If one wants to discuss how people are adding risk by reaching for yield, that's fine - and that's basically the lead sentence in the article. But the writer seems to have an agenda, and has slanted graphs and omitted data to that end.
(Disclaimer: I am a fan of Core Plus bonds - in my view, Core is to Core Plus as S&P 500 is to Total US Equity Market. In each case, the latter provides broader and better exposure to their respective markets - US bond and US equity.)
Everyone "knows" that the US Aggregate Bond Index (tracked by AGG) is much too heavy into government securities. Even Bogle says so, and suggests the index is weighted about 70% in Treasuries and other government bonds.
So when I look at Chart 1 (correlation coefficients), what jumps out at me is not that Core Plus is (slightly) correlated with equities, but rather that a good chunk, if not all, of AGG's (slight) negative correlation with equities could be coming from its heavy slug of government bonds (which the chart shows have a much stronger negative correlation with equities).
What this suggests is that if we were to look at Core Bond funds' correlation with equities (since they rightfully tend to have much lower percentages of Treasury/government holdings than AGG) is that they would have virtually zero, or perhaps even a slight correlation with equities. To me it is telling that the writer provided a core plus bond composite, but not a core bond composite. That likely would have undercut his thesis that there's a lot of difference between core and core plus.
Take the data from that chart, and look at the R-squared values for Core Plus and Aggregate. They're about 10% - close to meaningless.
Look at Table 2. The writer implies, without justification, that because Core Plus bond funds contain some junk bonds, their volatility will be similar to junk bonds. Table 2 shows 14.5 year (curious choice) volatility (std deviation) figures US Agg, junk, and equities. But missing are core bond and core bond plus figures.
This is a suspicious omission, since Chart 1 provides data for core plus, and Chart 3 provides a graph for core bonds (using Wells Fargo Advantage Core Bond as a proxy).
I'll remedy that. Using M*'s figures for 15 years (14.5 is not a standard time range), we have

Std Dev	Sharpe
Core (MBFIX)	3.59	1.12
Core+ (WIPIX)	3.53	0.98
Agg Index	3.50	0.99
S&P 500 Indx	15.38	0.26

The naive idea that adding a modest amount of a volatile asset (junk bonds) to a portfolio will necessarily make it more volatile is wrong. The obvious (albeit contrived) counter example is to add to a portfolio an asset that is volatile and perfectly negatively correlated with the portfolio. Adding a small amount of that asset will reduce the portfolio's volatility.
What one sees here (between Core and Core Plus) is little difference. (I used WIPIX, since the writer selected to use MBFIX, so I simply used the Core Plus representative from the same family.)
I could skewer Chart 3 as misleading also, but you get the point.
If you're really concerned about Core Plus funds that are "too" aggressive, just avoid funds whose portfolios are rated low grade by M*. Lots aren't.

Cashin has only been on the floor of the NYSE for something like 50+ years.

And no one has helped him off the floor yet!
"Help, I've fallen and can't get up"

This week might tell the story, technically.
http://m.seekingalpha.com/article/2555415-stocks-the-most-important-week-in-6-years?source=feed_all_articles

Interesting, yes. Short version: overweight US stocks "as much as you can." He sees blue skies and sunshine, still, for years to come. Given current circumstances, retail, durables and services will do very well. He says interest rates could fall even further, from a mere 2.35% just recently.

Yep and good for him. Anyone who works fifty years in a profession loves his job.
To clarify my position, I would rely on Art Cashin much more than any of the cheerleaders and squawkers CNBC has.

Cashin has only been on the floor of the NYSE for something like 50+ years.
Edited to add: Bio http://www.businessinsider.com/art-cashin-biography-2012-7?op=1

I'm connecting this with my holding in DLFNX (DoubleLine "core") which I've seen referred to here as a core-plus fund. I've owned it for just over 2 years, now. It's a tiny slice of my pie, 2.56% of portfolio. It's taken two years for it to gain 5.7% for me. I'll keep it.

Hi Tampabay,
Over the years I have held a good bit of my investment cash, time deposits, in CD's.
Old_Skeet

FYI: A rare interview with Cornerstone Macro’s Investment Strategist, François Trahan, who has once again been named the number one ranked strategist on Wall Street by Institutional Investor magazine, as he has been for eight of the last ten years.
Regards,
Ted
http://wealthtrack.com/recent-programs/trahan-still-bullish/

The last three years SCHD beats any in the article handily, but SPY beats them all plus VYM, and PRBLX is notably above all further.

Companies and countries, even shaky ones, seem to be able to get loans (eg,. Radio Shack).

And I think that's an example of malinvestment due to tons of money flowing around. I think it's very unfortunate what has happened to Radio Shack, but I question if you didn't not have the monetary environment that you do, would Radio Shack have been gone 1-2 years ago and is throwing money at the problem simply delaying the inevitable? Easy money doesn't fix Radio Shack.
Dave and Buster's IPO'd today. I think that's tried and failed twice.
"And, HELOCs are back again."
There's a joke radio ad in the new "Grand Theft Auto" game about how people are being idiots for having any equity in their house and how they should pull that out to buy new devices that will briefly improve their life.
I say get much tighter in regards to HELOC's and have people who can advise as to the realities and risks of HELOCs. It's not, lets take out HELOCs and go on vacation and buy toys.
I suppose the idea becomes the mortgage officer and underwriters become somewhat less focused on stats and formulas and more on the people who they're dealing with. Effectively, a mortgage officer becomes more of a financial adviser and takes things into consideration rather than the idea that you enter in a bunch of numbers and it says x or y. Obviously, that's not scientific, but I do think the broad idea is if you have someone whose costs could be considerably lessened by buying, how do you make it work?
When you have someone who is the former head of the Federal Reserve not be able to refi, it really would seem more a focus on particular statistics and formulas that say X or Y versus actually looking at the person's situation.

Caught this on NBR last night. Umm ... Anybody know what Gross' track record on predicting the stock market is? I thought he was more of a bond guy.
What did he say? Equities will gain 5-7% a year going forward the next few years? Let's hope.
How does this man manage to stay in the spotlight? Maybe if we'd all stop talking about him he'd fade away like other stage legends of the past. :)
Pogo: We have met the enemy ...

Last time SPY dropped below 200 day average was November 2012 and then only for three days.
Last sustained time was late 2011, about three years ago. That one lasted about four months (August - November).
And before that...pretty much May through August 2010, which I had forgotten about.
And before that, well, no one wants to remember...November 2007 - May 2009, or 19 months.
For what it's worth...

Arnott's All Asset funds have dramatically underperformed their peers over past years. Will he make that up in the next down cycle? We shall see

@scott, are you referring to the 130/30 funds which are typically leveraged for returns?

I guess the idea is more that I would not expect a long/short fund to change - or be nimble enough - to take advantage of a 4-5% correction. A mutual fund isn't going to change in dramatic fashion because of what has happened over the last week, in other words. If this lasts months, then you may see movement and then you can look at results. It's just too short-term at this point to - I think - see major shifts in a fund's allocation.
As for the Managed Futures category, which has not done well broadly over the last few years but is something I'd not expect a moonshot from on a good year, to have a fund like Pimco's new one get double digit returns and be ahead of the category by more than 10% is certainly compelling, although the fund's prospectus language is very broad and doesn't give me a sense of the difference in this fund vs other MF funds. I will say that the Pimco fund has outperformed a large managed futures hedge fund - whether or not that continues, who knows - but I find it rather impressive.

FYI: Just because winners decline doesn't make them a bad choice.
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=667868
How All the Funds Rank, Then and 10 Years Later
http://online.wsj.com/news/interactive/IFRANKING2014090820140906?ref=SB10001424052970203523204580116012154265320

Hey, a closer look at SEQUX...

Its UI is actually quite low this past year, even three years. Unfortunately, the SP500 UI is even lower. Compounding this issue is excess return. Compared to SP500, SEQUX has delivered only half the return.
During bull runs, equity volatility typically drops, and those funds that are more defensive, like SEQUX or many all-asset funds, drag, especially this past year as bond and commodity volatility is up.
But that does not mean they are "wrong," at least with regard to the way they chose to handle risk, but their ratings will invariably suffer. (Look at COBYX, for example, and the whole list above.)
Bottomline: If the market is always up, three years may not be very telling from a risk adjusted perspective.
That is something I think we are in-g on.
Thanks David. Hope all is well.

Howdy @heezsafe,
You noted: "Some here are referring to "cash equivalents" with words such as "TIPS, and related bonds [?]" and "low duration bond funds." Fascinating!! Please, describe for me, what could you possibly have used as your detour point to take you down this perditious road of reasoning, to this happy place of delusion?"
Okay, so in theory; down the road to investing hell............
The first week of February found me standing in front of the Mutual Fund Roadhouse Cafe. Bingo! Sell our small cap holdings was the thought. Sure enough the holdings were sold. But the money was not going to be parked in a traditional money market fund to which we have access; as the E.R. and yield of such areas is already negative and worse when factoring inflation. So our "cash" moves to investment grade bonds, be they gov't. or corp.
Eventually, these monies were moved to PRHSX, FSPHX and later to GPROX.
Our cash parking (since 2009) is not cash as in MM funds; and likely won't be for many years, if then.
There may already be enough "cash" among the managed holdings; so I won't add more to the pile.
Okay, past my pillow time for today.
Take care,
Catch

@MFO Members: Sounds like a broken record, but I've been telling MFO Board Members to buy healthcare, especially biotech, for over three years.
Regards,
Ted

I added to PRHSX just yesterday and have been trying to be overweight healthcare for the last 3 or 4 years. @jerry, I think you're right, everyone already knows about aging baby boomers, but the rest of the developed world is getting old too. I also believe there will be huge opportunities in China especially if the middle class continues to grow and healthcare becomes more important to people. If it were only for the US/Europe/Japan I would probably let the chips fall where they do with my funds and not pay as much particular attention to being overweight.