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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.

Vanguard Launches Low-Cost, Actively Managed Core Bond Fund
Subscription Period
Vanguard Core Bond Fund is holding a subscription period from March 10, 2016,
through March 24, 2016. During this period, the Fund will invest in money
market instruments rather than seek to achieve its investment objective. This
strategy should allow the Fund to accumulate sufficient assets to better
construct a portfolio and is expected to reduce initial trading costs.
The Fund reserves the right to terminate or extend its subscription period prior
to March 24, 2016.
During the subscription period, you may invest in the Fund online (if you are
registered for online access), or you may contact Vanguard by telephone or by
mail to request this transaction. Please see the Investing With Vanguard
section of the Fund’s prospectus for more details about requesting transactions.
© 2016
e.r.= 0.25% (Investor Shares) or 0.15% (Admiral Shares)
Prospectus straightforward and unremarkable, as one would expect.....
https://personal.vanguard.com/us/funds/snapshot?FundId=1320&FundIntExt=INT

heezsafe March 2016 in Fund Discussions
Lipper: Despite An Uptick In Equities; Fund Investors Remain Risk Adverse
FYI: Generally ignoring mixed economic news, equity investors continued to follow the lead of oil prices throughout the fund-flows week ended March 2, 2016.
Regards,
Ted
http://lipperalpha.financial.thomsonreuters.com/2016/03/55317/

Ted March 2016 in Fund Discussions
Most U.S. Stock Pickers Failed To Beat Index Last Year, S&P Says
FYI: Study finds the pattern persists over five and ten years.
Managers who bought international equities fared better.
Chalk up another victory for indexing.
Sixty-six percent of mutual-fund managers who buy large U.S. stocks underperformed the benchmark Standard & Poor’s 500 Index last year, according to a study by S&P Dow Jones Indices.
Regards,
Ted
http://www.bloomberg.com/news/articles/2016-03-09/most-u-s-stock-pickers-failed-to-beat-index-last-year-s-p-says
MarketWatch Slant:
http://www.marketwatch.com/story/the-sp-500-beat-66-of-stock-pickers-last-year-2016-03-10/print
Click On SPVIA U.S. Year-End 2015
https://us.spindices.com/search/?query=spiva+u.s.+year-end+2015&Search=GO&Search=GO

Ted March 2016 in Fund Discussions
Jeffrey Gundlach Calls End of Risk-Market Rally
@hank said "So small investors are supposed to ...? "
Gundlach mentioned as possible investments
G-7 Bonds in local currency. Gundlach's newest fund Right product,right time.
http://www.doublelinefunds.com/funds/global_bond/overview.html
Bond C E Fs @ discount.His ?
DBL
http://www.cefconnect.com/Details/Summary.aspx?Ticker=DBL
DSL
http://www.cefconnect.com/Details/Summary.aspx?Ticker=DSL
@junKster said on 3/6
the Jeffrey Gundlach DoubleLine bond funds mentioned (DBLTX and DLTNX have been among the best of the best over the past 1, 3, and 5 years. And obviously had you *blindly* put your money in the trust of DoubleLine you would be sitting pretty in that bond category if a diversified portfolio is your thing.
http://www.mutualfundobserver.com/discuss/discussion/comment/75948/#Comment_75948
Also in JNK

By Bloomberg News | March 9, 2016 - 12:09 pm EST
Best junk bond manager of decade says recession fears overdone
Fidelity's Mark Notkin sees mid-to-high single-digit returns for 2016
Mark Notkin expected the rebound in high-yield bonds. The earlier plunge in the first part of the year is what didn't make sense to him.
Mr. Notkin, whose $9.7 billion Fidelity Capital & Income Fund FAGIX has outperformed all peers over the past decade, didn't flinch as high-yield bond prices tumbled in January and early February. While investors feared that declining oil prices and troubles in Europe and Asia might disrupt growth in the U.S., Mr. Notkin found little evidence to support the gloom.
http://www.investmentnews.com/article/20160309/FREE/160309924?template=printart
Gundlach's Slides From 3/9
http://seekingalpha.com/article/3956876-jeffrey-gundlach-probability-another-hike-march-june-2016-slides
Gundlach "uncanny"how accurate this indicator has been

TSP_Transfer March 2016 in Fund Discussions
Coalition Pressures Vanguard On Political Spending Proxies
FYI: A coalition of consumers and investors says it is focusing its efforts on getting Vanguard to join in the efforts of shareholder activists.
Regards,
Ted
http://www.fa-mag.com/news/coalition-pressures-vanguard-on-political-spending-proxies-25597.html?print

Ted March 2016 in Fund Discussions
Jeffrey Gundlach Calls End of Risk-Market Rally
We will have to revisit Mr. Gundlach predictions sometime down the road. PIMCO has a different and positive view on junk bonds - see link below. I have no idea on stocks, junk bonds or whatever. Albeit I am lighter than I was last week in the junk category. I also have a few irrelevant issues with the month long stock market rally. My only quibble with his junk bond prediction is when he says they aren't worth buying until crude rallies to around $45 to $50 a barrel. They have already rallied 6% from their 2/11 lows (at which time he was predicting a junk bond collapse) If crude does trade to the $45 to $50 level that is another large percentage move you will have missed in junk.
http://www.bloomberg.com/news/articles/2016-03-03/pimco-wades-into-junk-as-doubleline-warns-danger-still-lurks

Junkster March 2016 in Fund Discussions
DAILYALTS: Plates Are Shifting
@Heezsafe,
Thanks - But I added a gold fund, a real estate fund and an EM-bond fund to the mix on Sept. 9 ('15). Added an EM-equity fund (Latin America) on Jan. 18 ('16). These were not popular moves at the time. All have jumped since purchase - in he case of gold and EM-stocks about 35% and 25% respectively.
I'd prefer to move before the markets have ratcheted-up 10-40% and the pundits have issued their reports.

hank March 2016 in Fund Discussions
60/40 follow
@shipwreckedandalone: As time goes buy, you'll learn that one must get up very early to beat the linkster to a article, but please keep on trying. Once again welcome to MFO.
Regards,
Ted
http://www.mutualfundobserver.com/discuss/discussion/26304/the-problem-with-trying-to-quantify-risk#latest
http://www.mutualfundobserver.com/discuss/discussion/26259/bogle-vs-golitath-college-endowment-funds/p1

Ted March 2016 in Fund Discussions
Carlson’s (and Others) Periodic Table
@MJG: Interesting, but the chart you linked is from 1/2/15, today ,3/8/16, he updated the chart. Earlier this morning, I did link which at the time was his latest column, 3/6/16, " Bottom Fishing & New Bull Markets" Thanks for calling it to my attention.
Regards,
Ted
http://awealthofcommonsense.com/2016/03/updating-my-favorite-performance-chart/

Ted March 2016 in Fund Discussions
Carlson’s (and Others) Periodic Table
Hi Guys,
Earlier today, Ted posted a Link that listed 20 best investing Blogs. Here is the internal Link to that listing:
http://www.mutualfundobserver.com/discuss/discussion/26376/the-20-best-investing-blogs-of-2016
I am familiar with many of them, and they are useful resources. I am especially a fan of Ben Carlson’s columns. They are almost always chockfull of actionable information. His latest column is no exception. I’m surprised that Ted has not yet referenced it. So I will:
http://awealthofcommonsense.com/2015/01/updating-favorite-performance-chart/
It is Carlson’s favorite performance chart. Likewise, it is one of my favorites. Note the rather random quilt-like pattern. Good luck on recognizing a specific pattern, but general observations are possible. Carlson makes a few very relevant interpretations. I agree with his assessments. I do wish he had included an average volatility column to supplement his returns summary column.
Many alternate Periodic Tables of Investment Returns are accessible. They all provide terrific performance summaries at a glance. Here is a Link to one such Table that includes a few more years of data:
https://investment.prudential.com/util/common/get?file=1D065355D2CC360385257B7D00536F8A
This one is from Prudential Investments. Many others, like from Callan, are easily accessible. Others include Fixed Income Periodic Performance summaries. Here is a Link to a set of Tables from American Century Investments:
https://www.americancentury.com/content/dam/americancentury/ipro/pdfs/flyer/Periodic_Table.pdf
These tables include a Standard Deviation summary column. Good for them; good for us. Pick your own poison. Enjoy.
Best Regards.

MJG March 2016 in Fund Discussions
Did You See Why The S&P 500 Is Outperforming Dividend Mutual Funds?
FYI: Dividend mutual funds as a group lagged the S&P 500 stock index over the 10 years that ended going into Monday.
The reasons for the underperformance are worth keeping in mind whenever you make buy or sell decisions in your portfolio, particularly the diversified portion — your mutual funds and ETFs. They could boost the octane in your funds’ fuel tank.
Dividend funds lagged despite having outperformed as a group over the first half of the decade. But as the post-financial-crisis bull market picked up steam, the S&P 500 began to top dividend funds in total return.
Regards,
Ted
http://www.investors.com/etfs-and-funds/mutual-funds/did-you-see-why-the-sp-500-is-outperforming-dividend-mutual-funds/

Ted March 2016 in Fund Discussions
Funds sold through fee-only advisors
IMHO, trying to infer anything from a class name other than perhaps A, B, C, I, and Investor is an exercise in futility, since there's no standardization.
For example, Federated funds have classes A, B, C, F, R, and Institutional (IS). A,B, C, and F shares are all available to individuals directly or through brokers. See, e.g. this prospectus for Federated Capital Income (CAPAX, CAPBX, CAPCX, CAPFX, CAPRX, CAPSX) - "How is the fund sold?"
The F shares (at least for this fund) cost a basis point more than the A shares, which are available load-waived - you don't even need to go through an adviser. So these F shares don't seem limited to use by advisers, and they don't even seem to be cost effective.
These days, many load families (though not American Funds) waive loads if you go through discount brokers. The A shares may have a 12b-1 fee that's higher than the fund's share class (if any) designed for wrap accounts, but the net cost to you is still lower (since you avoid the wrap fee). For example, Templeton Bond Fund A (TPINX) is available load-waived, but carries a 0.25% 12b-1 fee (total ER 0.88%), while the Advisor share class (TGBAX) has no 12b-1 fee (total ER correspondingly lower, at 0.63%).
Traditionally, load families waived the load on A shares if they were sold in a wrap account. So we've now identified some F shares, ADV shares, and load-waived A shares sold through wrap accounts. I'm sure there's more.

msf March 2016 in Fund Discussions
High Yield Corporate Mutual Funds
Just to clarify AWF is a global fund in which 70% is invested in the USA. DSL has 40% foreign debt. Both of them reached near 15% discounts during the oil panic.

shipwreckedandalone March 2016 in Fund Discussions
The Harm In Selecting Funds That Have Recently Outperformed: Research Paper
I went right to the results of this paper. Everything else puts me to sleep.
Results from the this investigative paper:
…a strategy of hiring managers with mediocre track records outperforms one of hiring past winners, and a strategy of hiring past losers turns out to be the best of all.
…the practical implication of our paper is that asset owners should focus on factors other than past performance when selecting managers.
…the “investment thesis” that drives a fund’s portfolio management strategy should be a key criterion for consideration.
…a variety of objective characteristics that predict future performance… :the presence of performance-linked bonuses in fund manager compensation packages (Ma, Tang, and Gómez (2015)), a high level of fund manager ownership (Khorana, Servaes, and Wedge (2007)), board of director ownership (Cremers, Driessen, Maenhout, and Weinbaum (2009)), a high active share (Cremers and Petajisto (2009), Amihud and Goyenko (2013)), lack of affiliation with an investment bank (Hao and Yan (2012)), outsourced execution of shareholder services (Sorhage (2015)), the presence of a short-term redemption fee (Finke, Nanigian, and Waller (2015)), having PhDs in key portfolio roles (Chaudhuri, Ivkovich, Pollet, and Trzcinka (2013)) and having strong positive firm culture (Heisinger, Hsu, and Ware (2015)).
In conclusion:
Evaluating a manager’s strategy ex-ante and taking account of fund characteristics may be more difficult than making decisions based on historical performance. Nonetheless, our research suggests that it is a better approach to delegated portfolio management.
Much if not all of these results have been stated by different people here at MFO, which makes this site so enlightening. It strengthens my resolve that there are only a few places where you might hire a fund manager. For me, International, EM's maybe small caps need active fund managers. Balanced funds for sure if you want to leave it up to a professional to adjust investment weightings (which I do).

MikeM March 2016 in Fund Discussions
The Harm In Selecting Funds That Have Recently Outperformed: Research Paper
FYI: We empirically investigate the investment results of commonly used fund selection strategies that involve redeploying assets from underperforming to outperforming funds. Based on portfolios constructed using U.S. mutual fund data over typical three-year evaluation periods, we find that investors who chose funds with poor recent performance earned higher excess returns than those who chose funds with superior recent performance. Our findings pose a challenge for asset owners: If past performance is used at all in selecting funds, it is the best-performing funds that should be replaced. Realistically, however, a policy of replacing successful funds with poor performers is unlikely to gain widespread acceptance. Instead, the practical implication of our paper is that asset owners should focus on factors other than past performance. We offer alternate criteria for selecting funds.
Regards,
Ted
http://poseidon01.ssrn.com/delivery.php?ID=438094071086119066002010083088101123024020030032038022077085101018094027090108104009120036123104050034053099090030004100110109109040002033054075065068084123004103058015033101012027103091100086127029094104004097087071074014106113086015101099123013103&EXT=pdf

Ted March 2016 in Fund Discussions
Mutual Funds Rally By Not Sticking To A Style: FPACX
@msf - I noted the 15-yr baseline but not David's suggested start date. In my look I started with the TIBIX start (inception) date of 12/24/2002 when running my comparison since I basically jumped on board then. Stop, we're both right? I don't know. It just seemed like a good place for me to begin, creaming included. I'm not sure there's a true apples-to-apples way to go after this.

Mark March 2016 in Fund Discussions
Mutual Funds Rally By Not Sticking To A Style: FPACX
I just compared the above top rated Forward Income Builder fund (AIAIX) to the fund I've been using in this space for the last 13+ years TIBIX. No thanks, I'll continue to remain oblivious.
Edited to add: I'm sure I'm missing something but it doesn't appear to be performance. I'd be thankful for any insight. FWIW, I'm not totally thrilled by the Thornburg offering as they have faltered in their objective of "income building" but I haven't been able to find or settle on a suitable alternative.
An obvious observation - TIBIX couldn't show up in the cited article, since it hasn't been around for 15 years.
What you're missing seems to be the fund's relatively poor performance through 2008 (falling further than both M*'s moderate allocation benchmark and the average world allocation fund). See this M* chart
For the chart, I used 9/30/2007 as the start date (David suggested fall 2007 as a start point, this date seemed as good as any). Over this period of time, TIBIX performed in line with AIAIX and the moderate allocation benchmark, though it significantly outpeformed world allocation funds.
It's that oversized dip that's killing it. It doesn't get brownie points for upside volatility with Sortino.
Over its lifetime, TIBIX has indeed excelled. Here's that same M* graph, stretched to lifetime.
While I'm not a fan of asking "what have you done for me lately" (e.g. YTD), I think it is fair to point out that all of that outperformance is due to the fund's first five years. Since then it has been doing well, but it's not beating a few other good funds. However, by the same token, if you throw out its 2008 performance, it again looks great.
If one is willing to live with the idea that the fund could get creamed (relatively speaking) in a bear market, it's a fine, high performing fund.

msf March 2016 in Fund Discussions
Waiting for the smoke to clear?
Just adding a little fuel to the fire so to speak (from Dow Jones via M*):
Oil Prices Lifted by Supply Cut Hopes
http://news.morningstar.com/all/dow-jones/us-markets/201603072580/oil-prices-lifted-by-supply-cut-hopes.aspx

Mark March 2016 in Fund Discussions
Mutual Funds Rally By Not Sticking To A Style: FPACX
The short version: a former Morningstar analyst ranked "balanced" funds with more than a billion in assets by their 15-year Sortino ratio. Sortino is an offshoot of the well-known Sharpe ratio, but it's more sensitive to a fund's downside deviation. By that measure, the best balanced fund is F P A Crescent.
Two quick notes:
1. a lot has changed for Crescent over the past 15 years, not least growing to 100 times their previous size. That is, from $170 million in 2002 to more than $18 billion now.
2. different parameters give different results. Lipper categorizes Crescent as a "flexible portfolio" fund, which seems more appropriate than benchmarking it against staid 60/40 funds as Morningstar does. If you look at 60/40 funds over the course of the current market cycle, which began in the fall of 2007, Crescent finishes sixth:
1. Forward Income Builder
2. Chicago Equity Partners Balanced
3. Bruce
4. Marsico Flexible Capital
5. Intrepid Capital
6. FPA Crescent
7. Provident Trust
8. JP Morgan Income Builder
9. Prudential Income Builder
10. Loomis Sayles Multi-Asset Income
If you sort by Martin ratio, Charles's preferred metric and the basis of our fund ratings, you get most of the same funds but Crescent pops to fourth:
1. Forward Income Builder
2. Intrepid Capital
3. Chicago Equity Partners Balanced
4. FPA Crescent
5. Provident Trust
6. Bruce
For what interest that holds,
David
David_Snowball March 2016 in Fund Discussions
Unique S&P 500 ETF: High Income, Low Volatility Bring Investor Love: SPHD
FYI: When an ETF invests in the S&P 500 while offering less risk and a big yield, what’s not to love?
PowerShares S&P 500 High Dividend Low Volatility (SPHD) filters the iconic index for 75 companies with the highest dividend yields, then extracts 50 of those that are least volatile.
SPHD was up 5.99% this year through March 2 vs. a 2.39% loss for SPY. It has also outperformed SPY, the largest and oldest U.S. exchange traded fund, over the past three years.
Regards,
Ted
http://www.investors.com/etfs-and-funds/etfs/sp-500-etf-high-income-low-volatility-and-loads-of-investor-love/

Ted March 2016 in Fund Discussions