Thanks MJG. There is a saying sitting next to my computer that reads "In Prosperity Be Prudent. In Adversity Be Patient." That's a similar message. It would be interesting to see the chart and graph extended to take in 100 years so the 1929 and 1937 declines could be included. That would provide a more complete picture of the kind of patience that doing nothing occasionally requires! And, its not clear to me central bankers will be able to keep that kind more extended decline from a prior peak from happening again.

Hi @rforno
Yes.
I still have to guage these type of funds against a longer time frame than a week or two.
Does one keep a portion of a portfolio in these as protection against downturns? If the equity market is down for more than one year, would there be a great benefit of "total return" using a alt. fund?
The "best" alt. fund return for 3 years = 9.9% and for 5 years = 8.3%. The best of these numbers is just that; and what about if one chooses the "bad/wrong" alt. fund and those folks don't really know what they're doing and may present one with a negative return.
The alt. funds on this M* list still can not match longer term returns in the 3 and 5 year columns for many equity and many bond funds; and I feel a review in 5 years from today will not be different.
Hell, if I was this smart; I would avoid the alt. funds and would know of soon to arrive downward moves in equity and have sold away those positions to move monies elsewhere.
I'll remain my own smart arse and rely on my own brain cells for today. I'll watch to find whether the alt. funds can capture 3, 5 year or longer positive returns above and beyond a simple mix of 50% each of VTI and BND (or your choice of similar).
I wish these "alt." funds well; be I am not optimistic about the long term performance.
Even the bear market funds look good right now, eh? Check their 3 and 5 years returns.
M* category returns through Aug. 25
Regards,
Catch

Bonds should return principal if held till maturity. Is there any risk that will not be the case for short term HY funds held for 3-5 years?
I am thinking about rising interest rate environment with falling bond prices. Can, for example RSIVX, be considered as good and safe investment, if held for 5 years, for investors who care about total return?

I never could figure out why so many here are enamored with RSIVX, mediocre since inception at best and underperforming this year. As to your question - with anything in the junk bond market you have to think *default* It's not a given there would never be a default among the portfolio of this or that fund that holds junk corporates.

Bonds should return principal if held till maturity. Is there any risk that will not be the case for short term HY funds held for 3-5 years?
I am thinking about rising interest rate environment with falling bond prices. Can, for example RSIVX, be considered as good and safe investment, if held for 5 years, for investors who care about total return?

http://www.marketwatch.com/story/a-dow-theory-sell-signal-is-upon-us-2015-08-20?link=MW_popular
http://thedowtheory.com/resources/traditional-dow-theory/complete-dow-theory-record/
Record is OK, beats buy and hold. Sell signals only occur every few years. I wonder if any asset allocation funds use this or death cross signal to move from low to high stock allocation.

You're likely to get as many opinions as responses. And everyone's response will be very personal according to their situations. I have given your question a great deal of thought as I am caught between a 401K rollover.
For me, fund purchases will simply be for funds who I had previously identified as best of breed in their specific allocation areas IMO. I don't think the market has been selectively rewarding/punishing areas to any great degree based on whether they are growth or value to this point. For international, I am steering away from China, with the exception of foreign funds with a broad mandate...the Seafarer Fund as example.
I am also targeting blue chip divi payers...as this is a golden opportunity for a 4-5% dividends from good companies...there are several funds who do this if you don't like individual holdings. I also think this may be where the money will track.
I am not smart enough to know what gold will do...many people have lost alot of money trying to figure this out.
As for biotech...many here are buying into GILD, but I have quite a bit of HC in several of my funds and prefer gambling on dice. I am going to toss some funny money to ETNHX as discussed in the monthly newsletter. A basket of bios seems a good way to play this.
But....your more difficult question involves when to put money in play. Today was a sucker's rally. Big money bought during the fire sale yesterday AM, and then sold today during the rally. With the rally over the past few years and no correction, the market's default direction appears to be down. The next 6 weeks may be a bit nerve wracking. I may buy into carnage, but just at 25% bursts of available funds.
press

Does anyone have the stock/bond split of Vanguard's Wellesley Income Fund over - say - the last 5 (or more?) years?
(I thought I could get this from the Morningstar PDF's - I have Premium access - but the PDF appears to be missing.)
Reason: I am playing around with "synthetic" Wellesley Fund construction/performance, using Vanguard's VEIPX for stock portfolio, and bond-fund-to-be-figured-out-later for the bond portfolio.
Thanks - in advance.
Example: Looking for answer like this:
2010: 30% stock, 70% bond [or whatever]
2011: xx% stock, xx% bond [etc...]
...
2015: xx% stock, xx% bond

Hi Folks,
I am still within a mid range allocation to equities within my asset allocation that currently falls somewhere between 45% to 50%. A high range for me would be around 60% and a low range would be around 40%. Currently, I've got my buying britches on and plan to open, and then postion cost average into, a special investment position (spiff) as we move towards fall.
I learned many years ago in times of uncertanity and high stock market valuations sell down equities not out of equities. And, those that have followed my post through the years know I sold some of my equities down into a rising overbought market thus raising my cash allocation many months ago. Now on weakness and by my thinking an oversold market it is time to do a little buying in equities and lower my allocation to cash.
We each have our own strategies that are a fit only to us and perhaps not others. There are many many ways to have success in the markets including shorting which I do not do.
Have fun and I wish each ... "Good Investing."
Old_Skeet

Here is another take on QLACs: http://andrewtobias.com/column/qlacs/

In reality annuities are a poor investment. Even more so in this low interest rate environment. The article above has some errors but makes two good points. An annuity can give you piece of mind and are best for those who live to a ripe old age into the 90s. If you purchase a QLAC for the maximum amount of $125,000 at age 70 and receive payments beginning at 80, those first five years you are basically just getting back your $125,000. I may rethink these QLACs when I turn 70 and hopefully have a larger nest egg.

"It's a can't lose business, because you get paid the same $3 million no matter what"
Correction: $30 million, not $3 million.
I guess I was thinking that $3 million is a lot of money to make in a year.....how about $30M?
Hmm.....I definitely went into the wrong business.
Most of my career I worked for hospitals getting paid by the hour.
You can't walk into a hospital's Human Resources Department and say you want to make $3 million a year.....Hmmm
And when I got my DPT degree, doctor of physical therapy......I did not get even a one cent raise from human resources! They had a list of degrees that are listed as having an automatic increase in pay, but since no one who ever worked for that hospital ever got the DPT degree........now they have some, but I was the first employee of that hospital to ever get that degree........it wasn't on their list!
It cost a lot of money and time and effort and energy to get that degree. So far it hasn't paid me a penny!!
Maybe in a future job? Who knows......I could go back to work one day
My future is unknown, including where I will be living 2 years from now.
A state with no state income tax sounds appealing, like Texas, Florida, Nevada, etc.......
The biggest appeal to California: my parents are not doing well.
Second biggest appeal: the weather is superb in Los Angeles!
So nice to not have extremes of cold and heat.......especially cold
The worst part about L.A. : the cost of living......
Cheers,
Robert

I have been in AOMIX for years as my #1 core fund. I have been very happy with them.

No, no ex-US situation; rather by state.
But I may have not kept up; sorry; meaning things have changed. I can now buy it via Fido ($50 fee). I still cannot buy it via ML. Only a few years ago no one in Massachusetts could buy it at all, along with many other states' residents.
Also Frels is gone, but everyone appears to be thinking that succession and style are all good.
I am no longer as keen on balanced funds as in the past, doing more of my own 50-50 mixing via DSENX [or other equity fund in different cap area] and PONDX and a few other more or less steady bond funds, which sure are hard to find these days.

I believe this might be what David means. Per M&P prospectus:

The Mairs & Power Balanced, Growth, and Small Cap Mutual Funds are offered by Prospectus only. The Funds are not available for sale to investors residing outside of the United States...

Possibly. Just as likely is the fact that at least in the past, M&P wasn't registered for sale in all of the 50 United States. I don't know what the current situation is (nor does it seem to be documented; one probably needs to call M&P).
1996, Spokesman.com: "The fund [MPGFX] has stayed small in part because it was available only to investors who live in Minnesota for the first 11 years of its existence. Today it’s available in 12 states"
2001, NYTimes: Expenses [for MAPOX] are a low 0.93 percent a year, partly because Mairs and Power reduces costs by marketing the fund in only 12 states. These include New York, New Jersey, California, Florida and Arizona."
2004, M* thread: "MPGFX is only available in 32 states and the Balanced fund is only available in about 12."

I thought for most humans with risk tolerance 80-20 worked best as it showed little gain given up compared to 100% equities and was much smoother. To me the real interesting asset allocation issue is whether to invest in international and whether to hedge currency. Obviously you should in situations like Japan in the last few years where it was clear the govt. intended to weaken the currency

Curious why you exclude PRWCX? I do a lot of "volatility mitigating" (to borrow your termonology). And I'm not sure it's fair to evaluate any of these funds based on recent performance (past 3-5 years).Underperformance may simply mean their managers are seeing insane valuations where others are seeing value and so are either hedging against equity losses or holding higher levels of cash.
There's a lot of great ones. But here's my choices: OAKBX, TRRIX and PRPFX in roughly equal weightings. I toss them together in a group called "hybrids."
Here's how they finished Friday: OAKBX -2%, TRRIX -1%, and PRPFX -0.7%
Combined loss was -1.25%.
(For reference, PRWCX lost 1.72%. Dow and S&P each lost 3%.)

My existing Mod. Alloc. funds have been disappointing me for too many years (not just returns wise), therefore, I am considering reallocating those dollars. I want solid returns but not overly volatile for this class. In other words, excelent risk/reward returns and good downside protection is preferred.
I'm looking to mitigate some of the volatility that my portfolio has. This down-turn has exposed some imbalances.
These dollars are in an Fido Brokerage IRA so C/G concerns are zero! I also have about a 10-15 year time frame, thus this is a long-term investment!
I've come across of few possible candidates, such as:
MBEAX/MBEYX (AMG Chicago Equity Partners)
RPBAX (TRowe Price Bal.)
JABAX (Janus Bal.)
FBALX (Fido Bal.)
and a couple of others.
Any thoughts on these funds or other suggestions would be greatly appreciated.
Thank you, Matt

I heard on Bloomberg that a 30% correction happens every 3.5 years on average. So far, nothing unusual.

With regard to using Roth IRA dollars for longevity risk Julian commented at the end the kitces article with this:
"I agree with you that there are better hedges for old age than longevity annuities. In a Roth IRA or non-retirement account, one option is to purchase U.S. Treasury STRIPS that mature at perhaps 80 or 85 years of age and at maturity time, buy an immediate life annuity with the proceeds. This has several advantages over a longevity annuity purchased years or even decades in advance: (1) the bonds can be cashed out prior to maturity and may be worth considerably more than their cost if held for many years, (2) the counter party risk (i.e., of an insurance company going insolvent) is eliminated, (3) not all -- or any -- of the maturing bond proceeds have to be committed to the immediate annuity, and (4) if one spouse dies -- or has significantly impaired health -- prior to purchase of the immediate annuity, the immediate annuity can be written for larger annual payouts than would be possible with a longevity annuity (e.g., written as a single life annuity or an impaired life annuity). By my calculations, if I purchase the STRIPS around age 60, then after about age 80-85, the IRR with this method is about 50 bp less than with a longevity annuity. However, this seems like a small price to pay for the advantages and flexibility outlined above."

Hopefully a QLAC calculator will answer this question soon.

Yep - good questions bee. I'm assuming you looked at the Fidelity calculator msf already linked. It does allow you to set the time you start receiving funds (but assumes an immediate investment). Probably doesn't go far enough to answer your question.
If I wanted to dig deeper today (I don't) I'd just take one of the readily available compound interest calculators and run some hypothetical amounts on my own over the same time periods comparing the to how I'd fare with the annuity. What the annuity offers is a degree of certainty on payout - while the markets can go anywhere over shorter terms. Also, that you won't outlive your income stream. But - Yikes, at 85 how many good years will most of us have left to pursue our interests?
My problem is that I have converted enough to Roths where more than half of retirement funds are now exempt from RMD. So, RMD isn't going to impact me much. I'm already taking out each year more than the required RMD amount would be on the non-Roth investments. But, I wouldn't mind sinking a relatively small amount into one of these products.
Sorry I can't answer your questions.

Not a bloodbath yet.
But what I find amazing is the contrast in the 3 & 5 year returns for (diversified) large-cap equity funds in general and those funds focused on raw materials/energy. It's a stark contrast with the first group showing 10%, 15%, and even 20% annualized gains over 3 & 5 years, and the second group essentially flat or negative over that same period.
Doesn't make sense to me considering that to a degree the two groups are interconnected economically. (You don't buy a car and than not put fuel in it or drive it - or drive only on unpaved roadways. And few houses today are built of mud and grass and heated with solar.) Point I'm awkwardly trying to make is that the products which drive earnings for large cap stocks rely to an extent on the use of energy, metals, lumber, cement, etc. for their production and continued operation.
Either one group of stocks appears to be way overvalued - or the other way undervalued.