“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
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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.

Thanks, John.
Inflation (Consumer Price Index) was up 2.1% in 2019 as of last November, so it's not surprising that IRA contributions would remain the same for 2020. Some years (in fact most years) I struggle to find the max to contribute anyway!
IRA contribution limits last increased by $500 for tax year 2019. With inflation so low I wouldn't bank on another increase for 2021. The increase for 2019 was the first since 2013.

https://www.cnbc.com/2020/01/11/wall-street-strategists-recommend-stable-dividend-paying-investments.html
Dividend stocks look attractive with a volatile year that nets measly returns expected ahead
KEY POINTS
Unlike growth stocks, dividend stocks typically don’t offer dramatic price appreciation, but they do provide investors with a steady stream of income.
This type of strategy can bode well for investors in a much riskier year ahead grappling with Middle East unrest and a U.S. presidential election.
Wall Street market analysts largely see much more modest returns in 2020 following a historic run last year. The average year-end target for the S&P 500 comes to 3,345, a measly 2% gain.
A slew of banks including Goldman, UBS and Bank of America started advising clients to shift to dividend-paying stocks and strategies to hedge against rising risks and seek outperformance.

https://finance.yahoo.com/news/much-contribute-traditional-ira-2020-195814096.html
How much you can contribute to traditional or roth ira 2020
Unfortunately for retirement savers, the maximum amount that can be contributed to a traditional IRA in 2020 remains the same as it was in 2019. Let's hope the limit is increased for 2021.
IRA Contribution Limits for 2020
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.

FWIW, Schwab lists PONAX with a net exp ratio of 1.45% It also shows it has a 12b-1 expense of .25%. So I have know idea what you would end up paying. But, I haven't owned it for a few years so don't care.

PONAX exp ratio is 1.45%. This includes 12b-1 fees, management fees, administrative fees, operating costs, and all other asset-based costs incurred by the fund.
It doesn't include transaction costs as a result of trading of the fund's assets but this is very small.
The most important is the fact that performance is after all costs and risk attributes (SD=volatility, Max Draw, Sharpe, Sortino...) are correct too.

This post is about Bank Loan/Floating Rate bond oefs. This category of bond oefs is being mentioned more often for a 2020 investment, after a good 2019 performance. Typically these funds perform very well in rising interest rate and flat rate markets, and so the 2019 market was supportive, and 2020 is projected to be a flat interest rate period. They generally get punished in a falling interest rate environment. This is a sector of HY Bond funds, with the average fund in this category will have a credit rating of B and about 7.5% of its total portfolio in investment grade categories. The average standard deviation in this category is about 2.77, and the risk level in this category is highly correlated with how much yield the fund earns, with the assumption that junkier bonds pay higher yield. With that background, one might wonder if there is any bond oefs in this category, that might appeal to a more conservative investor. I did some searching in this category and I found 3 funds that a conservative investor might be interested in. The following 3 funds are offered for consideration for the conservative investor:
1. RCRIX/RCRFX: This fund has a standard deviation of 1.0, almost 1/3 of the category average, has a portfolio with a credit rating of BB compared to the typical B rating, has 21.4% of its portfolio in investment grade assets compared to the typical 7.5%, and in the strong downmarket of 2018 this fund was in the top 2% percentile of performance.
2. MWFLX/MWFRX: This fund has a standard deviation of 2.18, has a portfolio with a credit rating of BB, has 24.2% of its portfolio in investment grade assets, and in the 2018 downmarket it was in the top 15% percentile of performance.
3. FRSAX/FFRSX: This fund has a standard deviation of 2.34, has a portfolio with credit rating of B, has 24.7% of its portfolio in investment grade assets, and in the 2018 downmarket it was in the top 22% percentile of performance.
I use to invest in this category quite a bit in the past, but exited this category early in 2018. I have thoughts about re-entering this category in the future, when rising interest rates look more likely, but have considered a small investment in 2020 because of a projected flat market. RCRIX and MWFLX are 2 funds I would consider due to their strong performance history in downmarkets,their portfolios having a higher credit rating of BB, and because they have over 20% of their portfolios in investment grade assets.

Linked chart might shed some light. Compares returns (both stocks and bonds) among different countries since 1900 (but ends with 2014). Clearly, U.S. stands out as leader when it comes to equities.
https://monevator.com/world-stock-markets-data/
Some things to keep in mind:
- U.S. benefitted over the century from many unique cultural, societal and political advantages (including a strong regulatory, legal, judiciary framework and strong educational stystem).
- It costs more to invest abroad for a variety of reasons - some related to the above.
- The chart may not reflect the impact of currency fluctuation. I’ll take a 0% market return over a 10% market return if the currency of the former appreciated 20% while that of the latter declined.
- The world has changed dramatically over the past century. Namely, industrialization and technological innovation are far more widespread across the globe today than just 50 years ago.
- Assuming outperformance by the U.S. continues for decades more (a big assumption) an investor might still want to dampen year-to-year volatility by spreading out across the globe.

Hi @hank, I have some memories of that time too in the manufacturing world. That quote from US businesses and schools, “I don’t get it”, was exactly the reason Japan was beating the sox off US manufacturing at the time. Toyota was heads and tails better at making reliable, less expensive cars than General Motors, Ford or Chrysler and Dodge in the '70s and '80s. Fuji proclaimed that they would destroy Kodak and take our lucrative film business (I remember that well. We laughed at first). Electronics, TVs, stereos and such were all made cheaper and better in Japan. RCA became a looser, Zenith was a looser to Japan. Why, because Japan manufacturing adapted religiously to a manufacturing system taught to them by American statisticians after WW2. Edwards Deming led the way in the '50s to teach Japan what American CEOs once knew but were to fat, dumb and happy to implement themselves, Lean Manufacturing and Statistical Process Control (SPC). The Toyota Production System is synonymous to Lean Manufacturing, the bible for LM in fact.
Japan's economic rise is understood. Their mediocrity since is less, but likely due to poor government economic policy and the rest of the world catching up with outsourced labor costs and more efficient technology.

https://www.forbes.com/sites/kenrapoza/2020/01/10/best-countries-for-fixed-income-in-2020/?ss=markets#5b37112930d2
Best Countries For Fixed Income In 2020
Forbes
That means the passive index funds will basically be mandated to buy. More money flowing into China bonds pushes up bond prices
Unless you’re happy with junk bonds and 2% yield on ten-year Treasury debt, then the best place for fixed-income investors is outside of the advanced economies. That’s always been the case, but they have been avoided, for the most part, due to risk and the fact that quantitative easing made the U.S. the only game in town since 2009.

FWIW, Schwab lists PONAX with a net exp ratio of 1.45% It also shows it has a 12b-1 expense of .25%. So I have know idea what you would end up paying. But, I haven't owned it for a few years so don't care.