• https://www.pionline.com/defined-contribution/research-shows-investing-decisions-made-based-order-options-are-listed

• https://www.planadviser.com/study-finds-alphabeticity-bias-401k-investing/
  

A white paper, “Alphabeticity Bias in 401(k) Investing,” finds that investors tend to select funds at the top of an alphabetically organized list of funds. Authored by academics at Saint Louis University, Seton Hall University and Kansas State University, as well as a researcher at the Ipsos Behavioral Science Center, the paper finds that people tend to select the first “acceptable” option.
“Thus, when a participant searches through her plan’s menu of investment options, she may be more likely to choose the funds appearing towards the beginning of the list,” the paper says. “Since 401(k) fund choices with early alphabet names appear at the beginning of the list, they will be chosen more often than later alphabet named funds. We find that the same fund appearing in multiple plans in the sample receives a significantly higher allocation when it is listed closer to the top of the plan menu.”
Paper Link at SSRN [free registration required]
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3295400

One of the things about buying good dividend paying stocks (or mutual funds) is that they have to have earnings inorder to keep paying dividends. With this, Old_Skeet has two sleeves of good dividend paying mutual funds. One consist mostly of domestic funds while to other has more of a global orientation including some exposure to emerging markets. These two sleeves combined make up 15% of Old_Skeet's overall portfolio.

https://www.morningstar.com/articles/961786/should-you-own-a-muni-fund
Should You Own a Muni Fund?
Unless you're in one of the highest tax brackets, the tax advantages might be smaller than you think.
Amy C. Arnott, CFA
Jan 15, 2020
Investors have been pouring money into municipal-bond funds. For the trailing one-year period ended November 2019, inflows into all municipal-bond fund categories totaled about $95 billion--the highest annual inflow since 2009. Taxable-bond funds still hold far more assets overall, but municipal-bond funds have been gaining ground, with nearly $850 billion in total assets as of Nov. 30, 2019. The appeal of these funds is largely based on their tax-advantaged status. In the wake of the 2018 tax law changes, fewer people can itemize deductions, which makes investment vehicles that help reduce taxable income more compelling
Another key question is whether to invest in individual bonds or in a diversified mutual fund. If you have a brokerage account, you can generally buy individual municipal bonds in increments as low as $5,000. But while transaction costs for trading municipal bonds have declined significantly, they're still relatively high. The Municipal Securities Rulemaking Board estimates that the average spread between buy and sell prices was about 80 basis points for retail investors as of April 2018. These transaction costs would eat up much of the tax advantage of holding individual bonds unless your portfolio is large enough to buy bonds in larger increments. Even then, you'd probably need to buy at least 20 higher-quality bonds to help mitigate bond-specific risk. And because the municipal-bond market is notoriously opaque and illiquid (though less so than it used to be), you should also plan on holding any individual bonds until maturity.
We have been doing the later past 10 or 12 yrs, buying private muni and corp bonds
Could not have been happier
Just monitor the bonds carefully and looking at bond cusip/credit reports/ (see which funds/etf dump the bond) routinely to prevent any bankruptcy

https://www.cnbc.com/2020/01/13/this-was-the-best-strategy-for-picking-stocks-the-last-10-years.html
This was the best strategy for picking stocks the last 10 years
Picking stocks with high dividend yields was the best strategy for investors over the last decade, Bank of America said.
Low interest rates and steady economic growth made dividend stocks attractive, even the riskier ones with the highest yields.
The strategy would not have worked in 2019, when the S&P 500 outperformed high yielding stocks.
Wonder if this would work next 30 yrs...

My impression is that PIMCO generally uses derivatives to boost income as opposed to using them to mitigate risk. Likewise, it can be more aggressive with junk bonds.
Foreign exposure? PIMIX is weighted negative 30% in non-USD developed markets. It is also 14% long in emerging markets.
See excerpts below from the funds' prospectuses and fact sheets. They may be meaningful or may signify nothing. Reading these docs is like reading tea leaves. They can mean whatever you want to read into them. For your amusement to compare and contrast.
Objectives:
PIMIX: The Fund’s primary investment objective is to maximize current income.
Long-term capital appreciation is a secondary objective.
RPIEX: The fund seeks high current income.

Investment strategies:
PIMIX: The Fund seeks to achieve its investment objectives by investing under normal circumstances at least 65% of its total assets in a multi-sector portfolio of Fixed Income Instruments of varying maturities, which may be represented by forwards or derivatives...
RPIEX: The fund also uses [derivatives], primarily to manage interest rate exposure and limit the fund's overall volatility.
High yield (junk) bonds:
PIMIX: The Fund may invest up to 50% of its total assets in high yield securities rated below investment grade by [an NRSRO] or if unrated, as determined by PIMCO (except such 50% limitation shall not apply to the Fund’s investments in mortgage- and asset-backed securities). [Note that 77.6% of the fund is presently in securitized debt.]
RPIEX: The fund focuses mainly on holdings that are rated investment grade .... However, the fund may invest up to 30% in high yield bonds, also known as junk bonds, and other holdings (such as bank loans)
Fund home pages (with links to fact sheets, prospectuses, etc.)
PIMIX: https://www.pimco.com/en-us/investments/mutual-funds/income-fund/inst
RPIEX: https://www.troweprice.com/personal-investing/tools/fund-research/RPIEX

Mike, A lot of risk measures are related to the category, and it is sometimes difficult to compare between categories. The 4 funds above are more risky in the non-traditional bond oef category, approaching lower risk multisector bond oefs. For me personally, I use M* quite a bit to try to establish relative risk between funds, but there are imperfections and complexities. I usually start with how M* has established Risk, COSIX is rated as Average risk, and DFLEX, IISIX, and PFIUX are all rated by M* as having "Below Average" risk. I then look at Standard Deviation as another singular way at looking at volatility, which closely corSDponds to risk--so again COSIX has the highest SD at 2.45, followed by PFIUX at 1.56 SD, IISIX with a 1.52 SD, and DFLEX at 1.51 SD. I gave you information about the credit qualiity of assets in each bond in my post above, so you can look at how much Investment grade bonds are in each fund vs. junk rated bonds. I like to put all the funds on a performance graph and then look at their performance patterns, with particular emphasis on peak to trough drops in downmarkets. There are many other statistical measures of risk, including upside/downside capture ratios, Sharpe ratios, etc.
You have to remember that in the non-traditional bond oef category, the definition of this category notes the widespread use of more sophisticated investment techniques involving shorting, hedging, leveraging, and large host of measures that will vary from fund to fund, but they do impact performance. So, any simple way of determining risk is often not that simple--for the most part I depend heavily on SD, and M* risk categorization, but I look at a lot of other things to dig down deeper to form an opinion.
When you compare the 4 funds above, there are a number of other nontraditional bond oefs that I consider much less risky, including SEMMX which has a much lower SD. When you start looking at funds like ZEOIX, from the HY Bond category, it is even more tricky, but ZEOIX has a very low SD and its performance pattern, like SEMMX, is very smooth and upward, including almost no drops in performance in downmarkets. So, in my opinion, I would consider ZEOIX and SEMMX the least risky and very close in riskiness, and then a bigger step up to IISIX, followed by DFLEX, then PFIUX, and COSIX being the most risky. Some may argue with me on these rankings, if they stress some other characteristics more than those I emphasize.
I will eventually make another post about non-traditional bond oefs, that are as a group lower in risk, and close to the short term bond category as a cash alternative.

Boost Your Retirement Income With Tricks The Pros Use
https://www.investors.com/etfs-and-funds/retirement/retirement-income-strategy-pros-use/
Finding retirement income is still a challenge. Interest rates remain low. But you can borrow a key trick financial advisors use to solve this puzzle.
For every $100,000 you invest in this group of funds, you could have created. Bond Fund (PEBIX) for a 4.5% yield plus gains from the bond prices."

@hank: I'm sorry to hear of you're problem, so to speak. Did you stand pat or move on ? You've caught my ear & I would like to hear more .
Have a good week, Derf

Thanks Derf! (I wasn’t asking for sympathy.) :) Oppenheimer never had more than 10% of my assets. What they offered were some niche funds others didn’t. Some were gems / other clunkers. But when you’re with a house for a quarter century you accumulate a deep understanding of their offerings and operation that’s difficult to replicate elsewhere. So I miss their operation, even though it wasn’t the sharpest gang on the block in all respects.
As far as “voting with one’s feet” - that’s all too easy to do in this day and age - often with just a few key strokes. And my fuse is as short (or shorter) than the next guy’s. To answer your question, I’m in the process of moving about one-third of my already small holdings at OPP/ Invesco to T. Rowe. What remains is mostly split between their miners’ fund (which has benefitted from gold’s uptick) and some cash. Also have a tad in an alternative fund there.
The issue of fund house closings / mergers might have significance to the broader mutual fund community. My own issues were mentioned merely to represent what that circumstance might entail and how it might affect others. If you were dumb enough to pay a front load for those A shares 25 years ago (I was), than perhaps the “sting” is felt a bit sharper.

This post is about Non-traditional Bond oefs, that resemble and perform in a manner, similar to multisector bond oefs.
"Morningstar Category: Nontraditional Bond
The Nontraditional Bond category contains funds that pursue strategies divergent in one or more ways from conventional practice in the broader bond-fund universe. Many funds in this group describe themselves as "absolute return" portfolios, which seek to avoid losses and produce returns uncorrelated with the overall bond market; they employ a variety of methods to achieve those aims. Another large subset are self-described "unconstrained" portfolios that have more flexibility to invest tactically across a wide swath of individual sectors, including high-yield and foreign debt, and typically with very large allocations. Funds in the latter group typically have broad freedom to manage interest-rate sensitivity, but attempt to tactically manage those exposures in order to minimize volatility. The category is also home to a subset of portfolios that attempt to minimize volatility by maintaining short or ultra-short duration portfolios, but explicitly court significant credit and foreign bond market risk in order to generate high returns. Funds within this category often will use credit default swaps and other fixed income derivatives to a significant level within their portfolios."
Attached are 4 Non-traditional bond oefs, that I believe are potential funds you might consider, as a Conservative Bond Oef investor, as lower risk alternatives to Multisector Bond oefs:
1. COSIX: One of the more risky Non-traditional Bond oefs with a SD of 2.45. Its assets are spread across 4 asset groups--Gov't (18.26%), Corp (28.55%), Securitized (28.39%), Cash (23.79%). Its Assets fall into the following investment grades--AAA (12.22%), AA(7.54%), A(8.89%), BBB(24.4%), BB(13.82%), Below B/NR(19.83%)
2. IISIX: One of the better total return options with a SD of 1.52. Its assets are--Govt(12.68%), Corp(20.58%), Securitized(53.14%), cash(13.62%). Its assets between investment grades are--AAA(21%), AA(5.16%), A(5.16%), BBB(21.5%), BB(16.85%), B(19.95%), Below B/NR(4.96%)
3. DFLEX is managed by the well known Gundlach with a SD of 1.51. Its assets are--Govt(14.71%), Corp(26.8%), Securitized(51.6%), cash(6.89%). Its assets between investment grades are--AAA(17.43), AA(3.6%), A(5.87%), BBB(21.01%), Below B/NR(26.5%)
4. PFIUX is from PIMCO with all of its stable of analysts with a SD of 1.56. Its assets are---Govt(24.89%), Corp(11%), Securitized(30.5%), cash(22.8%), other(10.28%). Its assets between investment grades are---AAA(79%), AA(6%), A(9%), BB(3%), Below B(3%)

“Benz: And one thing that we're continuing to see is just these massive inflows into very low-cost products” ....
“Kinnel: Yeah, that story has continued. It's really been running since the bear market of '08-'09 when a lot of people gave up on active management, and we've really seen that grow as, obviously, the ETF industry has grown alongside that because ETFs have drawn a lot of that passive flows. An interesting wrinkle this year is we saw passive fixed income and passive foreign equity start to gain some traction, too, not nearly as much, but generally, those have remained the domain of active”
Kinnel also comments on the Oppenheimer merger with Invesco. But he doesn’t seem as alarmed as I am. I hope no one here ever has the experience of seeing their B grade fund house where they’ve held Class A shares for nearly 25 years bought out and taken over by a larger C grade outfit (being generous here). Funds you’ve depended on for years disappear / are merged into the new owner’s funds. Even for those older funds that remain, management changes or is diluted. And the formerly excellent fund reports that kept you abreast of what your manager was thinking and doing (and enhanced your market perspective) are replaced by bland accouting statements lacking any narrative.

@hank I also remember doing a 15-year catch-up provision with my 403 b provider based on the following information and Link

To qualify for the 15-years of service catch-up (if the employer’s plan includes this provision) the employee must have 15 years of service with the same eligible 403(b) employer. The limit on elective deferrals to the participant’s 403(b) account may be increased by up to $3,000 in any taxable year (lifetime employer-by-employer limit of $15,000) if the employee has at least 15 years of service with the same employer in a:
public school system,hospital,home health service agency,health and welfare service agency,church, orconvention or association of churches.

https://irs.gov/retirement-plans/403b-plan-fix-it-guide-an-employee-making-a-15-years-of-service-catch-up-contribution-doesnt-have-the-required-15-years-of-full-time-service-with-the-same-employer

Thank you all for participating in yesterday's webinar.
Here is link to chart deck.
Here is link to video recording.
c
-----------------------------------------

This coming Wednesday, January 15th, we will host a webinar discussing latest features of the MFO Premium search tool site. Topics covered will include the new home page and user portal, the MultiSearch Portfolios tool, updated metrics for risk adverse investors, expense rating, expanded category averages, revised “Include Averages and Benchmarks” options, and finally allocation indices across ten decades.

There will be two sessions, one at 11 am Pacific time (2pm Eastern) and one at 2pm Pacific time (5pm Eastern). The webinar will be enabled by Zoom. Please use the following links to register for the morning session or afternoon session. Each will last nominally 1 hour, including questions.

Here are links to previous webinar charts and video recording.

Hope to you can join us again on the call. If you have any questions, happy to answer promptly via email ([email protected]) or scheduled call.

@Jim0445. HICOX was a close 2nd. Actually has better risk numbers.

Many nearing retirement seem unaware of the IRS “Catch-up“ provisions. Appears current law allows persons over 50 who were unable to fully fund their retirement plan in prior years to make generous catch-up contributions later on in addition to the current yearly limit. I’m unclear whether it pertains to IRAs, but it appears that at least in some cases it does. My experience more than 2 decades ago (with a 403-B) may no longer be representative. But in my case the “catch-up“ came in darned handy in shoring-up earlier insufficient contributions as retirement neared.
Quick search pulled up 3 reads:
https://www.investopedia.com/terms/c/catchupcontribution.asp - Invesropedia / general description
https://www.irs.gov/retirement-plans/401k-plan-catch-up-contribution-eligibility - IRS / 401K
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions - IRS / mentions IRAs - but I’m unsure of types and amounts.
PS - I should have read John’s article first: “ The maximum amount you can contribute to a traditional IRA for 2020 is $6,000 if you're younger than age 50. Workers age 50 and older can add an extra $1,000 per year as a "catch-up" contribution, bringing the maximum IRA contribution to $7,000. You must have earnings from work to contribute to an IRA, and you can't put more into the account than you earned.”
Perhaps my added emphasis may be helpful to some. :)
From Simon - “Inflation (Consumer Price Index) was up 2.1% in 2019 as of last November” -
While that sounds trite in the face last year’s near 30% return on the S&P, it really depends on perspective. A 2% rise in cost of living (if you believe the numbers) would look quite different following a 30% decline in equities, especially if bonds languished or fell in value. And even at 2% a year, over 5 years you’re looking at well over a 10% increase in COL. (Remember that inflation compounds in a manner similar to how interest does.)

A couple more factoids:
- M* rates it bronze; though I have my doubts about how much intelligence there is in M*'s artificial "intelligence" ratings (done by machine, not analyst)
- Its 165% turnover rate is not a mere artifact of being a bond fund. 90%+ of the cap gains it has distributed in the past four years are short term. On the other hand, it distributed no cap gains in two of those four years (losing years, perhaps?)
The fund did well out of the gate, for its first two years, but has been essentially flat over the past three. My guess is that the star rating will nevertheless go up in a couple of weeks when the fund hits the five year mark. The way M* calculates stars is to compute a weighted average of a fund's three year rating, its five year rating (if available), and its ten year rating (if available). The two good years of the fund aren't getting counted because the fund is just short of five years. In a couple of weeks that will change, and those good years will be included.
To continue the fund description that Lipper quoted from T. Rowe Price:
The fund also uses interest rate futures, interest rate and credit default swaps, and forward currency exchange contracts, primarily to manage interest rate exposure and limit the fund's overall volatility.
If I'm going to buy a nontraditional fund that uses these techniques to manage interest rate risk and volatility, I'll buy one that does it well: FPNIX. It doesn't seek high current income, just the opposite (though it still sports a very similar SEC yield of 2.59% vs. 2.69% for RPIEX). Slow and steady wins the race.
Here's a chart comparing their performance over the lifetime of RPIEX.

I agree that alternative funds have been lagging badly in down cycles, thus I don't see them for drawdown protection. Once you subtract the high fees (typically 2% or more), the results are pretty sad. No wonder those who manage these expensive products are doing very well in their paychecks.
I think in today low yield environment, there is always a demand for better yield products. The recession fear drives these alternative products. I am not surprise of T. Rowe Price is offering this bond fund. Vanguard offers a Market Neutral fund, VMNFX ($50K min and ER 1.80%) , and the 3-years, 5-years returns and 10-years return are -4.71%, -1.32% and 1.08%, respectively.

Re: RPIEX - T. Rowe Price Dynamic Global Bond Fund. Just discovered this one. Price appears to classify it as an it as “alternative” investment. It comprises about 2% of RPGAX - so many of us have some exposure to it.
From Lipper: “The Fund seeks high current income. The Fund invests at least 80% of its net in bonds, and seeks to offer some protection against rising interest rates and provide a low correlation with the equity markets. It invests at least 40% of its net assets in foreign securities including securities of emerging market issuers.” Inception Date: 1/22/15.
M* gives it 1 star. Lipper ranks it 1 (lowest) for total return. Max Funds awards it 19 out of 100.
It appears the fund engages in short selling of bonds to hedge against (anticipated) rising rates. That probably explains a lot, as the Fed and other CBs seem to be doing everything in their power to hold the lid on still very low rates. Many alternative investment funds have struggled and disappointed. But it eludes me how what appears to be a bond fund from such a good house can be off 0.67% over 3 years.
I post only as a possible intellectual exercise for those so inclined. Not seriously considering owning this one.

"BigTom">RCRIX has a small AUM. I wouldn’t be comfortable knowing the top 10 securities make up 49% of the portfolio in floating rate space (75% in junk) but that’s just me..
BigTom, very understandable. The category of Bank Loan/Floating Rate is basically a subsector, of the broader HY Junk Bond category. For an investor, especially a conservative bond oef investor, to be willing to invest in junk bonds, is an important question that each investor should answer. The Bank Loan/Floating rate bond oef, that I would most likely invest in, is MWFRX/MWFLX. It is from a stable of bond oefs, offered by Met West, and it has an established history of being managed very conservatively, at least "conservative" for a sector HY bond category.
RCRIX/RCRFX is from a smaller investment company, but a company that has offered some very good bond oefs, with a very conservative approach to investing. But on a confidence/comfort level, many investors will choose to only invest in a larger fund, from a more well known company.
I offered this topic to just offer a topic of discussion for a category of bond oefs, that has been around for many years. In general Bank Loan/Floating Rate funds, are considered a bit more conservative way of investing in junk bonds, at least from my experience. Of course some Bank Loan/Floating Rate bond oefs can vary greatly in risk, with many having much higher volatility, much worse performance in downmarkets, and focusing on much riskier types of bank loan assets.

RCRIX has a small AUM.
I wouldn’t be comfortable knowing the top 10 securities make up 49% of the portfolio in floating rate space (75% in junk) but that’s just me...

Hi @johnN.
John I want to thank you for your continued effort to post articles for members and viewers to read. Keep it up and you will become ... Linkster, Jr.
Now for my comment about this article. Old_Skeet has two sleeves of dividend paying mutual funds. Both sleeves are found in the growth & income area of my portfolio with one being my domestic equity sleeve and the other one being my global equity sleeve.
My domestic equity sleeve consist of ANCFX, FDSAX, INUTX and SVAAX. This sleeve has a dividend yield of 2.95% with a 1 year total retrun of 17.78% and a 5 year total return of 8.36%. The P/E Ratio for this sleeve is 14.3.
My global equity sleeve consist of CWGIX, DEQAX, DWGAX and EADIX. This sleeve has a dividend yield of 2.17% with a 1 year total return of 22.75% and a 5 year total return of 8.06%. The P/E Ratio for this sleeve is 16.35.
Why two sleeves?
From reivew one is more domestic and the other takes a global perspective including some emerging market exposure. With this, there can be, at times, advantages for one over the other. Currently, the domestic sleeve has the higher divided yield; but, the global equity sleeve has the better 1 year performance while they both share about the same 5 year returns. In addition, these two sleeves add some diverisfication to the overall portfolio and combined they account for about 15% of the portfolio. I'm thinking that the domestic sleeve will be the better performer this year due to it's lower P/E Ratio which allows for some good price expansion. Also, it holds a good amount of energy stocks which I feel have some good upside associated with them.
Once, I build out INUTX I've been thinking of adding VYCAX to the sleeve. In addition, DWGAX is not yet fully built as a sleeve member and is under construction.