I backtested your two fund portfolio by creating three distinct portfolios using your two funds in differing percentages. The starting balance was $10,000.
Portfolio 1 - POAGX =20% & PIMIX =80%
Portfolio 2 - POAGX =40% & PIMIX =60% (your suggestion)
Portfolio 3 - POAGX =80% & PIMIX =20%
Using this portfolio tool I was able to compare these three portfolios (from 2008-2013). What I found interesting is that for all years except 2013 the 20/80 (portfolio one) provided the highest end of year balance.
Here's a small part of the results:

FYI: Most years, the performances of the two indexes track each other fairly closely. However, since late March the Russell has drifted lower while the S&P 500 has moved higher. As a result, the Russell is down 4.2 percent for the year, while the S&P is up 4.1 percent, so small caps have some work to do if they are to outshine the big boys.
Regards,
Ted
http://www.dallasnews.com/business/columnists/will-deener/20140803-are-small-cap-stocks-waving-a-warning-flag.ece
As Of 8/22/14:
S&P 500 7.58% YTD
Russell 2000 0.50% YTD

With hindsight it looks great!! I'm a big fan of POAGX and its my largest single position so I've been very happy with its performance in the last few years. The Primecap folks have a fantastic record with the Vanguard funds they sub-advise for as well as their own Odyssey funds. I'm not sure I'd invest in anything from PIMCO now, but it certainly would have worked out over the past 6.5 years.

40% PRIMECAP Odyssey Aggressive Growth POAGX
60% PIMCO Income Instl PIMIX
Since 1/1/2008 ~12.5% annual return vs S&P ~7% annual return
2008 return -17% vs S&P -38% return
Beat S&P 5 out of 6 years 2008-2013, YTD about even
.55% expense ratio
POAGX holds 30% Large/Giant Cap, 30% Mid Cap, 40% Small/Micro Cap, 14% non-US
FWIW, POAGX is Morningstar 5 star Gold fund, PIMIX is Morningstar 5 star Silver fund

Well that's interesting. He was against junk bonds back when but of course stocks were the sure bet too. OSTIX sounds like ASDVX which I own. He is the king of the $cost avg.

He only went into funds like OSTIX due to his conviction that interest rates will rise and traditional bond funds will do very badly. That's why he went into Fidelity's bank loan fund too. And Gundlach's Low Duration Bond, and Metro West Low Duration Bond. He's focused on only one thing with bonds right now: he says rates will rise and bond funds will do badly, except short duration. Now, if you go short duration Treasuries, those will do fine, but they have almost no yield.....therefore, he went into the bank loan fund, OSTIX, and Gundlach's Low Duration Bond. And his average duration of 1.1 is about as low as you can get. Fidelity Floating Rate High income has a duration of something like 0.24 years, so a hefty weighting to that keeps his duration very low.

OSTIX, duration 1.94 years. Sort of like a short term junk bond fund right now. Supposedly it has the ability to go anywhere, but M* says it has been mainly in junk bonds for many years now. Not sure how many years they have been as short duration as they are now.

"do you still listen to Bob Brinker. I listen to him every Sunday for the full 3 hours. Maybe we can share some Brinker stories....."
@rjb112
I don't listen to him any longer and haven't done so for several years now. Do you remember his QQQ buy signal? That was before the tech crash. I was a subscriber and got the bulletin in the mail. It seemed to go against everything he had preached on his show and besides that, the bulletin was on a plain sheet of paper, not even his letterhead. At first I thought it was fake.
I listened to him for a few years after that but he would never talk about that QQQ debacle. During the 90's he had a great show and some excellent advice.

@JohnChisum: you bet I remember his QQQ buy signal! I made the mistake of buying on that signal! And I still hold a chunk of those QQQs in my account to this day!
I too was a subscriber and got the bulletin in the mail.
You're right, he would never talk about that QQQ debacle. I still listen to him every Sunday and participate in a Google blog that someone has on Brinker.
Yeah, that QQQ call was awful....

"do you still listen to Bob Brinker. I listen to him every Sunday for the full 3 hours. Maybe we can share some Brinker stories....."
@rjb112
I don't listen to him any longer and haven't done so for several years now. Do you remember his QQQ buy signal? That was before the tech crash. I was a subscriber and got the bulletin in the mail. It seemed to go against everything he had preached on his show and besides that, the bulletin was on a plain sheet of paper, not even his letterhead. At first I thought it was fake.
I listened to him for a few years after that but he would never talk about that QQQ debacle. During the 90's he had a great show and some excellent advice.

Smaller caps funds are struggling this years comparing to that of the larger caps. High valuation would keep me to put in more $$.

@MJG Thanks for taking the time to address my question. Useful information and well thought out analysis as always.
VWELX vs. DODBX - When confronted with vexing choices during my migration to passive ETFs, I tend not to completely dump "old friends" who have been good to me over the years. I simply reduce dollar holdings in each. Might result in a few additional active funds to monitor, but it gives me something to do and something to talk about here.
@Ted Any other candidates, besides SHRAX?

FYI: My youngest daughter was born 21 years ago this week. At the time, I called an economist named Mark Lino from the U.S. Department of Agriculture, who told me to expect to spend as much as $300,000 to get her to age 18; toss in college costs, and it was well past $500,000 to get her to adulthood.
Regards,
Ted
http://www.marketwatch.com/story/why-its-so-difficult-to-raise-kids-and-save-for-retirement-2014-08-22/print

@PRESSmUP I've been linking Scott's article for years, he was big fan of Roy Weitz and FundAlarm. Here's what he had to say back in 2005
Regards,
Ted
http://assetbuilder.com/scott_burns/an_interview_with_mr_fund_alarm

I have two funds underwater YTD out of 28 open end funds and ETF's that are on my crowded portfolio. Bringing up the rear are RYSEX at -1.36% and PRSVX at 0.99%. My top two are BRUFX at 15.25% and PRHSX at 16.28%. All these funds I've owned for several years.
This year I started trimming some funds to keep my AA closer where I want it to be, which is 55% stock funds. I am an old guy at 64, retired, living off my investments. The trimming has been very gradual and gentle.
Best wishes,
Dave

BUFOX hammered ytd...negative 13.62%! Ouch!

Yeah, micro and growth. I used to own this fund very long time back and sold long time back, after concluding my WHEN vs WHAT mantra. Not sure if you own this fund, but we take diversification to extreme when we think about such funds. On one end I do own BRLIX. Next correction I plan to buy BRSIX - the other end.
PS BUFOX showing down 10 percent not 14, but maybe you seeing different reported number. BUFSX also down 9 plus. Another fund I owned but sold long time back. Such funds to be bought after heavy correction, and sold 3 years later and use to improve quality of life.

Hi Ted,
The fund that you mentioned (SHRAX) likely never made it to my candidates list way back in the early 1990s. I avoided front-end loaded mutual funds like the plaque that they are. I was reading John Bogle’s “Common Sense on Mutual Funds” in those days, and indeed agreed that costs mattered greatly.
The front-loaded funds were immediately discarded by me from further consideration. I probably interviewed a half dozen financial advisors during that period, and every single one of them recommended portfolios populated only by these costly products.
Our potential retirement war-chest was modest, and I was sickened at the prospects of reducing it immediately by a composite 5% to 6%. It would take years of positive outcomes to replace those unnecessary highway robbery charges. I still feel that way, but less so as my wealth substantially increased. Even then, I believe that I recognized that I was summarily tossing away some excellent fund managers.
I do like Ricky Freeman’s record and his tenure. It is outstanding. He definitely is a talented and skilled stock picker. I am especially impressed by his low portfolio turnover numbers. The man makes his choices, and he stays the course with them. He sticks to his guns. Good for him, and the record shows that it is good for his investors too.
Automatically discarding front loaded funds will eliminate some superior active fund managers. However, I suspect that from an overarching portfolio strategy, it probably does more good than harm.
That’s more than a naked opinion since the cumulative fund management data consistently demonstrates that, on an annual basis, only 20% to 40% of active mangers outdistance passive Index management. Integrated over time, those numbers deteriorate even more, not including the upfront fee. It’s a hard uphill road to overcome fees, and the odds do not favor the individual investor.
Thanks for your input.
Best Wishes.

@MJG:How about Richy Freeman, SHRAX, 30 years !
Regards,
Ted
Without Sales Charge 12.58%
With Sales Charge 12.36%
(Fund inception 10/24/83)

Hi Bitzer,
Thank you for reading my post and for your question.
I’m sure you realize that, as a matter of personal policy, I resist divulging my specific fund positions. I believe it can do more harm than good because we all have different time horizons, life experiences, anxiety levels, investment proclivities, goals, family commitments, ages, and overall wealth. But since I introduced the fact that I’ll be scaling down my actively managed fund holdings, I feel the need to make an exception to that policy. So here goes.
Before I describe the short actively managed fund list, allow me to define the criteria that dominated my selection process. It was not a broad diversification goal or by sector selection. My primary selection criteria were to reward active managers who generated Excess Returns over a substantial timeframe. So Excess Returns and performance time were the key dimensions to shorten the field.
The Excess Returns were measured against the S&P 500 Index standard. The timeframe was the most recent 20-year period because I have owned the final candidates for from 17 to 22 years. I used the Portfolio Visualizer website as my data source.
My Final Five are provisional depending on the continuing tenure of the fund managers. Here are my Final Five with the mangers indicated:
FCNTX William Danoff since 1990
FLPSX Joel Tillinghast since 1969
VWELX Team Wellington since fund inception
VGHCX Edward Owens, Jean Hynes since 1984 and ????
DODBX Dodge and Cox Team with John Gunn leader since 1977
This is not a fully diversified portfolio. The missing pieces will be filled with passively managed Index products. The ordering is important since successful active fund managers are hard to find.
These mangers were chosen because they delivered annualized Excess Returns over the S&P 500 benchmark for the 20-year test period. They delivered these Excess Return outcomes with lower volatility as measured by each funds Standard Deviation. The correlation coefficients were not overly impressive, but they helped just a little to dampen total portfolio volatility. These managers have demonstrated more skill than luck over a very daunting investment cycle.
Earlier, I noted that this list is provisional. Several issues need further resolution. Ed Owens is mostly retired, so I’m closely monitoring Jean Hynes’ performance. She did assist Owens for 20 years or so, but it’s a different ballgame when you graduate from a secondary position to the top-dog managerial slot.
Also, the 20-year records of the balanced funds, VWELX and DODBX, are very similar. In a sense, they are on my bubble. At this juncture, eliminating one or the other is a vexing choice since both funds have served me well for 20 years. During that extended period they outdistanced the all stock S&P 500 Index with lower volatility. That’s a noteworthy accomplishment.
I recognize that these are pedestrian selections, but I’m a pedestrian sort of investor. I like plain vanilla ice crème. I get my excitement when visiting Las Vegas. Keeping things simple works best for me.
Of course, I reserve the right to be flexible as the opportunities develop over time. In the investment world, nothing is forever.
Best Wishes.

Bonds are definitely a mystery for most investors. For years I concentrated on stock funds. When I turned 45 I started to think about bonds and decided to $cost avg into them. At that time I was listening to Bob Brinker on the weekends and he was all for Ginnie Mae's so I bought BGNMX which was the Benham Ginnie Mae fund. Benham was a well run firm and later American Century took them over. Those funds had excellent returns during the 90's and beyond 2000. I would use that fund as a sweep account when I swept profits from gold funds and other investments I was planning on using it as my core bond holding until the fiscal crisis hit. Everything changed.
I still track BGNMX and it seems to hold its own. But if and when rates do rise those funds do very poorly from what I hear and read.
Nothing is sure but at least we can try to minimize damage to our portfolios. If stocks drop 30% and bonds drop 10-15% then that is a success in relative terms.

Bonds seem like they should be simple, but for some reason my mind turns off when trying to understand them. I get the basics on duration, quality and bond sectors that are more or less volatile. But my decision is to give the money to managers who have demonstrated results and have flexibility to buy the different types of bonds they think best. Unconstrained, multisector, whatever - not even sure the difference there.
So I decided on splitting most of my bond allocation to 2 multisector funds, a somewhat aggressive fund/manager, Ivascyn/PONDX and to what I see as a more conservative multisector fund, Sherman/RSIVX.
As a side note, I chose PONDX over LSBRX because returns have been as good with less volatility. I could of held both but my mandate is to hold a minimal number of funds. But I did hold LSBRX for years and was very happy with Fuss.