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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Withdrawal rates
    tabs at top of screen to adjust a plethora of scenarios. Website default auto populates to 75/25 allocation. It looks like 50/50 at 3.5% withdrawal rate is bulletproof.
  • Salient EM Corporate Debt Fund to liquidate
    @jptak
    I did see the new summary prospectus filed prior to the liquidation notice above. I thought it was little strange. Maybe more details will develop as time progresses.
    Here may be some news from another filing:
    https://www.sec.gov/Archives/edgar/data/889188/000119312516752870/d278526d497.htm
    Excerpt:
    ORGANIZATION OF THE TRUSTS
    The Salient MF Trust was organized on November 15, 2011 as a Delaware statutory trust under the laws of the State of Delaware and is an open-end investment management company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Salient MF Trust presently has four series, Salient Adaptive Growth Fund, Salient MLP & Energy Infrastructure Fund, Salient Trend Fund and Salient Tactical Plus Fund (each a “Salient MF Fund”). ...
  • Salient EM Corporate Debt Fund to liquidate
    https://www.sec.gov/Archives/edgar/data/889188/000119312516752839/d262690d497.htm
    497 1 d262690d497.htm FORM 497
    FORWARD FUNDS
    Supplement dated October 31, 2016
    to the Salient EM Corporate Debt Fund Investor Class and Institutional Class Prospectus, Salient EM Corporate Debt Fund Class C and Advisor Class Prospectus and Salient EM Corporate Debt Fund Statement of Additional Information each dated May 1, 2016, as supplemented
    NOTICE OF LIQUIDATION OF SALIENT EM CORPORATE DEBT FUND
    On October 18, 2016, the Board of Trustees of Forward Funds (the “Trust”), including all of the Trustees who are not “interested persons” of the Trust (as that term is defined in the Investment Company Act of 1940, as amended), approved the liquidation of the Salient EM Corporate Debt Fund (the “Fund”), a series of the Trust. The Fund will be liquidated pursuant to a Board-approved Plan of Liquidation on or around February 28, 2017 (the “Liquidation Date”). On the Liquidation Date, the Fund will distribute pro rata to its respective shareholders of record as of the close of business on the business day preceding the Liquidation Date all of the assets of the Fund in complete cancellation and redemption of all of the outstanding shares of beneficial interest, except for cash, bank deposits or cash equivalents in an estimated amount necessary to (i) discharge any unpaid liabilities and obligations of the Fund on the Fund’s books on the Liquidation Date, including, but not limited to, income dividends and capital gains distributions, if any, payable through the Liquidation Date, and (ii) pay such contingent liabilities as the officers of the Trust deem appropriate.
    As the Liquidation Date approaches, the Fund will likely increase its holdings in cash and cash equivalents in anticipation of redemption requests and liquidation. As a result, the Fund may invest without limit in money market securities, U.S. Government obligations, and short-term debt securities. This could have a negative effect on the Fund’s ability to achieve its investment objective.
    Certain investors may expect to receive an additional communication from their financial advisor or intermediary concerning this announcement.
    IN CONNECTION WITH THE PLANNED LIQUIDATION, EFFECTIVE NO LATER THAN FEBRUARY 10, 2017, SHARES OF THE SALIENT EM CORPORATE DEBT FUND WILL CEASE TO BE OFFERED FOR PURCHASE TO NEW INVESTORS OR EXISTING INVESTORS (EXCEPT THROUGH REINVESTED DIVIDENDS) OR BE AVAILABLE FOR EXCHANGES FROM OTHER FUNDS OF THE TRUST.
    PLEASE KEEP THIS SUPPLEMENT FOR FUTURE REFERENCE
    ****
  • AA for a retiree on SS.
    DM,
    Thanks for the note. The advisor's fees start at 1.00%-0.5% per year so that is a bit more expensive than VG. VG and some of the ROBOs charge 0.25% or less so his prices would give me pause. I am not sure if she would qualify for the lower rate based on asset size. I think she and I both talked about "sleep at night" levels. I think given time horizon, health, covered costs that 37% is just fine. I think Pfalu and Kitces (among others, forgive spelling errors please) have made arguments for rising equity values in retirement but I don't know if that would allow us to sleep at night. Regards.
    Mike
  • J.Maddel monthly read - MF newsletter Is Skill Still Relevant in the Era of the Indexes?
    I posted this same newsletter a couple days back and just discovered it got moved to the bullpen after 80 viewings.
    See below limk.
    http://www.mutualfundobserver.com/discuss/discussion/29955/mutual-fund-etf-research-newsletter-november-2016-edition#latest
    I sincerly hope this one put up by JonhN will stay up for discussion and possible comment longer than mine did as this newsletter is indeed good reading.
    Please make comments on post you enjoy reading, or find favor in, or they will get moved to the bullpen, as mine did, if enough comments are not made to keep it posted under the discussion heading.
  • Fund Focus: Vanguard Core Bond Fund
    FYI: Underpinned by low fees, this new offering is designed to beat the Barclays index and be the centerpiece of portfolios.
    Regards,
    Ted
    http://news.morningstar.com/articlenet/article.aspx?id=775899
  • Does Factor-Based Investing Work?
    FYI: Last summer I watched Creed. It’s the latest movie in the “Rocky Balboa” series. One of the lines stands out. The movie’s lead character, Adonis Creed, asked Rocky how he had beaten his father. “I didn’t beat your father,” said Rocky. “Time takes everybody out. Time’s undefeated.”
    It’s like that for most investors who try to beat the market. They might get lucky for a year or a decade. But if a low-cost index fund were a boxer, time would stand in its corner. According to the SPIVA scorecard, the S&P Composite 1500 Index beat 87.47 percent of U.S. actively managed stock funds during the ten years ending June 30, 2016.
    Regards,
    Ted
    https://assetbuilder.com/knowledge-center/articles/does-factor-based-investing-work
  • Why Performance-Chasing Investors Will Love The New 5-Year Rolling Averages

    More like why the fund marketing departments will love these rolling averages. Remember how responsible FAs and others (ie, MFO readers) were saying in 2013 beware of the 5 year returns being hyped once the '08 crash 'fell off the radar' on that chart? People will still get suckered in by awesome 5-year returns, I bet. ;(
    Speaking of returns, I still chuckle that many funds and pension offices still assume a 5 or 7 percent annual return in their projections. Really, still? What are they smoking?
  • AA for a retiree on SS.
    No one can give you 'the answer'. Here are some things to think about in developing your own answer:
    1. At 76, presumably you are not trying to 'grow' your assets, and with your fixed costs covered, you re-invest the income, and presumably wish to conserve your assets. If that is the case, and you have 'won the game' -- meaning you have sufficient assets for your needs. Well, why keep playing the game, after the game is already won? If that assumption on my part is wrong, and you prefer to stay in the game, for whatever reason, then the answer is probably 'stay the course' -- so long as you will be copasetic with the results Mr. Market delivers.
    2. If by 'bond bubble', you are implying the likelihood of a'popping' of the bubble, why stick around, at least in full-allocation mode? An investor can earn ~ 1% yield on near-cash or cash assets (e.g. "MINT", internet savings accts, etc.) Market-cap bond index products pay what now, something with a 2-handle in terms of yield? If the answer is you want the marginally higher income, that is a true answer. But consciously accept, stability of income may be at odds with stability of principal, especially when asset values are rich. You have to understand what is of primary importance to you, the income, or the value of your principal, then decide what to do.
    3. If your 'bond bubble' diagnosis becomes reality and the bond market drops, expect stocks to fall in sympathy with bonds. Both asset classes benefitted from Q/E & ZIRP; IMO it would self-serving and delusional to expect that stocks will soar while/if bond prices drop. Often, stocks are more frenetic in their price moves than bonds. So reallocating principal from bonds to equities, probably won't DE-risk a portfolio. In fact, it may have the opposite effect.
    4. Lastly, and I am sure you know this, a decision to buy, hold, or sell is never a 'final decision'. Circumstances may change tomorrow, and you can reverse your decision.
    I'm about 25 years your junior. Still in accumulation mode, but expecting to retire early in 4 years. Except for the whole health-insurance issue, I could retire now, spend principal, and not have another worry. So, I've no intention of exposing all of my assets to the vississitudes of Mr. Market here --- which might risk delaying my retirement. Especially with most asset classes trading 'rich'. But that is me. You are in a different place. Your fixed costs are covered. The question is to what degree to you wish to expose your assets to Mr. Market -- and for what purpose? Does the marginal income/return you derive from holding rich assets adequately compensate for the risk of holding richly-priced assets? Ultimately, only you can answer that question. Nobody else can.
  • Asset Managers Bleed $50 Billion As Industry Crisis Deepens

    Get in line @ Blackstone ! From The Blackstone Group LP (BX) Q3 2016 Results - Earnings Call Transcript
    In the past 12 months alone, our limited partners, we call them LPs, have entrusted us with nearly $70 billion in new capital which despite $38 billion in realizations brings us to another record for assets under management of $361 billion. We continue to see strong positive growth in every one of our businesses. Blackstone continues to be the solutions provider our limited investors need, perhaps now more than ever in a world of sluggish growth, record low interest rates, high public market valuations, the resulting very low returns for most asset classes. These challenges seem likely to persist for some time which is causing real problems for LPs.
    Here is a pretty stunning fact. In the past 10 quarters, we have raised nearly $200 billion, more than the aggregate size of any of our domestic alternative peers. And given the secular forces driving capital into the alternatives, we continue to nicely grow combined with Blackstone's powerful and unique competitive position. I remain quite optimistic in our ability to keep growing with one of the largest, if not the largest, platforms in each vertical area, Private Equity, Real Estate, Hedge Funds and Credit. We are able to accept and responsibly deploy billions of dollars from individual LPs which is a critical capability that few, if any, other firms can offer
    http://seekingalpha.com/article/4016086-blackstone-group-lp-bx-q3-2016-results-earnings-call-transcript?part=single
    Bloomberg Gadfly Take by Gillian Tan Oct 27, 2016 3:58 PM EDT
    Stephen Schwarzman, the billionaire chairman, CEO and co-founder of Blackstone Group, is accustomed to having people pay attention to his point of view, whether it's in a meeting room at the firm's Park Avenue headquarters or in his capacity as a philanthropist. But he seems to have trouble getting his message across when it comes to Blackstone's shares.
    Disconnect
    Blackstone, like its peers, has struggled to win over investors.
    As the firm's biggest shareholder with a stake of roughly 20 percent, Schwarzman has gone to lengths to persuade investors that Blackstone deserves a higher valuation -- even going so far as walking through the math of his argument -- but his words have fallen on deaf ears. On an earnings call Thursday, after the New York firm easily beat analysts' expectations thanks to sales of real estate assets, he resorted to sarcasm. "Who needs yield when you can invest at 1 percent in government bonds?" he dryly asked, after referring to the fact that Blackstone's dividend yield is markedly higher than that.
    .....potential shareholders should remember that the yield isn't as airtight as, say, a U.S. Treasury bond. Blackstone's ability to pay dividends fluctuates every quarter and is driven in part by the firm's ability to profit from its activities across various arms, such as by selling off real estate or other investments as it has done in recent years. Still, there's little likelihood that the dividend will disappear completely, owing to the diversity of Blackstone's holdings
    https://www.bloomberg.com/gadfly/articles/2016-10-27/blackstone-yield-appeal-is-schwarzman-s-latest-valuation-argument
  • Bond Tourists Expose Soft Underbelly Of America’s High-Yield Market
    Highlights of the Week:from Payden & Rygel
    High Yield: Despite retail flows stalling in the last three weeks, the market remains well bid. A combination of foreign capital flows and separately managed
    accounts are providing price support as the market grinds tighter. Coupling this tailwind with prudent credit selection will reward long-term investors.
    Corporates: A recent stringent crackdown by anti-trust regulators has halted several mergers and acquisitions from being completed in the last year.
    Despite this slowdown, companies seeking to merge have still been rolling merrily ahead with their intentions. In fact, October 2016 now ranks as
    the month with the most corporate merger agreements ever, nearly breaking $250 billion. Whether or not they will be completed is another story
    Municipals: While municipal yields have drifted near 7-month highs, the market has showed resilience in the face of over $16 billion in new supply
    over the past two weeks. After the first week of fund outflows YTD last week, investors added $335 million to funds this week. Municipals remain
    very attractive on a relative basis with 30-year municipals yielding in excess of 100% of Treasuries.
    https://www.payden.com/weekly/wir102816.pdf
  • Why Performance-Chasing Investors Will Love The New 5-Year Rolling Averages
    HI JoJo26,
    Apparently I misunderstood your position, at least in terms of emphasis. We are in substantial agreement.
    In investing there is an issue of too much information; some tendency towards paralysis by analysis. There is a famous study of horse-race handicappers that demonstrated that debilitating characteristic.
    The handicappers were given tons of horse performance data. Initially they were tasked to handicap a race using only 5 bits of data for each horse that they selected. The challenge was repeated with 10, 20, and 40 pieces of individually selected data. The handicappers winner accuracy score did not improve with increasing data, but their confidence levels falsely did.
    Some decision making experts believe that we can not process too much info when forming a decision. I'm sure the number varies with each person and for differing circumstances, but these experts have concluded that an information overload takes control at about the 7 piece level. I suspect that finding is highly controversial. I find that observation uncomfortable since I am a member of the more is better cohort.
    Thanks for your post and your patience.
    Best Wishes.
  • Art Cashin II: "Critical If Market Closes Below 2,130"
    The S&P 500 made its first new high at 2130 on May 21, 2015. It took 14 months and a pullback to 1829 (about 15% off its 2130 high) before the S&P 500 moved once again moved above 2130 in July of 2016. Today, a full 17 months later, it stands at 2126. This is 50 points below its must recent new high of 2187 (or about 2.5% below its most recent new high).
    Here the 2 yr chart:
    image
  • Asset Managers Bleed $50 Billion As Industry Crisis Deepens
    @Ted Ha! just coming here to post this one, ya beat me by the proverbial nose.
    In the second quarter, that group of seven saw $34 billion in outflows. The tally is further evidence that investors, frustrated with high fees and mediocre performance of actively managed funds, are increasingly casting them off for low-cost passive investments. In the 12 months ended Sept. 30, active funds had redemptions of $295 billion while passive took in $454 billion ...
    12 months, almost $300B--- that's some serious coin.
  • Asset Managers Bleed $50 Billion As Industry Crisis Deepens
    FYI: Seven top asset managers this week reported a total of $50 billion in third-quarter net redemptions, most of it from active funds, company filings show. The biggest losers: Franklin Resources Inc. with $22.1 billion, AllianceBernstein with $15.3 billion and Waddell & Reed Financial Inc. at $4.9 billion.
    Regards,
    Ted
    http://www.bloomberg.com/news/articles/2016-10-28/asset-managers-bleed-50-billion-as-industry-crisis-deepens
  • Why Performance-Chasing Investors Will Love The New 5-Year Rolling Averages
    I've made this point before. Trailing 1-, 3-, 5-, pick a number-year returns are absolutely worthless. Investors fixate on them way too much and lose sight of the bigger picture - it's why we get in and out of the market and good managers at precisely the wrong times.
  • T. Rowe Price Profit Rises 18 %
    bee said, "Is TROW a good buy or is PRWCX about to correct?"
    @bee Wouldn't touch your question with a 10 foot pole - make that 15' :)
    Here's a link back to TRP about the $194M write-off they took back in June after botching a proxy vote on Dell. https://www3.troweprice.com/usis/corporate/en/press/t--rowe-price-to-compensate-clients-for-dell-voting-error.html This received a lot of press (mostly favorable) back in June and was broadly lauded as testament to the firm's integrity and shareholder commitment. (I don't recall any discussion here.) But I'd imagine it impacted their share price. The WSJ appears to have more on this - but I have trouble reading it without a subscription, so didn't link them.
    PRWCX, BTW, isn't having a particularly good year after several great ones. Manager has become very cautious on the market and is no doubt dealing with bloat - though it's now closed to new investors. If one wanted to have some fun with play money (assuming he/she held a favorable opinion of the firm) he might invest 50/50 in both the company and PRWCX and than rebalance periodically.
    The future of T. Rowe? It's tough out there. They're small-fry compared to Vanguard, Blackrock and a few other giants. There's been a shift from actively managed funds to low cost passive funds and ETFs going on for many years now and I see no signs of it abating. Over the past year, if my reading of Barrons serves me well, Price experienced net outflows - though not as severe as Oppenheimer and some other active managers. I'd expect continued shrinkage or consolidation among companies in their segment of the market.
    ---
    PS: Asset managers are to an extent subject to the whims of the markets. In a sharply declining equity market AUMs fall - reducing profits. This interplay between investors' and advisors' outlooks for equity markets and the re-pricing of asset managers like Price is far too complex for my feeble mind to understand. But it's not inconceivable that (future) market expectations are impacting TROW's valuation. (PRWCX would be expected to hold up better during a sharp correction than TROW.)
  • T. Rowe Price Profit Rises 18 %
    Interesting... the stock price of TROW is trading at its lowest price in over a year. In fact, you have to go back to its 4 year low (Sept 2012) to match today's stock price. The stock is up 36% over the last ten years which included the 2009 great-cession.
    image
    Over the past 10 years TROW has more often out performed PRWCX, but that is not the case over the past year and half. (TROW in Yellow). Is TROW a good buy or is PRWCX about to correct?
    image
    Here's the most recent three performance of the two:
    image