the high cost ones) against mutual funds with non-niche missions. Still, the cost warning seems worth it.
For what interest that holds,
David

I'm always looking for yield, but I'm at my limit with respect to risk tolerance, where I'm at right now. I've held PREMX since 2010, and was late for the 2009 run-up. In the 5 years that have followed, it's paid me handsomely while I reinvest everything. Yes, that is EM, not HY. I read the article which included the reference to TRP HY fund and like the rest of you--- I did see--- divorced from the reference, further down, that the fund is closed. A global substitute was offered. Noted already, above, in this thread.
In my portf, PRSNX is 11.46% of total. PREMX = 14.43%. DLFNX = 2.7%...... Then, there are also bonds being held in my PRWCX and MAPOX. Just threw some money at MAPOX. (IRA.) I'll be throwing more money at MAPOX, soon, again.

Bloomberg has a decent article on the reasoning behind the SEC's liquidity management proposal.
When you sell your fund shares, you're supposed to get the day-end NAV and the fund's supposed to cut you a check within a week. In recent years, funds have seen the challenge of earning something as greater than the challenge of remaining fully liquid. As a result, more funds have moved into investments that might turn into roach motels: each to get into, impossible to get out of. Those include below investment grade debt, private placements, some derivatives and illiquid investments in general. That's compounded by the move to passive products that maintain near-zero cash levels.
The SEC research found that liquid alts funds face a greater prospect of a liquidity crunch than most, since their investors have a greater tendency to sell en masse. (Data's in the article.)
The SEC proposes requiring that each fund analyze its portfolio, determine the potential magnitude of quick outflows in a crisis and maintain enough "cash or cash-like investments that can be sold within three days" to be able to handle redemption demands without exacerbating a crisis by trying to sell illiquid positions into a market where everyone else is already trying to do the same.
The Investment Company Institute scoffs at the very idea of a challenge to the easy grandeur of the industry they're paid to represent.
Two interesting implications: (1) liquid alt funds might have to become dramatically more liquid but also (2) ETFs might no longer be able to remain fully invested. One additional implication: an ETF and an index fund mimicking the same index might not be permitted to carry the same cash level if the redemption patterns in the ETF don't mirror the redemption patterns in the fund.
Worth pondering, perhaps.
David

Daisy Maxey, writing for the online version of the WSJ, announced "Mutual fund's overhaul hits investors with a big tax bill." It's the same "F P A Perennial becomes F P A U.S. Value" story that we warned people about in June. Remember "F.P.A. Perennial: Time to Go"? Remember: "If you are a current Perennial shareholder, you should leave now"?
Highlights of the story:
Morningstar channeled Bernanke. Ben was adamant that there were no clear signs of trouble brewing in the years leading up to the 2007 implosion. Dan Culloton of Morningstar seemed equally surprised by Perennial's $39/share payout: “It’s certainly a big, shocking distribution. It exceeded my expectations."
Why? In the parallel case of F P A's conversion of Paramount from small growth to large value, virtually the entire portfolio was liquidated within a few months. Morningstar's own data back in June suggested a $36/share payout. The only reason you'd be surprised is if you weren't paying attention. How could Morningstar not ... oh, right. The fund only has $280 million in AUM!
Wall Street Journal practiced "safe" journalism. Two tenets of that strategy. Talk to Morningstar. Avoid hard questions.
"F P A declined comment". Yep. You could sort of feel the temperature drop after we complained about raising the management fee at Paramount when it was converted from a clone to Perennial to a global absolute value large cap. Since that change, perhaps coincidentally, assets are down nearly 50% and the fund is underwater.
(sigh)
David

Just some ramblings from perspective of a T. Rowe Price investor,
I owned PRHYX for many years. It's one of those conservative funds that are said to earn a "B" during up markets and an "A" on the way down. Vaselikov is good. He's been there nearly 20 years however - a long time by TRP standards. He also manages their new Global High Income Fund, RPHIX - in existence less than a year. I'd view that as a good alternative to PRHYX, which is closed, as long as Vaselikov stays.
Not very familiar with the HY sector since selling PRHYX couple years ago. But as one who sometimes likes to speculate on beaten up sectors, I'd urge caution. That's always the case with beaten up sectors. You just don't know how long and how far they'll tumble.
An outside-the-box thought is to consider Price's RPSIX (Spectrum Income) for some moderate growth potential. While not fond of the investment grade bond part, I like that the fund is experiencing a rare bad year and that approximately 50% of its holdings (owned through other funds) are having miserable years. These include high yield bonds, EM bonds and a dividend-paying stock fund (PRFDX). When these beaten up sectors turn, you'll get some nice payback out of stodgy RPSIX - without having undertaken a lot of risk.

Thanks Ted,
Scattered among the debris was this..."Emerging-markets funds were hammered, plummeting 16.02%. “The commodity-producing emerging markets are right in the eye of the storm,” says MKM’s Darda. “But even the commodity-importing markets have started to roll over.” Ablin sees a potential long-term opportunity. “Emerging markets, as lousy as they’ve been, are trading at the biggest valuation discount to the U.S. that I’ve seen since 2002—which was a year that ushered in 10 years of outperformance.”

@ Crash PRHYX is closed to new investors. Has been so for at least 3 years.
Geez - You'd think author would note that.

Central banks are still concerned with the nasty "deflation". Euroland just went negative for "inflation" from a report a few days ago.........correct me if I am wrong. South Korea reported today a +.6% inflation rate.
Lets see/think............Norway just cut rates again, yes? India did a rate cut the first part of this week, I recall. Although India is benefiting muchly from inexpensive crude pricing.
As a bond investor over the years, I remain concerned about the amount of issuance in high yield, corp. and gov't. bonds. HY in the energy sector is already getting wacked, the M&A issues bonds every which way on the cheap in order to buy "something", just "anything". And centrals banks worldwide have so many issues flowing around at really low yields............ I suspect the words "what the hell we gonna do when no one wants these anymore?" have been spoken at more than one meeting.
The intra-day low yield on the 10 year was 1.91%.
Holy crap........just a very large boat load of all flavors of bonds floating about.
To repeat, in spite of having been a bond person for a number of years; I really don't like the fast forward picture.
Hang in there.
Catch