It would be a completely different story if the graphic were of sector funds and dated back beyond 15 years. Sector funds exhibit more trend persistency from one year to the next and extended periods of outperformance. Technology funds in the 80s and 90s made many a trader/investor rich as have health/biotech funds over the past 15 years. You only have to get rich once in this game....and then hold on to it!!

Preachin' to the choir here :)
We started our kids in IRAs when they were in their early teens, 2K was the max. Now at age 37 and 32 they have 160K and 130K respectively all in Roths (converted from trad IRAs). It's kinda our annual 'gift' to them. Keeps money out of Washington, too.
Their spouses, however, had no such plans established for them and so, even tho they have started plans now, they probably will never fully 'catch up' due to the early compounding. They're talking 401's and 403's to supplement.
My biggest concern right now is getting our two kids to participate more in the selection of funds as there will come a day when we can no longer do it. Our daughter in particular does some reading, and I gave both of them charts showing values at various percents over time (both accumulation and deposit.) To their credit they seem to understand the M* 9-box matrix (imperfect as it is), they know to look at the ER and the risk ratings, to look for stock overlap, and they like the "committee" approach employed at D&C and Primecap, for example. Hey, maybe I didn't do such a bad job :)
Anyway, it's been a fun 20-25 years.
best, hawk

FYI: The most treasured fantasy of investing is the belief that winners can be picked. If you put together enough computers, enough data and enough talent to find the secret, you’ll have the key to consistently picking winners. Riches beyond imagining wait behind the door it unlocks.
But reality interferes.
Click the graphic below to view a color-coded, rank-ordered list of asset class returns over the last 15 years. Last year we showed it as a roulette wheel, which it really is, but this year we’re showing it as you would see it presented by most students of investing.
Regards,
Ted
http://assetbuilder.com/company/2015_annual_letter.aspx

Hi @Ted
Likely for yourself, too; but over the years the biggest challenge I have found with trying to get folks to put aside monies for investing was to change their spending habits.
One change that did help a lot was the, although slow, introduction of 401k plans into company plans. This addition made saving and investing easier.
I always tried to help with the understanding of compounding of investing profits. One of the most critical parts for growing monies, eh?
There remain too many I know who would comment about once a year over the past 30 years that; "I want to get together and talk about investing." I had one such comment 3 months ago and I recall the comment from the same person, starting 25 years ago. The couple has put aside some monies with an adviser (my understanding), but they have mostly lost the value of compounding time. Instead of investing earlier in their lives, they did things and purchased "stuff" that have little value today and these items did not greatly enhance their lives.
I know you fully understand all of this. Just some personal notes.
Take care,
Catch

Please keep in mind that both pharmaceutical and biotech stocks were flat for almost a decade and started to move in the right direction only three years ago.

"generate reasonable dividend yield without undue price risk" = 1.86%
VFSTX - Average effective maturity 3.0 years
http://finance.yahoo.com/echarts?s=VFSTX+Interactive#{"range":"max","scale":"linear"}
If you buy now at 10.70, be aware that there have been several years where it has been below that number.
The other factor is inflation. With inflation and taxes and VFSTX at 1.86% you are not making money.

I'd like to hear other's thoughts on these ideas:
Like many investors, I've been concerned about the portion of my portfolio that is intended to generate reasonable dividend yield without undue price risk. Especially since interest rates are at all-time lows, and are bound to come back up (eventually). A rise in interest rates will cause the value of bonds and bond funds to fall.
What I'd like to do is buy the bonds directly and hold them to maturity. In that case I'd be collecting the dividend payments and ignoring the paper loss of value, since I'd always get my principal back at maturity. But with individual corporate bonds there would be a risk of default which would be hard for me to mitigate by buying lots of bonds. No risk of default if I buy treasuries, but I can't stand the anemic yields. And I don't have much knowledge on how to buy bonds and know I'm getting good prices.
And so bond funds with low durations are my current vehicle of choice. They can have a zero or negative return year when interest rates rise. But lately I've come to the conclusion this risk can be ignored, as long as you're willing to hold the fund at least 2-3 years, and it's this that I'd like comments on.
Take a look at this graph of the federal funds rate, especially from 1990 on:

Periods of rising interest rates were: 1994, mid-1999/mid-2000, mid-2004/mid-2006. In all these cases, the rising rates resulted in a flattening or slight reduction in total return, as reflected in this graph of the Vanguard short-term corporate fund:

And if you continued to hold through the year following the completion of the rising rate period, you would have recovered most or all of your paper loss. Hence my thinking it's probably best if you just ride it out. (But sticking with low-duration bonds, of course)
Thoughts? Thx!

I think I will keep my PJP up 13.95% ytd five year average total return 33.47. Just wish I had bought it five years ago instead of two. You could not go wrong with almost any health care fund or etf in recent years. Lots of great funds and etfs to choose from.

Jeff Vinik is going to own Tampa, before it's over, local politicians on board....
Guess that's ok, He has Vision and lots of money (backing Him), Tampa will be the playground it Should have been all these years...
Wish Jeter/Vinik could get ahold of the Rays...but would be political problem with The Yankees in Tampa

As a sentient (or at least semi-sentient - my wife made me say this) carbon-based life form (yo, Spock), I can assure you, based on over 35 yr. in a profession in which personal benefit could be in conflict with the best interests of those served, fee for service or commission-based reimbursement poses stresses difficult to resist. There is a pressure to increase the services offered or the products recommended. Ultimately, I opted for the reduced income and the reduced stress of an employed position, where my recommendations were not financially altered.
OTOH, if the adviser, taking a small percentage of my investment portfolio, sucks down over a month's worth of income yearly, regardless of the quality of the advice, the eye I turn towards them is definitely jaundiced.
I plan to send my lovely wife to meet a Garrett network member to discuss her age 70 options to see if the adviser meets my standards, since the situation is moderately complex. I hope the result is positive, so I can get an opinion regarding the next 30 years.
The unfortunate reality is that honest financial investment advisers probably can't make a decent living. I may want to buy 3 or 6 hours of advice a year, and even at $500/hr (and, yes, I would be complaining loudly), it is less than any percentage-based advisory service. OTOH, I'd trust the hourly advice more, since I'd presume they were trying to earn my money.

Hi Flack,
I am probably an isolated case in where carrying this many funds works reasonably well. Some folks might buy a fund based upon a whim … I buy a fund for a specific reason and purpose; and, it must fit well within the sleeve where I plan to park it.
One of the things that has helped me to achieve above average returns, from my perspective, is to be a shrewd buyer and buy when assets have become oversold and then perhaps sell some assets off when I feel they have become overvalued. Booking small profits over the years will add to a portfolio’s overall performance. Especially if a good downdraft comes, those booked profits don’t get vaporized. My brokerage firm does a good job of keeping track of my portfolio’s total return by year. With this, I pretty much know where I am at from both asset investment and portfolio performance perspectives.
Thanks for stopping by and making comment.
Old_Skeet

@MFO Members: I was only giving an example of how you can attain a 12% + return over ten years with only three funds. I don't think you could accomplish this with fifty. I believe less is more
Regards,
Ted

Ted, I was only referring to the period that yields went up during the 3 or so months of whichever year it was (it was during the last couple of years), not the entire year. During that period, both stocks and bonds went down. I could be mistaken, my memory of what happened a couple years ago during those few months might not be 100% accurate, but after that, yields went back down, and stocks and bonds both went back up.

@BenWP: Yes, My drugs went from $10 per generic drug for a ninety day supply to $25 for the same seven generics. For three years I paid $280 for my meds, I'm now paying $700.
Regards,
Ted

I just picked up two prescriptions for meds we've been taking for several years and which are Tier One generics on our prescription plan. One rose in price from $1.79 to 2.89 and the other from $10 to $40. The lower prices had been in effect for at least two calendar years. We did not change the drug plan from 2014 to 2015. The pharmacist told me I am not to only one to register sticker shock since Jan 1st. No wonder our healthcare stocks and funds are doing so well…

Well ... hi again, Ted,
Seems the many post about how many funds to own might have given them something to write about. Ever wonder how many from the press vist the MFO board and pick up on ideas? It would be nice if there were away to find out.
Perhaps, they have not learned of the Old_Skeet's sleeve system. It is cleaver, neat and it works. In addition, a look at their reported results from different time periods might have produced a better picture of the outcomes. After all, 2014 was indeed a strong year for domestic equities and not so good for the international ones. It would have been good to see the periods of five, ten and fifteen years represented. After all, diverification is designed to have some assets in the faster currents of the markets while others might have found a slower moving channel.
I still plan to keep on keeping-on with my system. Thinking now of adding a little to my private equity fund, LPEFX.
For those that might be interested, I have linked its Morningstar report below.
http://quotes.morningstar.com/fund/f?t=lpefx&region=USA
Have a good one,
Old_Skeet

PONDX a great fund for the conservative investor. As a not so conservative investor this fund lost its allure in the spring of 2013 and have never ventured back. Without checking I assume AUM have soared the past many years making it not as nimble.

Hi @scott,
PIMIX dropped 3% between Nov 27 and Dec 17 last year, bumped up about 1.5% and remains sideways. And yes, this has been an exceptional bond fund for the past several years of our holding. The fund is 1, 1 and 7 ranking over the past five years and has almost doubled the average return of all M* rated, multisector bond funds.
Something has changed their previous pattern.
We also sold all of LSBDX the first week of January, our 2nd largest bond holding at the time.
This comes from a house that has "overstayed" the bond rally way past what most would have considered to be prudent investing in this sector. Every year for the past 5 years we have been issued warnings about the death of bonds. We also sold our HY bonds, early last fall.
We're 50% equity right now. Keeping in mind that our investments are all post-retirement directed.
The major consideration, as with all sells, is where the money will travel next.
Thank you, scott.
Regards,
Catch

Managed Futures Funds per M*
How would an investor find a fund in this category that they would be assured could perform in a steady performance pattern over the years?
Yes, there are winners and losers over various time frames; but most investors here at MFO, are managing their "future" mix of funds for steady and positive returns, just not using the "common futures tools" that these funds use.
Check the 3 and 5 year average returns at the link above. Also look at some of the winners and losers in various time frames. One would have to hold 10 of these type of funds to hope for a decent averaged profit, using a best guess method, IMO.
Regards,
Catch

Combining thread ideas here.
Ted recently posted a similar Top Performing Global Stock list which revealed a few funds that I might call "Global Hybrid" and what M* calls "World Allocation" funds.
These funds are typically made up of:
-stock (both US and Foreign)
-bonds (both US and Foreign)
-cash (hedging currency?)
-other opportunistic holdings
For example HCOYX holds a large portfolio percentage of its bonds in Argentinian Sovereign debt. I find important and interesting looking under the hood and understanding these fund's holdings.
A few others "Global Hybrid" / "World Allocation" funds are GAOAX(40% stock/40% bond/20% cash), MDLOX(56/17/15/11% other), SGENX (80% stock/ 20% cash), KTRSX(55% stock/40% bonds), ARTGX(90% stock/ 10% cash).