FYI: If you were stranded on an island for years, what is the one mutual fund you would own?
Regards,
Ted
http://investorplace.com/2015/03/the-one-best-mutual-fund-to-hold-forever-naesx-vimsx/print

FYI: After more than six years of a bull market, investors should stare a cold, hard truth straight in the face: Future returns on stocks are likely to be far slimmer than the fat gains of the past few years.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2015/03/27/the-new-era-of-low-stock-returns/tab/print/

Thanks for all the great contributions. I've used the MFO risk tool to compare. I've restricted it to funds in the 1st risk group to approximate the risk category of RPHYX and organized them according to Martin Ratio. For the 3 year group, RPHYX is the winner. for five years, NTAUX. For the 20 year group, GSTGX is the winner. (Disclaimer: As clearly explained by others in the thread, an investment in one of these funds is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Unlike individual debt securities, which typically pay principal at maturity, the value of an investment in the fund will fluctuate. You could lose money by investing in the fund.)
Edit-I meant to include FNPIX, but somehow forgot.

@Old_Joe I haven't forgotten you, really. It's just that what I've found is a lot different than what I expected, and I'm having to re-scale the package. The changes to money market function, and what various kinds of MMkt funds can hold, is so profound that I'm having to go to primary sources (rather large regulatory documents) to understand the what and why of things; if I were to simply post these, it would be a big turn-off for most, who would see the page length and flee. Fortunately, the writing is pretty good, so I think I need to finishing perusing them, and select the sections that describe what a typical retail investor would what/need to know to make an investment decision about MMkt funds. Maybe a couple extra days, please?
Humbling to learn how little I have understood how the different kinds of MMkt funds really worked, all these years. Surprising to learn that, in the past 25 years, there were 11 financial events severe enough to cause 158 MMkt funds to break the buck, had it not been for fund sponsors dashing in with cash to hide it and preserve the NAV at 1. In 2008-9, the industry simply ran out of luck--- their Black Swan flew in.

I bought a small position in SBIO on the dip this morning and was happy by the end of the day. This eft is all over the place. In the last 3 months compared to the price it started at it's been everywhere from down 3% to up roughly 31%. In the last week it's lost 15%. If you're an adrenaline junky this is a great fund but otherwise you'd have to stick it in some deep dark corner of your portfolio where you wake up 10 years later and hope its a nice surprise. I'm pretty sure it'll be a surprise one way or the other, I'm just not totally sure which way it'll be.

Based upon what I've seen over the years; that although Baird does have investor class shares, the majority of these funds ( I shares) that I have seen as portfolio choices were offerings inside of retirement plans, and that the "I" shares, being using by large institutions (pension funds, etc.)
I am aware of a large pension plan that will be replacing PTTRX at the end of April with the institutional class of the Baird intermediate term bond fund.
Another Pimco loss; although PTTRX is beating most of their related fund competition YTD.
Knee jerk stuff by managers (pension funds, etc.) , as was discussed here, last year.
@Mark . Agree. I was also trying to determine the value of a compare of HY funds to a more straight line bond fund. Oh, well.

Wait long enough, and a lot of what one has in mind will be said. Thanks to Hank for his most recent post above about what cash means. That was some of what I wanted to point out - that if you're thinking about cash as something used for paying bills, you need stable (or very nearly stable) prices. But if you're using "cash" for asset allocation, you can tolerate fluctuations.
In the latter case, these days I wonder about the use of bonds at all (rather than cash) for ballast. Is 1% or so extra return over cash worth the extra risk? While some people are wondering how to get any return on cash, I'm wondering whether 2% on short-intermediate term bond funds is worth the risk. If one does want to take that risk, I'd look at FPNIX - it's always been non-traditional, using derivatives as much to preserve capital as to improve returns.
Back to cash. Regarding I-bonds - which I think are great for cash allocation but not day-to-day cash (since you can't redeem them for a year) - not only can you buy $10K/year/SSN from Treasury Direct, but if you have a refund coming on your 1040, you can buy $5K more using Form 8888.
A similar idea to I-bonds (stable, insured, liquid albeit with penalty) is long term CDs. Many banks offer CDs where you come out ahead of cash even after a year or so (like an I-bond), even after penalty. But there are risks - being able to access your money (early withdrawal may be at the discretion of the bank), and interest rate risk (the bank could increase the early withdrawal penalty). Here's a good post on that. The site (depositaccounts.com) also has a CD calculator showing the net APY after penalty.
Comparing muni bond funds with RPHYX - BobC addressed this to some extent. He likes NEARX. I've been a little uncomfortable about the risk it seems to take (investing heavily in low graded states), but if memory serves, it seems to have cut back significantly on Illinois (lowest graded state), and generally gotten more conservative. Here's a nice graphic on state ratings (you'll need to zoom in to read it well). But NJ's rating (5% of NEARX) has dropped further than the graphic shows.
I tend to look at SEC yield, especially for investments that are not intended to be short term (i.e. used for monthly payrolls and the like) - this is a calculation that's designed to reflect total return (i.e. it accounts for increase/decrease in values of discount/premium bonds). Near the top of short term munis is Vanguard Ltd-Term (VMLUX, VMLTX), a more conservative muni fund that BobC has also suggested in the past as a conservative alternative to NEARX. I feel it offers better risk/reward, in the sense that even though its return is less, its risk is much less. And right now, its SEC yield tops most funds, including NEARX.
It does this, as you'd expect, with low costs. So its portfolio can be shorter term, and higher grade than any of the funds with similar SEC yields. Specifically, its average duration is 2.5 years, and average AA rated (M*). Its SEC yield is 0.86%. There are only two AA rated funds with SEC yields about 0.5% that are comparable - AUNAX (NTF at TDAmeritrade) 2.2 year duration, but high expense and high M* risk (volatile), and DFSMX 2.7 year duration, but 0.52% SEC yield and, well try to buy DFA funds.
Compared to cash (I use 1% as a baseline, since that's about what one can get in FDIC-insured online banks) and a 28% tax bracket, the expected return of 0.86% beats the 072% post tax cash return. Go shorter with munis and you won't beat cash; go longer and you'll be taking on higher interest rate risk that I feel pushes the fund too far away from cash. YMMV.

Mark
12:10PM Flag
The author works for Raymond James. Can you say "possible conflict of interest" because nothing he wrote in the article had me pumping my fists in the air.

Yes. I think there is clearly a conflict of interest. But, I think there were some good points in his observations and the observations he referenced in the article. Indexes clearly tend to outperform during prolonged periods having strong general up treads. "Good" active managers have better prospects of outperforming when markets are choppy and during prolonged market declines.
I expect the 90 to 10 out-performance by index funds in the US large cap sector of the stock market will probably be substantially reduced when viewed over the upcoming 10 year period. If that turns out to be the case, investors who currently are or who now choose to invest in quality actively managed funds will have increased odds of being rewarded for their increased spending on fees. (It is my expectation the odds of that happening outside the US large cap area and among foreign funds is higher than in the US large cap area.)
Doing homework, not picking closet indexes, and periodic monitoring will be necessary. But, it is my expectation investing in funds like YAFFX, BBTEX, and PRBLX -- the chosen 3 in the "large cap, US stock funds" section of my core portfolio -- instead of VFINX provides good prospects of achieving performance that will be at least as good as VFINX over the upcoming 10 years with lower volatility. Time will tell!

@Scott - almost took a toehold at the closing but since it's almost the end of the month (or quarter) and fund managers are playing games with positions and holdings I'm going to let that shake itself off first. GILD has definitely been on the radar though. Do you think they are done splitting shares as has been their MO up to this point?

I don't see a split any time in the foreseeable future. There is a $15+B buyback in place, as well as a 43c quarterly div starting soon.
"Gilead Sciences, Inc. (Nasdaq: GILD) announced today that the company’s Board of Directors has authorized a dividend program under which the company intends to pay quarterly dividends of $0.43 per share, beginning in the second quarter of 2015, subject to quarterly declarations by the Board of Directors.
The Board of Directors also approved the repurchase of up to an additional $15.0 billion of the company’s common stock. This new program is in addition to the currently authorized three-year $5.0 billion repurchase program (authorized in May 2014). As of December 31, 2014, approximately $3 billion remained in the May 2014 program. The new program will expire 5 years after the completion of the May 2014 program. Purchases may be made in the open market or in privately negotiated transactions from time to time, as determined by Gilead’s management and in accordance with the requirements of the Securities and Exchange Commission"
http://www.gilead.com/news/press-releases/2015/2/gilead-sciences-announces-43-cents-quarterly-dividend-program-and-15-billion-share-buyback-program

It's a huge deal, but I guess I look at this as this industry where the majors basically have had little or no innovation over the last couple of decades. I'm not talking about the processed foods industry having to be wildly innovative, but many of the majors have the same brands they did when I was growing up (and much further back) for better or worse. They haven't tried to really freshen them up in many cases.
Merging them helps with scale and raw costs, but you look at Kraft and Conagra and the like and the brands are dated. You have these companies that I think have largely rested on their laurels for years. Additionally, not everyone is eating healthy, but you have a bit of a backlash for the very artificial nature of a lot of these products.
I think at some point these companies have to go after the Hains and Whitewaves and the "roll-up" nature of Kraft/Heinz makes me guess they will integrate more companies. It's not that nobody's going to buy Cheese Whiz anymore - nothing against it and it actually sounds kinda good right now - but it's just I think over time I think people will little-by-little move away from things that are just totally artificial. I mean, look at Jell-o, which has seen declining sales for a while now.

I have owned brk for 25 years never paid a cap gain tax yet nothing but net!!!

I guess that with respect to RPHYX, it is behaving the way that the SEC would like all mutual fund money-market accounts to behave: no suggestions, implied or otherwise, regarding "breaking the buck". No suggestions, implied or otherwise, regarding any government protection. Value can fluctuate, according to the market.
That being said, the relatively small amount that RPHYX pays is certainly better than my remaining MF MMKT accounts, which have paid NOTHING for at least five years now, but have maintained their $1.00 share value. The only thing supporting those funds is the good faith of the MF families, American Funds and American Century.

RPHYX nav dropped .1 % last year, returning 2.6 according to Old_Joe Averaging 3.7 % return over the last 3 years maybe it's time to find a greener pasture? Is the manager running out of places to invest in? Total assets 896,000,000 as of 2/28/15. FWIW ( It seems to me the manage at one time stated the amount of assets he thought the fund could handle). More digging to do.
Derf

Of course the return on cash is laughable, I've loaded up my max I-bonds for this year (which I like because of the tax-deferred nature, they make a good emergency fund.) I'm in my mid-40s and still have a ways to go until retirement - hopefully an early one - and I need a place to park cash since I'm a bit risk averse. And I have a lot of cash, way too much for an emergency fund.
So - more RPHYX? Maybe intermediate bond ETF like BIV? Switch my cash into large cap growth and transfer my 401k/IRA to be more heavily into bonds to avoid the tax on dividends (which I did with VIPSX years ago)?

I saw an interesting article recently (but unfortunately cannot locate it) which maintains that the reason active management is not performing better is that "dispersion" (a measure of how differently individual stocks perform as opposed to the average of the set) has been low in recent times. Thus the change in value of individual stocks has not varied greatly from the change in the average, making it difficult to outperform an average (index). The article charted dispersion over time and noted that dispersion has in the past been much higher than in recent years. Thus it is possible that dispersion will in the future widen out and make active management look a lot better. I thought this was an interesting and plausible argument.

Hi Guys,
I only glanced at the conclusions section and the graphs.
This Duke academic study is essentially a wash relative to the active-passive fund management debate. It only considered a 10-year period that ended 6 years ago.
The Professors concluded that they saw no active advantage over passive Indexing. Some active managers marginally outperformed their Index while about the same number failed to do so. The Profs suggested a whatever comforts you approach.
Dan Wiener, the Vanguard follower, overstated his position. I have read several of his assessments, and he does a very exhaustive job. But his incentives make him a somewhat biased judge.
You might want to scan the report. Whatever Alphas ( excess returns) existed were small and unstable. In general, active managers generated Positive Alphas in the studies earlier years, but then produced negative Alphas in the study's last years.
No decision making findings in this inconclusive study.
Best Wishes.

In the never-ending debate, "the last few years" means nothing. Too short of a time frame. I thought this was common knowledge.

FYI: John C. Bogle: “Well I don’t run Vanguard any longer, but I will take plenty of responsibility for having those active funds in all of the years I ran it. And the answer to that is really a couple of things. One, a lot of investors, no matter how persuasive the case for indexing is, and it’s overpoweringly persuasive, just don’t quite get it. They want a little more activity. They want something to watch. Index funds, as you all know, are roughly as exciting as watching paint dry or maybe watching the grass grow. They create great returns but they’re not that exciting. So what we tried to do and what I tried to do personally was pick good managers, and that’s very, very hard to do. I want to be clear on that, and I have some hits and some runs and some errors in that category, have funds with multiple managers, so you get a much broader diversification, which is not unlike an index fund. . . . [for example, take] our Windsor II fund. It’s a large cap value fund. And it has five different managers. I think that’s the number now. And so you are going to tend to have a value average return for that fund. And then, actually, make sure you have the other two big advantages of indexing, or three really, no sales commissions, very low expense ratios, because I negotiated with all those advisors and got those fees as low as I could possibly get them, and hire advisors with low portfolio turnover. An article was done by some professors at Duke University about a year ago and they showed that our active managers in the life of the index fund actually did a hair better than the index fund. [Reinker and Tower (2005)]. On the other hand if we had started the comparison a little bit later, the active managers would have done a little bit worse. But I think it’s a valid strategy. What can I do and tell you? I’m still 80% indexed.” [Bogle (2006)].
As if by reply, Dan Wiener, editor of the FFSA Independent Guide to the
Vanguard Funds, writes:
“Vanguard wants you to ‘believe’ in indexing. Your faith in indexing is the cornerstone of their business. But it’s a lie. And your trust could cost you…plenty!. … Indexing doesn’t work for you. It works for them. The big famous Index funds at
1
Vanguard have chronically underperformed over the last few years, exposing conservative investors to the worst risks of bear markets. But Vanguard knows investors who plunk money into an index become “passive.” Their money goes “dead.” And Vanguard never has to worry about these clients getting antsy. Indexing is a great business—but it’s a lousy investment
Regards,
Ted
http://public.econ.duke.edu/Papers//PDF/0419CHAPTER_12_TOWER_working_paper_version.pdf

I still say Abbott Labs (ABT) is the most enjoyably boring play on EM, with about 50% of revenues from EM and the stock is conservative to put it lightly. International Flavors and Fragrances, which has been around for 125 years or so, is also about 50% EM. (IFF). I own both. As for EM, I continue to own RIMIX and a few individual names but less EM than I used to.
EM I think remains a compelling long-term theme but it's not been a good few years. I mean look at Wintergreen's attempts to play the EM consumer, with Macau stocks (obliterated) and luxury goods (which were hurt by the crackdown in Asia on luxury gifting.)
SFGIX is probably the most interesting to me from the standpoint of the growth and income mix.

I have been aggressively allocated to International and EM for several years. I raised the issue because I feel as though I'm fighting the tape, so to speak. Ted's latest post demonstrates this. Grandeur Peak funds I hold have been disappointing for quite a while now and MACSX has hit a rough patch as well. FMs are weak since the oil price drop. I reduced GPEOX, GPGIX, GPGOX, and MFMIX, but cherry-picked by adding some INCO, thinking Indian consumer stocks will be winners long term.