BRUFX vs OAKBX - lower expenses, smaller asset base, much more flexible mandate, able to own small market-cap holdings because of smaller size. Bigger loss in 2007-08, bigger gains 2009-10. Underperformed 2012-2013, outperformed 2014-2015. Just FYI for the board.

Like others, I was surprised to see the Sequoia prospectus excerpt that David S posted. Not so much because it warned to expect redemption in kind (which is exceedingly unusual), but simply because it gave rules - over $250k in 90 days.
Yet (keeping @ducrow in mind), the first fund I checked was OAKBX, that had somewhat similar language:

Each Fund is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of the Fund’s NAV during any 90-day period for any one shareholder. Redemptions in excess of those amounts will normally be paid in cash, but may be paid wholly or partly by a distribution in kind of securities.

The main difference is highlighted - Oakmark doesn't expect to redeem in kind, even if you exceed the $250K limit.
But pro-rata? I too thought that was almost everywhere. Yet it's not in Oakmark, and it's not in the next family I checked, Vanguard. No pro-rata qualification in the in-kind section, at least in Primecap's prospectus.
Regardless of whether an in-kind redemption is pro-rata or not, the fund comes out a tiny bit better when it redeems in-kind. It gives the shares to the investor at full price (no market movement), and the investor gets less than 100% value as the sales push the price down.
That market movement affects the fund's remaining securities also. If the redemption is pro-rata, the percentage impact on the fund's NAV will be the same as if it had sold the shares itself.
But suppose the fund has a really volatile, poor performing stock that it unloads on all the redeeming shareholders. Now it has eliminated (or reduced) its position in that one stock. So it no longer cares how the market moves as those shares are sold off by the individual investors.
For this reason it seems that funds would be better off dumping their dogs when redeeming in-kind, rather than redeeming pro-rata. Unless the prospectus explicitly requires pro-rata redemptions.

Well, it would help to have a more current print on asset allocation to better understand what is going on. As of 12/31/15, the equity sleeve was rather concentrated in only 46 holdings (and with $17B in AUM suggests big position and a not-so-nimble ability to move on a dime). The fund also showed 20% in cash. With the bonds being so conservative and short in duration, I don't know what kind of yield you'd expect from the fund, beyond what you're getting.
http://www.oakmark.com/Our-Funds/Overview/Equity-Income.htm
Unless this fund changes its long-standing modus operandi, I can't envision anything but underperformance for the foreseeable future. The fund just isn't structured for anything else, IMO.

@hank
You noted: " the investment grade universe today more closely resembles Disneyland than a serious investment option. (Returns on a 10 year Treasury held to maturity should net the owner about 1.5% per year after expenses. Sound attractive?)"
>>>Held to maturity are the key words.....
Yes, 1.6 % or so held to maturity and assuming no changes along the 10 year journey is not much of a return. Tis why folks trade bonds, not unlike equity stuff of all flavors.
Now, not unlike equity(s); the capital appreciation is with the "price", yes?
Much of the IG bond area is running +3% so far this year................that gain such as heck has nothing to do with yield (if it were static). The longer term IG is +10% and greater.
Forget the yield with the bond, except as a reference to where the bond(s) price is parked at the moment.
Bond yield is of value and can have a straight line method of a calculation for the yield only and the money value, in the perfect world of "static". I don't find any static in today's world of money.
Now if bond fund "x" is on the ball with all of this, they are likely buying bonds based more upon pricing versus yield. That is how the capital appreciation will be had, and won't be reflected with whatever a fund states is the "current yield".
I would be more concerned with a fund (holding IG bonds) shows a high average yield. With the proper circumstances, perhaps it is time for the fund to sell away some of the bonds, as the price may be eroding.
Not unlike HY bonds purchased in early 2009 and one stating at a page indicating a yield of 20% or more. Geez, one would like that all day long, eh? But, that yield came from the price being beat to hell in the prior 6 months. I wanted the price appreciation that would evolve from the "bail out" that would help smooth the pain and fear in the markets.
Nuff said by this"WhatsAMatter U" masters program graduate, in theoretical economics.
Take care,
Catch

@ducrow & MFO Members:: Here's the problem with OAKBX and it's performance: Very long-term 10-15 years excellent, medium term 3-5 years below par, recent term YTD- 1 year horrible.
Regards,
Ted
Years: Percentile Rank:
15 2
10 12
5 58
3 35
1 89
YTD 91

I can't believe how terribly late to the party Barron is, muni CEFs are trading with a one year z-score of 2-3.... if this article leads to another jump, i'll be a seller.
"As munis have climbed in value, yields have fallen. The average high-rated intermediate term municipal bond yields just 1.6%. After-tax, that’s still way better than a 10-year Treasury, but not a lot of income.
One solution to the income dilemma is to buy a closed-end muni fund. Because many of them use leverage (borrowing short-term to buy longer-term bonds) they average 5% yields. The funds typically trade at discounts to net asset value, but those have narrowed substantially in the past year, boosting returns. The average total return in this niche is 11% over the last 12 months, reports Morningstar."
google search results here

@ducrow,
GM is the fund's largest holding (at just over 4%). GM's down nearly 15% over the past year. They've only recently (past 3 years) acquired GM - sensing deep value. Either the bet pays off or it's a classic value-trap. Oakmark is known to dump companies when they feel they've made a mistake - so I suppose that's a third possibility. Lipper places the fund in its "mixed equity" category and gives it a 5 (highest) for category performance, but only a 3 (average) for consistent performance . So much of this ratings game depends on the category one places a fund in. Looks like the fund averaged about 6% over past 3, 5 and 10-year periods.
Haven't paid much attention to their fixed income holdings lately. The fund has never played much in the junk bond area (where there may still be value). It's just not their game. And (IMHO) the investment grade universe today more closely resembles Disneyland than a serious investment option. (Returns on a 10 year Treasury held to maturity should net the owner about 1.5% per year after expenses. Sound attractive?) So, most likely, the fund has gone very short on its fixed income component (around 35%) which helps explain the low returns for fixed. To them, in the current environment, fixed income is more of a defensive holding than a way to generate return.
I've owned OAKBX for close to 15 years* (currently 9-10% of holdings). No plans to do anything - just not my nature. But can understand others' concerns. Am sure you'll find better performers on the chart Ted linked. As for this fund "getting crushed" anytime soon ... don't hold your breath waiting. :)
*Temporarily moved all of it to their more aggressive OAKGX for 1-2 years starting in early '09.

Here are some Muni C E F's with current Premium/
Discounts to nav ( Pricey ?)
NUW + 2.34
NMZ +1.29
OIA -0.26
NBH +1.04
Good spots for further research.
Nuveen Tax-Exempt Municipal Debt - National Municipals
http://www.nuveen.com/CEF/DailyPricingTaxExempt.aspx
Source for C E F reseach
http://www.cefconnect.com
I have OIA on my watch list and own @fundalarm mentioned BGH
From Bill Gross
In a world of barely visible interest rates, it pays to borrow, rather than invest, Bill Gross tells Barron's. One way to do that is are closed-end funds which borrow and lever assets 35-50%, and his fund,:JUCAX, has 8-9% of its money in CEFs trading at a discount to NAV. Two favorites are the Nuveen Preferred Income Opportunities fund (NYSE:JPC) and the Duff & Phelps Global Utility Income fund (NYSE:DPG). (These two are not muni's)
http://seekingalpha.com/news/3172321-bill-gross-let-others-borrow
Mr Gundlach has also mentioned C E F's in recent commentaries as viable income producers in the current investment environment.
Speaking of Mr Gundlach,maybe he'll be clear on his outlook for High Yield and other financial assets in the coming week.Usually fun to listen to in this format.

Asset Allocation Webcast
Please join us for a live webcast titled "Asset Allocation Webcast" hosted by:
Jeffrey Gundlach
Mr. Gundlach will be discussing the economy, the markets and his outlook for what he believes may be the best investment strategies and sector allocations for the DoubleLine Core Fixed Income Fund (DBLFX/DLFNX) and Flexible Income Fund (DFLEX/DLINX).
Tuesday, April 12, 2016
1:15 pm PT/4:15 pm ET /3:15 CT
Register here
https://event.webcasts.com/starthere.jsp?ei=1085514

Wow! I just took a look at NHMAX it has matched its previous all time high of 17.51
http://finance.yahoo.com/echarts?s=NHMAX+Interactive#{"range":"5y","allowChartStacking":true}

The prospectus text, which is unusually clear on the subject:
Payment of Redemption Requests
Unless otherwise prohibited by law, the Fund may pay the redemption price to you in cash or in portfolio securities, or partly in cash and partly in portfolio securities.
The Fund has adopted a policy under which the Fund may limit cash payments in connection with redemption requests to $250,000 during any ninety (90) day period. As a result, the Fund may pay you in securities or partly in securities if the amount of Fund shares that you redeem is more than $250,000.
It is highly likely that the Fund will pay you in securities or partly in securities if you make a redemption (or series of redemptions) in an amount greater than $250,000.
David

Good stuff, but imho, the videos have gotten a little repetitive. Nowadays I'm finding the portfolio reviews more informative; most of the newer material he covers in the videos seems to be also in the reviews, and it doesn't take 15 minutes to read the reviews. Again, just mho - not saying he isn't still doing a great job communicating.

Jerry's correct above. And I won't argue that Sequoia management screwed up royally in managing their fund.
But here's the crux of the WSJ article:
"Sequoia’s repayment approach, called a “redemption in kind,” is part of a longstanding fund policy that allows it to give shareholders mostly stock if they are pulling out $250,000 or more. A person close to the firm said it has done thousands of in-kind transactions over many years and that the majority are done for redemptions in excess of $1 million."
If Sequoia failed to disclose RIK in its Prospectus that's a serious legal matter. In all likelihood it was mentioned. I've seen similar language in many prospectuses for my funds. It's not uncommon. Bottom line: Read and understand your Prospectus before you invest.
Additionally ... How many on this board will ever have occasion to pull a quarter-million dollars from one fund all at once (which is what triggered the RIK in this case)?
WSJ fails to address Mr. Bently's age and circumstance. Sequoia's annual/semi-annual reports should have revealed to him that Sequoia was concentrated in only a dozen or so securities. Ed S. addresses this issue in David's April 1 Commentary. In a nutshell: Potential rewards are high with a concentrated portfolio. So are the risks. If I'm reading Ed correctly, he has serious reservations concerning the suitability of highly concentrated portfolios for retirees.
msf has a good thread running on the topic of disclosure. Personally, I'm often guilty of clicking on "Accept these terms" without due diligence whenever Apple, Amazon or PayPal update their terms of use (not smart I know). But I love reading financial literature and so very much enjoy reading over prospectuses and reports for the funds I own. (And don't like the dumbed-down "summary" prospectuses either.)

FYI: (Click On Article Title At Top Of Google Search)
When Tom Bentley tried to pull his money from a mutual fund troubled by its large stake in Valeant Pharmaceuticals International Inc., he instead received shares in a Springfield, Mo. auto-parts retailer.
Sequoia Fund Inc. sent the retired computer hardware engineer about 5% of his money in cash and the rest was stock in one company–O’Reilly Automotive Inc. Mr. Bentley said he sold the shares as soon as they appeared in his account on April 7, but they had already dropped in value
Regards,
Ted
https://www.google.com/#q=Clients+Pull+Cash+From+Valeant+Investor,+Get+Stock+Instead++wsj

http://www.seafarerfunds.com/video/2016/03/quarterly-briefing/?utm_medium=email&utm_campaign=2016-04-06 Quarterly Briefing Individual Investor - Monthly&utm_content=2016-04-06 Quarterly Briefing Individual Investor - Monthly+CID_093448545840c6355a189d212fe43027&utm_source=E mail Campaign&utm_term=Quarterly Briefing
For those invested-- or who just like to watch-- here's one "interpretive reading" of the continuing EM turmoil. (Maybe) every little bit counts.

@Junkster: i agree these have been better relative value. please note that lots of loans are made to junkier credits, especially those to smaller energy companies. the recent oil action has resulted already in a bunch of bankruptcies, but more to come, since a lot of interest coverage modeling was done with oil at above $50.
loans, even more than bonds, are very flow dependent. since joe retail is not very much educated about loans, their flows haven't swelled as much as those for the bonds, hence the underperformance (in my view). another kink is that latest SEC liquidity proposal which could make daily liquidity loan mutual funds all but extinct.
since i dabble in CEFs, i choose those that have discretion to allocate to both. i trust that managers will pick up the relative value. BGH, which suffered mightily due to its energy exposure is on the rebound, so is HNW for example and more single asset thingies such as JRO/JQC/JSD/VTA/VVR, etc.

Thanks fundalarm nice post above. So let's get off topic. Any insights on bank loan/senior loans/leveraged loan/floating rate funds???? Talk about a stealth bull market or at least one under the radar. Some of the open end ala EVFAX have had but one down day since 2/17 and a multi percentage rise. Plus juicy yields around 5%. I hold EVFAX and SAMBX overbought as they are. Not as exciting recently as NHMRX or the junk corps and emerging markets debt when they are moving, but real steady eddies. Below is an excerpt of some comments in early March in Barrons on this often misunderstood asset class.
>>>>>Most loan funds have attractive yields of 5% to 6%—up to 9% for closed-end funds. Loan funds have credit risk, but are much less volatile than junk-bond funds when credit conditions weaken; and loan investors get paid back before bondholders in the event of a default. The loan market has about 4% exposure to the troubled energy sector now, compared to 15% for junk bonds.
As an added bonus, most loans have interest rates that float with prevailing rates. So if the Fed hikes several more times, many loans will yield more. Without interest-rate risk, loans tend not to correlate with other fixed-income assets.
Now is a good time to buy, because these loans are selling at about a 10% discount to par. They sold off, along with high yield, as investors worried that the U.S. was going into recession, but they haven’t recovered. “The asset class has always offered a nice risk-adjusted return over a three-to-five- year time period,” says Craig Russ, co-director of floating-rate loans at Eaton Vance. “But the last two years they’ve underperformed, creating this attractive entry point.”
There’s another good sign, says Jean Joseph, a portfolio manager at Goldman Sachs Asset Management: The default rate priced into the loan market is 7.5%, when the average default rate historically is 3%; and the current rate is still below that. “The market is pricing in defaults close to 2.5 times what we expect this year,” Joseph says.<<<<<<<<

i glanced over one of your links and found the following references:
"The Junk Bond Index rate has increased significantly… driving prices downward to a 4-year low" and "High-yield spreads over Treasuries are significantly higher now than they have been leading up to any Federal Funds “Liftoff” during previous cycles." (bold face is mine)
the first quote talks about rates while the other talks about spreads.
Generally, reference to 'prices' of junk bonds is reference to spreads. just like one quotes equity at a dollar price, as in 'VRX trades in low $30s', you quote junk in spreads - 650 bps to treasury.... that's the convention. and Gundlach, of all people, who breathes bonds, knows it better than anyone.
i venture to say that CNBC put up the JNK chart to illustrate his point, and I absolutely agree that using price only chart for JNK is misleading. All investments are total return vehicles, and the higher the yield, the more important it is to incorporate it in any return discussion.

i hope you're now suggesting that Gundlach doesn't know how to calculate total return for a bond fund.
he was referring to spread widening which started in August. junk spreads went to widths that were unheard of outside a full blown recession at the time (and earlier this year.) they have contracted since as you and others have noticed...
best, FA

Total return charts are the only way to go with bond funds as they include reinvested dividends. Price only charts for bond funds don't *remotely* begin to paint an accurate picture. Don't mind me, just one of my pet peeves. I recall Gundlach saying on CNBC late last summer how junk bonds (JNK) were making 4 to 5 year lows. Nothing could have been further from the truth as he was just looking at a price only chart and completely ignoring dividends.

Not exactly. The first link in October 2015 he says junk bonds are at 4 year lows. REALLY WRONG! The second link from this January he says junk bonds are trading at levels below those seen during 2012. REALLY WRONG! I would have to look further but he also said something to the same effect late this summer. He says nothing about spreads but simply junk bonds. When I saw him on CNBC this summer he was using a chart of JNK. Gundlach likes to make news enhancing announcements. I hope there is a crash in junk bonds so he can be proven right about that many times prediction.
Edit: For the record, junk went into a steep decline in January and bottomed on 2/11. At its lowest point it hit levels not seen since 12/11/12. Junk bonds were never at 4 year lows at anytime. When he made his comments in early January of trading at levels below those seen during 2012 not even remotely close. To have been at levels below those seen in 2012 junk would have had to have declined another 12+% from its 2/11 lows.
http://citywireselector.com/news/gundlach-credit-concerns-and-what-happened-with-bill-gross/a847840
https://www.markettamer.com/blog/gundlach-on-the-feds-amazing-blunder

i hope you're now suggesting that Gundlach doesn't know how to calculate total return for a bond fund.
he was referring to spread widening which started in August. junk spreads went to widths that were unheard of outside a full blown recession at the time (and earlier this year.) they have contracted since as you and others have noticed...
best, FA

Total return charts are the only way to go with bond funds as they include reinvested dividends. Price only charts for bond funds don't *remotely* begin to paint an accurate picture. Don't mind me, just one of my pet peeves. I recall Gundlach saying on CNBC late last summer how junk bonds (JNK) were making 4 to 5 year lows. Nothing could have been further from the truth as he was just looking at a price only chart and completely ignoring dividends.

"a low tolerance for risk"
Ummm ... you might reflect on that conclusion in light of the positioning of my portfolio, which I publish annually. In the non-retirement portfolio, about 50% of my money is in equities and 50% in income-producing securities. Within the equity sleeve, 50% is international and within international more than 50% is a combination of small, emerging and frontier. Domestic is overweight small- to micro-cap which a distinct value pitch. I have no savings account (0.01% APR does nothing for me) but instead balance very conservative income-oriented investments (the aforementioned RPHYX) with quite aggressive ones.
It might be a bit misleading to point to one fund and generalize from it. I mean, really, why is substituting RPHYX and RPSIX for CDs and a savings account "risk averse"?
My self-description would be closer to this: "I will accept no risk unless I perceive a serious assymetry, in which the probable upside is substantially greater than the probable downside." One measure of the ability of a manager to achieve that goal is to look at a risk-return ratio over a meaningful period of time. My default is Sharpe over a full market cycle. The FMC orientation simply reflects the fact that I have better things to do than try to time my portfolio; I have neither the interest nor the discipline to pull that off. Some folks do, although the evidence suggests a far larger number simply thinks they do.
So, if you start with my premise - high risk-return ratio over meaningful periods - which small caps should I be looking at? When I screen for open, retail small cap funds - domestic, global, international - no-load or load-waived at Scottrade and sort by descending Sharpe, the top ones are:
1. Intrepid Endeavor, first by a lot. ARIVX is a near-clone in terms of risk-return but it doesn't have a full cycle record.
2. Westwood Mighty Mites
3. Homestead Small Cap
4. Pinnacle Value
5. Tributary Small Cap.
If you play with the risk-reward measure (Sortino, Martin, Ulcer Index) you get a slight shuffle of the top ten with the addition of Queens Road SCV and Royce Special.
I'm not enamored with the Royce or Gabelli organizations. Love Homestead's low minimum initial investment ($500), don't love the $1.2 billion size as much. Queens Road is very much worth a look. Tributary really would qualify as "in the shadows." And still the numbers point most consistently to ICMAX and the much-derided ARIVX.
I bet you're wondering why I buy and sell funds so rarely. Briefly, I go through this sort of pondering with every single one.
David