Acitve managed Moderate Allocation funds list, which vary in balance methodology.
Click upon the 5 year column for the longer view to sort by return percentage.
Note: these funds, not unlike we mortal individual investors have off years, too; as with
VILLX, which fell upon its return face in 2014.

MJG & rjb,
Am I understanding correctly that both of you use a combination of actively managed funds as well as index funds? I've considered the merits of such a strategy in the past and am aware individuals such as Charles Schwab are advocates of the combination.

Hi Roy,
Yes, you are correct. I use a combination of actively managed funds as well as index funds. And like MJG, as time goes on, my percentage of indexed equity investments has been increasing and my percentage of actively managed equity investments has been decreasing.
And I plan to continue this, that is, use an increasingly larger percentage of indexed equity funds rather than actively managed equity funds. I'm particularly disenchanted with the negative tax implications of actively managed equity funds, that is to say, the fact that they distribute taxable capital gains.
And I'm increasingly overjoyed that the Vanguard Total Stock Market Index fund and Vanguard S&P 500 Index funds have not distributed any capital gains in over 10 years, and I only have to pay taxes on qualified dividends.
Last year was particularly distressing with respect to the large amount of taxable distributions from the actively managed equity funds (capital gains distributions........I'm not distressed by dividends, as if a company wants to pay dividends, that's great). To add insult to injury, on top of the generally large amount of taxable capital gains distributions from the actively managed stock funds, they generally underperformed the indexes by a significant amount. If you are going to distribute taxable capital gains to shareholders, at least outperform the indexes.
MJG has been partly instrumental in helping to change my thinking. I have read literally dozens of his posts where he has shown that skill is increasingly difficult to demonstrate in active fund managers, and luck often explains things when they do outperform the market.
I think Jack Bogle was 40 years ahead of his time. They called his S&P 500 index fund, which opened in 1976, "Bogle's Folly". No one wanted an "average" performance. Everyone wanted to pick funds that beat the market. But obviously all funds cannot beat the market, and after fund expenses, some of which show up in the expense ratio and some of which do not (such as brokerage fees, losses due to bid-ask spreads, losses due to the fund itself affecting the market price of the stock, etc), the vast majority do not.
And Bogle once speculated that taxes alone possibly subtracted about 2% per year from the returns on actively managed mutual funds versus index funds. I don't have a follow up on that, or data to know the true figure.
It's difficult to pick actively managed funds that are going to beat their respective index funds, in advance. It's very easy to pick them after the fact, retrospectively!! Even the pros can't do it well. And even equity mutual fund managers cannot do a good job picking funds that will beat their respective indexes.
Even Morningstar can't do it, in my opinion. Morningstar has a newsletter that may be called something like "Morningstar Fund Investor", and they have model portfolios. They have not beaten their respective indexes, and that newsletter is written by probably the top fund picker at Morningstar. He can't beat the market by choosing a portfolio of actively managed stock funds.
Anyway, yes, I own both actively managed and indexed equity funds, but am generally disenchanted with active management, primarily due to the fees involved. If there were no fees to actively managed funds, they would beat their respective indexes. Expenses are the reason they underperform as a group. It's not that the managers don't know what they are doing.......it's the fees involved, the expense ratio plus the other fees not found in the expense ratios.

take care Roy,
Happy Investing

For investors who desire a moderate allocation portfolio who do not desire to put in the effort to identify funds that have a history of doing better.......

Does investing in funds that have a history of doing better result in a portfolio that performs better in the future?
John Bogle is fond of saying that "past is not prologue"
And MJG has frequently posted about the lack of persistence in mutual fund performance, in other words, invest in a list of the best performers over the past 10 years, and it is not likely they will be in the list of best performers for the coming 10 years.
https://www.bogleheads.org/forum/viewtopic.php?uid=50214&f=10&t=156573&start=0
What Experts Say About "Past Performance"
Frank Armstrong, financial author: "Rating services such as Morningstar's 'Star Awards' or the 'Forbes Honor Roll' attest to the futility of applying past performance to tomorrow."
Barra Research: "There is no persistence of equity fund performance."
Jack Bogle: "The biggest mistake investors make is looking backward at performance and thinking it’ll recur in the future."
Burns Advisory tracked the performance of Morningstar's five-star rated stock funds beginning January 1, 1999. Of the 248 stock funds, just four still kept that rank after ten years.
Wm. Bernstein, author of The Four Pillars of Investing: "For the 20 years from 1970 to 1989, the best performing stock assets were Japanese stocks, U.S. small stocks, and gold stocks. These turned out to be the worst performing assets over the next decade."
Jack Brennan, former Vanguard CEO: "Fund ranking is meaningless when based primarily on past performance, as most are."
Andrew Clarke, author: "By the time an investment reaches the top of the performance tables, there's a good chance that its run is over. The past is not prologue."
Prof. John Cochrane, author: "Past performance has almost no information about future performance."
S.T.Coleridge: "History is a lantern over the stern. It shows where you've been but not where you're going"
Jonathan Clements, author & Wall Street Journal columnist: "Trying to pick market-beating investments is a loser's game."
Eugene Fama, Nobel Laureate: "Our research on individual mutual funds says that it's impossible to identify true winners on a reliable basis, even if one ignores the costs that active funds impose on investors."
Gensler & Bear, co-authors of The Great Mutual Fund Trap: "Of the fifty top-performing funds in 2000, not a single one appeared on the list in either 1999 or 1998."
Ken Heebner's CGM Focus Fund was the top U.S. equity fund in 2007. In November 2009, it ranked in the bottom 1% of its category.
Arthur Levitt, SEC Commissioner: "A mutual fund's past performance, which is the first feature that investors consider when choosing a fund, doesn't predict future performance."
Burton Malkiel, author of the classic Random Walk Down Wall Street: "I have examined the lack of persistency in fund returns over periods from the 1960s through the early 2000s.--There is no persistency to good performance. It is as random as the market."
Mercer Investment Consulting from a study of over 12,000 institutional managers: "Excellent recent performance not only doesn't guarantee future results but generally leads to under-performance in the subsequent period."
After fifteen straight years beating the S&P 500 Index, Bill Miller's Legg Mason Value Trust (LMNVX) is now (1/25/2015) in the bottom 1% of its category for 10-year returns .
Ron Ross, author of The Unbeatable Market: "Extensive studies by Davis, Brown & Groetzman, Ibbotson, Elton et al, all confirmed there is no significant persistance in mutual fund performance."
Bill Schultheis, adviser and author of The Coffeehouse Investor: "Using past performance numbers as a method for choosing mutual funds is such a lousy idea that mutual fund companies are required by law to tell you it is a lousy idea."
Standard & Poor's: "Over the 5 years ending September 2009, only 4.27% large-cap funds, 3.98% mid-cap funds, and 9.13% small-cap funds maintained a top-half ranking over the five consecutive 12-month periods."
Larry Swedroe, author of many finance books: "The 44 Wall Street Fund was the top performing fund over the decade of the 1970s. It ranked as the single worst performing fund of the 1980's losing 73%. -- If you are going to use past performance to predict the future winners, the evidence is strong that your approach is highly likely to fail."
David Swensen, Yale's Chief Investment Officer: "Chasing performance is the biggest mistake investors make. If anything, it is a perverse indicator."
Tweddell & Pierce, co-authors of Winning With Mutual Funds: "Numerous studies have shown that using superior past performance is no better than random selection."
Eric Tyson, author of Mutual Funds for Dummies (2010 edition): "Of the number one top-performing stock and bond funds in each of the last 20 years, a whopping 80% of them subsequently performed worse than the average fund in their peer group over the next 5 to 10 years! Some of these former #1 funds actually went on to become the worst-performing funds in their particular category."
Value Line selected Garret Van Wagoner "Mutual fund Manager of the Year" in 1999. In August 2009, Van Wagoner's Emerging Growth Fund was the worst performing U.S. stock fund over the past 10 years.
+++++++++++
along with MJG, I also hold actively managed funds. But I think one thing that needs to be talked about much more is the tax implications (the drop in performance) of all the taxable distributions that actively managed funds tend to make.
The Vanguard Total Stock Market Index fund and the Vanguard S&P 500 Index fund have not had a single capital gains distribution in more than 10 years. The only taxes you pay are on qualified dividends. This is a HUGE issue.
In the typical performance figures we see before tax returns. Would be interesting to see after tax returns, given a specified tax bracket. As we all know, you only keep the after tax returns.

MJG,
I appreciate your insightful post.
The funds I chose for the comparison were based on the fact that I have held two of them for nearly a decade and in combination with the others listed comprise many of the most widely held no-load moderate allocation/balanced funds. I used moderate allocation funds because that is the category that Mr. Burns was comparing his Couch Potato portfolio too without accounting for the difference in equity allocation among the funds in that category which generally ranges from 50-70%.
There are certainly many, many moderate allocation funds (probably a majority) that come up short verses the Couch Potato portfolio no matter their equity allocation. My main point was to show there are a number of actively managed moderate allocation funds that have both been around for many years and have consistently performed very well in comparison to the Couch Potato portfolio that utilizes low cost index funds.
For investors who desire a moderate allocation portfolio who do not desire to put in the effort to identify funds that have a history of doing better or are not available through workplace retirement plans, a couch potato portfolio is certainly a good option...not arguing that in the least bit.
Regards.

Hi Roy,
Thanks for your brief list of current superior Balanced mutual funds. Fortunately, I have owned two of them for over two decades. Given my meager financial knowledge at my entry date, I was more lucky and less skilled when making those decisions.
Your survey demonstrates that superior (defined as generating positive excess returns) active fund managers exist, although numerous global studies such as the semi-annual S&P Persistence Scorecards strongly conclude that the persistency numbers are fewer than would be statistically expected. There are exceptions for a subset of investment categories.
Three issues came to mind while reviewing your list: (1) hindsight bias, (2) benchmark selection, and (3) data clutter. Allow me to expand on these elements sequentially.
I’m sure the list you posted was not assembled randomly; it was generated with returns as the primary sorting mechanism. Investors typically use past returns as their number one ordering criterion. But that’s based solely on ephemeral past performance. It is an excellent candidate for a creeping Hindsight bias. The real test is how well this list performs over the next extended timeframe. Studies of this issue paint a dark picture.
Many studies conclude that a returns approach is just too simple; Alpha (excess returns) persistence is an unreliable fund trait. Additional fund attributes such as low holdings turnover rate, low fee structure, long-term manager tenure, policy stability, and low Price/Earning ratio positions are likely to enhance the odds of positive Alpha retention.
Your selected 50/50 mixed benchmark is reasonable, but not quite correct for the funds listed. The basic policy for my two funds in that list do not practice a 50/50 asset allocation; both those funds deploy a nominal 60/40 mix standard philosophy. Any meaningful comparison with an Index benchmark should properly reflect a precise asset allocation distribution.
Finally, given that short-term outcomes are mostly noise that should be minimally weighted, comparisons of YTD, 1 year, and 3 year results are not as definitive as results recorded over the longer timeframes. The more recent data is clutter. I actually prefer 10 year and longer performance data since these are more likely to capture full cycle performance, both good years and bad years.
Active fund managers are hardly ever made to pay for their investment engineering missteps. That’s too bad since that failure to account for mistakes goes against ancient traditions such as Hammurabi’s Code of Laws.
In those ancient days, if a house wall failed or a dam broke and flooded a field, the builder was required to make restitution. In Roman times the builder of an arched, elevated roadway was required to stand under it when the first load crossed it. Today’s fund managers do not face that test of fire. That’s too bad.
Thanks again for your submittal, but an investor must be constantly alert to the huge empirical mutual fund performance gap between past and future results. Always remember the strong regression-to-the-mean pull that exists in the investment marketplace.
Best Wishes.

I gave up on PRLAX a buncha years ago. Andrew Foster at SFGIX seems to think highly of Valid Solucoes eServicos de Seguranca em Meios de Pagamento e Identificacao. It's in Brasil, best I can figure. It may no longer be a value-play. Over the past year, it's come from 28 up to over 40. (Is that dollars? It's a M* chart.) In SFGIX, it's the 3rd-largest holding. Morningstar dates the SFGIX portfolio to 31st December, 2014. In SFGIX, Latin America = 16.3% of holdings. SFGIX is up over the past year by +10.24%.
I don't have any money in Latin America at all. I've just "cleaned house." In my own portf. I'm now holding 7% cash, 29% USA equity, 25% foreign, 37% bonds. "OTHER:" 2%. Japan, hardly a thing. 29% is in Asia. In US/Canada, the number is 54.25%. No more Matthews at all. Asia is covered with PRASX.

@Old_Skeet May I ask a more discrete question? How are your finds doing relative to their benchmark indices?
I used to own a lot of funds. I seemed to buy at the peak of the managers' performance, watch his/her performance fall off, then wonder what to do with the fund (which all too often was to sell after the manager was underperforming for 3 years or so)

Reply to davidmoran:
Ahh - Thanks for clarifying that your move out of DODGX was in 2003. So you missed their horrible period of '07-09 entirely. My first experience there was with the Income Fund beginning around 2005. That's what drew me to them. Mostly, the move into equities was during 2008 and early 2009. No complaints. Typical MO is to buy when things are falling.
To clarify: I interpreted your use of "...its ensuing performance" earlier as a reference to the post-2008 period. That's what sparked whatever interest I had in your earlier comment. If we look only at that period (post March 9, 2009), I believe you will find DODGX has done quite well relative to GABEX & YACKX.
It was during the dark years of 2007-08 for D&C that I recall all the vocal hand-wringing about how bloated they had become. It amazed me than that the hot money pouring in earlier had seemed oblivious to the issue. Hello?
-
I really do hate discussing returns & comparing fund performance - even though I understand that's the primary mission of a site called "Mutual Fund Observer." Very old-school. Came up in the 70s when most stayed with just one or two houses. So, spreading $$ around among 5 different families is a big leap. Am entirely comfortable limiting holdings to a few well established families that I feel I know well. The approach imposes a kind of discipline on me that I feel Is sorely needed.

@Charles: Thanks. Sorry I did not realize that they were in different tabs of same excel sheet. I am able to see them now. The issue is that I have been adding to the same 9 equity MFs in taxable a/c, month after month, in rotation that I thought I will get some new prospects.(btw, I used to browse thru the fundalarm honor roll few years ago quite frequently).

Unfortunately, there's really not much on the company (no SeekingAlpha articles or anything of the sort. It's largely limited to presentations on the company website or brief articles on Bloomberg and elsewhere. Additionally, it was a Wintergreen (WGRNX) holding for a while, not sure if it still is (Winters discussed Cielo in a "Wealthtrack" video interview not that long ago part of his play on emerging market consumers.)
The interview is here:
http://www.wintergreenfund.com/news/2013/0719-wealthtrack/
The Cielo discussion starts at about 16 minutes in.
I think my "issue" is that I'd like to invest a little bit in Brazil. My problem is that I like to do so in a way that I can get my head around. A fund can be volatile, too, but if I can have a thesis for something like Cielo (which goes along with the larger holdings that I have that are payment-related), it's easier for me to hold through the volatility than a fund that I don't have a real connection to/thesis for and may just dump if things get rocky (well, with how Brazil is now, rockier.)
I definitely like the payments space (a lot) and Cielo has a very large share of the market in Brazil. Cielo also bought US company Merchant E-Solutions (https://www.merchante-solutions.com/about-us/overview/)
Also, Cielo is an ADR where I can actually reinvest dividends. It varies by brokerage, but I've found that DRIP/reinvesting is usually no problem with US shares. When you get into ADRs or foreign ordinaries, then it becomes possible much less often and seems almost random as to what can/can't (possibly depends on which bank is the adr depositary?) Additionally, Cielo has also split twice in the last four years or so.
Anyways, it's not something that I'd recommend for a conservative investor at all. It's my way of investing in Brazil in a manner that I can feel comfortable with longer-term. Most people COMPLETELY UNDERSTANDABLY (and again, they're certainly not wrong) feel more comfortable if they were to invest in something like Brazil investing in a fund. I'm weird though and feel more comfortable investing in one company whose business I can wrap my mind around and feel fairly strongly about long-term.
For me, investing in the last few years or so has become, how can I structure my investments in a way that allows me to feel comfortable with a long-term view point and far less concerned about the day-to-day. The funny thing is, for most people, that would likely involve being less in single names and much more in funds. I feel more comfortable more in single names than funds because I feel strongly about various themes, sectors and companies. Plus, nearly everything I own pays a dividend.
Again, I'm weird - most people would understandably feel more comfortable in funds and probably rightly so. Older and/or more conservative investors should go the fund route.
Again, Ambev (ABEV) was the other name that I often thought about in terms of Brazil, but ultimately was more interested in the payments space. As I also noted above, Femsa (FMX) is something that I've thought about a lot, but I think the issue that I had with Femsa is its investment in Coca-Cola Femsa and the obesity problems in Mexico. There was a terrific hour-long presentation by a futurist in front of Femsa execs on Youtube and one of the major topics of discussion was in regards to health issues. (edited to add: found it)

Mexico ultimately decided on a soda tax to combat one of the world's highest obesity rates (http://www.theguardian.com/world/2014/jan/16/mexico-soda-tax-sugar-obesity-health) and it's apparently been successful.
While the conglomerate nature of Femsa is appealing, as is its reasonably solid track record, the problem that I have is: what's the future? The company's Oxxo stores are very compelling, but I have no interest in investing in Coca-cola in this country or any other (Asian conglomerate Swire is a Coke bottler, another company I want to like but can't.) Bill Gates was a large shareholder in Femsa for a while, but I believe he sold his shares not that long ago.
Although, that said, there was an interesting article on "The Most Successful Company in the World" the other day, and it wasn't a company that makes things that are good for people. (http://www.fool.com/investing/general/2015/02/13/the-extraordinary-story-of-americas-most-successfu.aspx)
I certainly don't own all things that are good for people. I own a liquor stock, although it's not a large holding. People do drink in good times and bad, but I think what's really kind of compelling is that you have this enormous industry where the big public names are now down to a few (and one less after Beam was recently bought.)
Long, rambling story short,
1. If I'm invested in a single name, the intent is a long-term holding with reinvesting dividends. It may have periods of under-performance, but I'm definitely diversified.
2. Most people should go with a fund and if I were to go with a fund, I'd likely go with T Rowe Latin America.

@davidmoran
I can't really speak to DODGX which is the topic of Charles' post. But, I've done well with this company in general. Converted a bunch of their Global (DODWX) to a Roth near the bottom in 09 and rode it back up for about 3 years. Paid off very well. The past 2-3 years that money's been tucked. away in their Income Fund (DODIX) and their Balanced Fund (DODBX). Very pleased with the 5 YR numbers for the Balanced - 13.35% annualized.
Heck, it's lagging the S&P by only a little over 2% for that period. The funds you list look like equity funds rather than balanced. They appear to be fine funds. They'd running 1-2% ahead of DODBX over the 5 year time frame from what I can observe.
In a way I hate touting good numbers like those for fear there will be another stampede of hot money into the funds. Folks than yank it back out when markets start correcting and it makes it really tough for those of us who are in for the long term.

It may have been pronounced dead of bloat but its ensuing performance put another nail in the boat, or whatever a good phrase is. Glad I bailed and dove into GABEX and later added YACKX. Years of suboptimal decisions, seemed to me. I had been in it for decades prior.

Hi,
I'm starting to do some research on Latin American funds -- particularly interested in Brazil as the market has taken a substantial hit over the last 5 years. I'd greatly appreciate it if folks on the board could steer me to: 1) good funds in the category that I can read up on more. 2) Good research that I can read on the Latin American market as a whole. This will be for just a small portion of my funds and I understand that there is risk here. Would value your thoughts. thanks.

Hi davidrmoran!
Yes, on the soup thing....this is an area I've never been in before....like emerging markets and frontier markets.....so a name I know is good. I owned Mario before. GABAX, GABEX some time back. I am very, very bullish on this country. The American can do spirit still lives in smaller companies. And I do believe this market has years to go.
God bless!
the Pudd

Do real estate funds in general have a high turnover rate? Also, is there a place one can research prior years to check the turnover rates for those years?

I don't think index funds have high turnover. Good reason to own them, like VNQ.

FYI: Some smaller corners of the market have stalled recently, even as the Standard & Poor's 500 index closes in on its record high. That means some fund managers are once again welcoming new investors, after they had closed their funds years ago to new money.
More than a dozen mutual funds have reopened their doors over the last year, according to data compiled by Morningstar. The number doesn't include funds that have partially re-opened -- those that still bar new entrants but allow longtime investors to add more money.
Regards,
Ted
http://abcnews.go.com/Business/print?id=28927836

Edmond said: "AU is not an investment ... Its insurance."
I like that. But instead of "insurance", I'd call it a hedging tool used by money managers to hedge other risk positions. Than again, "insuring" against various unforeseen events that could trash most paper assets is, I guess, a type of hedging.
I think charting the highest performing asset over 100 or 500 years and than promoting that single asset to the exclusion of all others constitutes a gross oversimplification of the investment process. If that's all there is to investing, let's say "Good Bye" to bonds, real estate, cash, precious metals, fine art, collectables, and an assortment of other alternative assets that help carry us through those periods when equities fall flat on their face.
Mr. Siegel wrote a book. "Stocks for the long run" - or something like that. Wonder how well that would have sold in 1929 or 2008?

One of our real estate holdings for the past several years is FRIFX. It is an odd duck fund for the other RE in its category; as it averages about 50/50 equity and bond mix.
The fund turnover runs about 30; among 570 or so holdings as of the most recent report period.
Fido summury view of this fund
For turnover rate/ratio with a fund; the understood measure method covers a 12 month period. According to statistics, the average managed mutual fund turnover is 85%.
A turnover event "count" occurs when a stock is sold before being held for 1 year. I will presume, without further investigation; that a turnover count does not happen if the stock is sold at a holding period of 1 year and 1 day from purchase date.
Obviously, turnover, as a ratio; is also affected by the number of holdings in a fund.
I/we at our house; are not concerned with turnover numbers.......if the fund functions in a manner as we anticipated and/or understood to begin; and continues in a positve direction.
Regards,
Catch

A long-term owner of gold here. I think the question asked is wrong.
AU is not an investment -- good or bad. Its insurance. What is the rate of return on homeowner's insurance to someone who never files a claim? (hint: its a negative number, as cash only goes out, and does not come) Does that make homeowner's insurance something to be avoided? In a precise sense, purchasing insurance is not "investing", its an outlay, an expense. In return for the outlay, you are obtain protection for an asset.
AU is similar. You decide on an appropriate allocation, you incur an outlay. The difference being, with AU (unlike homeowner's insurance) after several years of holding it, you can decide to liquidate it and get (some portion of) your money back. Try doing that with your H/O insurance premiums....
As to dryflower's comment about a miniscule ROR on AU over 'thousands of years'... First, my investment horizon is not that long. Second, directly to D/F's point, if you were WERE sitting (for example) in pharoanic Egypt circa 1500 B.C., or 200 B.C Carthage, and invested in loans to the pharoah (i.e. Treasurys), fertile farm acreage and tenement apartments (real estate) , or the local camel merchant (equity ownership in commercial enterprises, i.e. 'stocks') ...then here come the Romans, they kill the camels, topple the govt, set fire to your buildings (real estate) and seize the lands (or in Carthage's case, 'seed' the land with salt to make it unusable).
What is the ROR on THOSE investments once title has been seized or property destroyed? (hint, if your equity in an asset goes to $0, its gone, forever.)
The camel merchant who sold his camels the day before the Romans landed, could easily hide the proceeds from that sale (gold coins), throw them a bags, walk them out into the desert somewhere, bury them by night (perhaps in sundry locations, to thwart burglars, and come back in a year or two, and his AU and wealth intact. Still not impressed? Fair enough, but what is the ROR (or current value) on an IOU from the last, deposed sovereign of Carthage? --- 10 years before he was deposed, all Carthaginians assumed the sovereign's IOU was AAA-rated...
The above story is tongue-in-cheek, but meant to get the point across about AU being insurance, not an investment. AU, because of its inherent attributes (universally desirable -- among all cultures past and present, relative scarceness, indestructability, portability) makes it a unique diversifier against the potential ravagings of conventional investment assets, WTSHTF.
We all may lucky enough to NOT experience a "Mega Black Swan" event. And our houses may never burn down. [I also have stocks, and bonds (in far greater value than my AU -- so please don't consider me a 'gold bug', any more than I am a 'stock bug' or a 'bond bug'. ]
Like Henry Walton Jones Jr, I am "a cautious fellow". I renew my H/O insurance each year and I hold some AU. I consider neither to be "investments"; I consider having some of both prudent.

I used to find Kiplinger the best of the monthly finance (print-) mags, but the quality of their advice seems to have grown increasingly shoddy since the 2008 crisis. A couple impressions from the link:
a. The writer, Steve Goldberg (SG), observes T-rates are very low, and bonds are priced high. No argument there, rather, a question-- Is this news to anyone? It shouldn't be. But, OK, that is the underlying premise of the article. So how to react to this condition...
b. His suggestion? "Stick to bond funds with relatively short average maturities. If you’re willing to take some risk, buy funds that invest in some lower-quality corporate bonds." Hmm? SG doesn't seem to know/acknowledge the difference between owning bonds vs bond funds. (Or perhaps Kiplinger doesn't want their columnists to mention indiv bonds, as it might upset their mutual-fund advertisers?) -- An investor can invest in individual Treasurys -- perhaps in a bond ladder -- hold them to maturity and encounter no loss of principal.
Instead, he suggests short duration funds. This is a very, VERY crowded trade, as investors have been shoveling money into these for years --- The last time I looked (and its been a while) many of the holdings of short-duration funds were trading at premiums to par. The funds yield very little. Buying funds which hold bonds trading at premiums is a guaranteed drag on performance -- all dollar-good debt will move to par as it approaches maturity. Holding a bag of premium priced bonds is a good way to see your capital be whittled down.
Contining -- he suggests lower-quality corp bonds. That sound like junk. So SG cautions us to avoid Treasurys due to risk, but posits junk bonds as a less risky alternative.... Huh? Junk funds may/may not be a good bet here, that is not the argument I am making. Rather that as a "risk avoidance" strategy, it would not occur to me move from Treasurys to junk. Also, corporates, whether junk or IG are spread-products, their prices will not be immune to significant rate spikes in Treasurys. If (admittadly-) overpriced Treasurys suddenly and violenty sell-off, its is unlikely in the extreme that junk bonds will be a destination for capital wanting a "flight to safety"...
Another idea -- mine, not SG's--- online FDIC-insured banks can be found offering MMFs which yield ~ 1%, with NO duration risk. If the column's premise is "ways to downsize risk in your fixed-income allocation, Why doesn't SG mention those? --- Perhaps they don't advertise with Kiplinger?
SG is one more reason to avoid subscribing to Kiplinger.