Also:
Gundlach: Swap Corporate Bonds for Mortgage
J. Gundlach, bond King, Doubline, is suggesting to blow out of your corporate bonds, especially junk, that were purchased at the height of panic when everyone thought the Fed was crazy enough to hike rates four times this year.
Wait, aren’t they still saying that?
Gundlach quote from Tuesday:
“The junk market was scared to death that the Fed was actually going to go forward with their suicide mission to raise rates four times this year, four times next year and four times the year after,” Gundlach said. “It’s not surprising that the same burst of enthusiasm for Treasury bonds, once the Fed seemed to abort their suicide mission, it also helped junk bonds. I don’t think that can continue any longer.”
Government-backed Ginnie Mae mortgage-related securities “are cheap relative to Treasuries,” the fund manager said. “That’s been a good buy point for the past six years.”
http://ibankcoin.com/flyblog/2016/04/12/gundlach-swap-corporate-bonds-for-mortgage/
From Ted's link
"The easy money has been made," Gundlach said.
Seemed to be his general theme not only with "junk" but oil and C E F's.Harder to get to $45 oil than from $30 to $40. Many C E F nav discounts have narrowed .Good way to
participate is RNDLX/RNSIX .Likes the Puerto Rico Municipals for high income individual/family taxpayers.Likes C M B S '( Principal Real Estate Income PGZ up near 2% today ). Continues to stick with his now 2 year old prediction of $1400 gold.Bond investors at least 25% defensive posture which of course would be comparable to his own managed (DFLEX/DLINX).
Also
Try this asset allocator
http://bluerockfunds.com/asset-allocator/
And questions or comments besides WHY?
TI+ is a fund for individual investors that seeks current income, low-volatility, capital preservation and long-term capital appreciation. In the three+ years since its inception through February 29, 2016, TI+ has delivered a total annualized return of 8.93%, including 12 consecutive quarterly distributions at an annualized rate of 5.25%. Significantly, the Fund has achieved risk-adjusted returns of five to seven times higher than leading stock, REIT, and bond market indexes, underscoring the Fund’s low volatility.
As of 4/14/2016 NAV
TIPRX $28.79
TIPPX $28.37
TIPWX $29.00
http://bluerockfunds.com/documents/

--Morning Star has recently upgraded FPACX from 4 star to 5 star
--Kiplinger on line- has removed Fpacx from it's 'Kip 25' =best funds by catagory - and replaced with VWELX .
-Here on MFO David suggested replacing FPACX with Lcorx . and then suggested a 'wait & see' hold position.
- Any further analysis will be appreciated.
Thanks
Ralph

I believe those were not actually money market funds, but other MMF-like vehicles including short term investment funds (STIFs) and enhanced cash funds. Extensive quotes from an ICI paper explaining these are below (after --- break).
The ICI also has a two pager: Money Market Funds in 2012, History of Money Market Funds
It says:
- Money market funds were created in the early 1970s ...
- In 1994, the Denver-based Community Banker’s U.S. Government Money Market Fund reported a NAV below $1.00 and ultimately investors recovered approximately 96 cents on the dollar.
The reason why I quoted the second item is that the first MMF to fail was an institutional MMF, not a retail one. That shows that in this paper, the ICI is talking about institutional as well as retail funds when it writes that MMFs were created in the early '70s.
FWIW (can't verify, I don't know anything about the firm other than it makes the same claim on its own webpages):
"Drinker Biddle & Reath's lawyers are nationally recognized as pioneers in the bank-related mutual funds market dating back to the mid-70s. The firm developed the country's first institutional taxable and tax-exempt money market funds"
http://www.thefreelibrary.com/Drinker+Biddle+&+Reath+ranked+No.+1+mutual+fund+counsel+in+the...-a016805468
---------------
From the 2009 Report of the Money Market Working Group:
(Section 3.1) "Money market funds were developed in the early 1970s as a way to allow retail and other investors with modest amounts of assets to participate in the money market. ... Previously, market rates of return had been available only to wealthy individuals and large institutions with sizeable amounts to invest.
[Note "market rates of return", not "money market funds"]
It goes on to describe STIFs in Section 5.1.2:
"Bank trust departments offered a short-term investment product (STIF) several years before the first money market fund appeared. These cash pools amortized cost to meet client and fiduciary demands for low-risk investments that function much like money market funds."
The only mention of an investment vehicle available to wealthy individuals in the paper is the enhanced cash fund (Section 3.1):
"These funds seek to provide a slightly higher yield than money market funds by investing in a wider array of securities that tend to have longer maturities and lower credit quality. ... Enhanced cash funds target a $1.00 NAV, but have much greater exposure to fluctuations in their portfolio valuations. Enhanced cash funds are privately offered to institutions, wealthy clients, and certain types of trusts."

I must be having a bad hair day. Don't get confused, as I did, by the phrase "classified two company investments as passive", thinking that this might have something to do with passive mutual funds. Or that mutual funds have different disclosure requirements (as do ETFs) depending on whether they are passive or active.
The "passive" here has got nothing to do with a fund's investment style. It has to do with buying shares and just sitting back and enjoying the ride. Which makes me wonder whether even voting for board members is at some level "active". Or something only slightly less extreme - a fund voting on a shareholder initiative to limit executive compensation. The cited article references executive compensation in the context of "activism".
I think this Bloomberg opinion column sheds a lot more light on what's going on:
http://www.bloombergview.com/articles/2016-04-04/shareholder-activism-might-have-antitrust-issues
That has a lot of facts about the ValueAct case, including a link to the Bloomberg news article:
http://www.bloomberg.com/news/articles/2016-04-04/valueact-sued-by-u-s-over-halliburton-baker-hughes-purchases
It also discusses a possible impact on mutual funds. It suggest that the underlying action (saying that a hedge fund owning competing companies in an M&A was being "active") moves a step toward saying that mutual funds (which sometimes own competing funds in concentrated industries) may likewise be illegal. It links to an older column:
http://www.bloombergview.com/articles/2015-07-22/index-funds-may-work-a-little-too-well
That column in turn suggests that maybe funds are safe if they don't vote, which curiously brings me full circle to my speculation at the top of this post.

Isn't that the whole idea of ETFs? That APs generally redeem in kind (thus providing the tax efficiency that is purportedly lacking in open end funds).
Admittedly there are some types of ETFs that typically trade in cash, but they're the more esoteric ones (inverse and leveraged, and I believe commodities). But for the most part, the expectation (as marketed) when shareholders (i.e. APs) redeem (not sell) shares, the sellers get the underlying securities (or whatever is in a Creation Unit).
For example, from BOND's prospectus: "Except when aggregated in Creation Units, shares of a Fund are not redeemable securities. Shareholders who are not Authorized Participants may not purchase or redeem shares directly from a Fund."
There is a potential tracking problem with ETFs that hold illiquid assets (e.g. bonds in a credit crunch, to use your example). When normal (not AP) shareholders try to bail on an exchange, the market (not NAV) price gets depressed. APs may decline to step in, because they know they'll get illiquid assets they can't dump at a profit (the spread between the supposed NAV of the underlying assets and the market price of the ETF).
So the market price of ETFs can go into free fall. That's a related but different issue.

Response from Sequoia's David Poppe:

For many years Sequoia Fund has clearly disclosed that we can and do pay large redemptions with securities rather than cash, and we have done so thousands of times before this year without incident. So we were puzzled by “Sequoia Clients Get Stock Shock” (Business & Finance, April 9) questioning the practice as a “shock” to investors and trying to tie recent in-kind redemptions to our Valeant stake. This policy isn’t new, is unrelated to the ups and downs of our fund and, specifically, is unrelated to our holding in Valeant.
We redeem with shares to benefit our continuing shareholders, who might otherwise pay capital-gains taxes on the sale of appreciated stock that might be required for redemptions. By redeeming in kind, our 20,000 continuing Sequoia shareholders will pay lower capital-gains taxes in the future. Our goal is always to be tax-efficient and to do what is right for continuing shareholders. For a departing shareholder, there is no tax or other consequence to receiving stock instead of cash, aside from the minor inconvenience of having to sell a security upon receipt. We take care to always deliver stocks that trade in sufficient volume so that the exiting shareholder can sell them immediately without depressing the market for a particular security.
David M. Poppe
President
Sequoia Fund
New York

http://www.wsj.com/articles/sequoias-redemption-with-securities-is-tax-efficient-1460583731

FPACX 1st Quarter Update
TOTAL CASH & EQUIVALENTS 6,183,252,260.14 36.25%
TOTAL NET ASSETS: 17,059,264,885.05 100.00%
Activity:
o Sold out of Anheuser-Busch, Jardine Matheson, Joy Global, Orkla, and Walgreens
Boots Alliance.
o Added to several names, including Alcoa, American Express, Bank of America, CIT
Group, and Citigroup.
o Top contributors for the quarter were Oracle, Aon, Yahoo/Alibaba pair trade, United
Technologies, and Cisco. Citigroup, an undisclosed equity position, AIG, Bank of
America, and Esterline were the largest detractors for the period.
Positioning:
o Gross exposure to equities is 60.9% and net equity exposure is 57.6%. Corporate Bond
exposure increased to 4.9%.
o Cash and cash equivalents allocation is 36.3%.
Outlook:
o We continue to research financials, high yield, cyclicals and various commodities-related
businesses.
http://www.fpafunds.com/docs/fpa-crescent-fund/q1-2016-crescent-update.pdf?sfvrsn=2
Full Schedule of !st Quater Holdings
http://fpafunds.com/docs/funf-holdings/crescent-03-31-16-for-website.pdf?sfvrsn=2
Southern California in Early June ? F P A Investor Day on the Pacific !

http://fpafunds.cvent.com/events/a-day-with-fpa-2016/agenda-66af952dc057428fbafd4a90b856dcb7.aspx
From David Snowball
The better question is, can the fund consistently and honorably deliver on its promise to its investors; that is, to provide equity-like returns with less risk over reasonable time periods? Given that the management team is deeper, the investment process is unimpaired and its size is has become more modest, I think the answer is “yes.” Even if it can’t be “the old Crescent,” we can have some fair confidence that it’s going to be “the very good new Crescent.”
Beware the Siren Song ?

I chose Seafarer (SFGIX), but in my 401(k), Capital Emerging Markets Growth Fund (EMRGX) chose me, as the plan swapped out American's (NEWFX), for Capital's (EMRGX), which has a lower (.80) ER.
On paper, the EMRGX managers look to have more experience than nearly any foreign/emerging markets operation - its partners have in the range of 15-to-40-years. Apparently, they were "chosen by the International Finance Corporation, a World Bank affiliate, to manage the world’s first global emerging-market fund."
But their long-term results (and the emerging markets category) are uninspiring. If those markets ever catch a sustained rally, I would expect EMRGX to be rewarded for the risk - a la GMO's forecast on a mean reversion for the category.
Right or wrong, I consider such exposure a diversifier, without getting crazy with more esoteric, alternative options.

MUHLX had a very good run late-90s to pre-recession meltdown around 2004 0r 2005 if my memory is right. Then it was like the fund was on a different planet. Assets went from maybe $3 billion to maybe $250 million now. I wonder how much of the dollars left are Muhlenkamp family and employees. A really smart guy and a nice guy, but like Hussman and many others, being smart does not mean they understand how markets/economies/events can change the world in ways any of us can imagine.

FYI: Faced with a low interest rate environment since the financial crisis of 2008, many investors have begun to seek higher returns than those available from safe fixed-income investments such as Treasuries and FDIC-insured CDs. The ongoing pursuit for higher bond returns has led many investors to investments known as “unconstrained” bond mutual funds (also referred to as multi-sector, absolute return, strategic income and opportunistic fixed income). In 2010, these funds attracted more than $170 billion in assets. In the succeeding four years, assets in unconstrained bond funds rose to $223 million, $275 million, $416 million and $462 million, respectively.
Regards,
Ted
http://mutualfunds.com/news/2016/04/12/unconstrained-bond-funds-not-worth-the-risks/
M*: Mulitsector Bond Fund Returns:
:http://news.morningstar.com/fund-category-returns/multisector-bond/$FOCA$MU.aspx

@heezsafe:Yes, the banks will be having a bad quarter, but as 15% of the S&P 500 the financial sector will be supported by the other sectors. A rising tide lifts all boats. Are you predicting this ?
Regards,
Ted

Well, the Big Banks(ters) begin their walks to the confessional today, and it's not lookin' good.
http://www.reuters.com/article/us-banking-results-idUSKCN0X70VU

Analysts forecast a 20 percent decline on average in earnings from the six biggest U.S. banks, according to Thomson Reuters I/B/E/S data. Some banks, including Goldman Sachs Group Inc (GS.N), are expected to report the worst results in over ten years. [...] Investors will get some insight on Wednesday, when earnings season kicks off with JPMorgan Chase & Co (JPM.N), the country's largest bank. That will be followed by Bank of America Corp (BAC.N) and Wells Fargo & Co (WFC.N) on Thursday, Citigroup Inc (C.N) on Friday, and Morgan Stanley (MS.N) and Goldman Sachs Group Inc (GS.N) on Monday and Tuesday, respectively, in the following week.

Is it time for the adventurous to climb into the FAZmobile and burn some rubber? :)
http://howardlindzon.com/the-banks-are-crashing-everyone-to-the-fazmobile/
http://www.morningstar.com/etfs/ARCX/FAZ/quote.html
On a more serious note, in addition to possibly the worst bank reports since the Great Recession started, just what in the world is going on this week with the other bank-related intrigue? Emergency closed-door meetings, bail-in for European bank, Italy at edge of NPL cliff (is jig finally up?), etc.
http://thegreatrecession.info/blog/what-is-happening-to-banks/

Just about every major banker and finance minister in the world is meeting in Washington, DC, this week, following two rushed, secretive meetings of the Federal Reserve and another instantaneous and rare meeting between the Fed Chair and the president of the United States. These and other emergency bank meetings around the world cause one to wonder what is going down. Let’s start with a bullet list of the week’s big-bank events:
* The Federal Reserve Board of Governors just held an “expedited special meeting” on Monday in closed-door session.
* The White House made an immediate announcement that the president was going to meet with Fed Chair Janet Yellen right after Monday’s special meeting and that Vice President Biden would be joining them.
* The Federal Reserve very shortly posted an announcement of another expedited closed-door meeting for Tuesday for the specific purpose of “bank supervision.”
* A G-20 meeting of finance ministers and central-bank heads starts in Washington, DC, on Tuesday, too, and continues through Wednesday.
* Then on Thursday the World Bank and the International Monetary Fund meet in Washington.
* The Federal Reserve Bank of Atlanta just revised US GDP growth for the first quarter to the precipice of recession at 0.1%.
* US banks are widely expected this week to report their worst quarter financially since the start of the Great Recession.
* The European Union’s new “bail-in” procedures for failing banks were employed for the first time with Austrian bank Heta Asset Resolution AG.
* Italy’s minister of finance called an emergency meeting of Italian bankers to engage “last resort” measures for dealing with 360-billion euros of bad loans in banks that have only 50 billion in capital.

@prinx:
SFGIX is currently the most attractive actively managed EM equity fund. But to avoid manager risk over the next 10-20 years with the additional kicker of a significant cost advantage, I would favor the inexpensive EEMV (0.25% ER vs. 1.15% net ER for SFGIX). FWIW, the index for this ETF has backtested very well:
Backtest Data EEMV
Also, even though SFGIX has outperformed EEMV since its inception on 2/15/2012, I have more confidence in the much longer backtested data since 2002 for the underlying index of EEMV.
As always, I agree with Ted that investors need only one EM equity fund. If, by chance, you are a fiddler or optimizer, as I am, I would consider adding one country-specific EM ETF which is particularly undervalued to either SFGIX or EEMV. That ETF would be RSX according to this site that I monitor regularly:
http://www.gurufocus.com/global-market-valuation.php
Kevin

@DanHardy OK, I got it--- supply of new issue munis increases in the Spring and tends to be a negative on muni prices (thereby possibly presenting a better buying opportunity on the pullback). Also, munis have their own yield curve; and with things the way they are now, if interest rates were to rise, the long end and not the short end is the area less likely to be affected (the opposite of Treasuries).
http://blogs.barrons.com/incomeinvesting/2016/04/11/tactical-opportunities-in-muni-etfs-this-spring/

First, given the steepness of the municipal bond yield curve, he thinks Market Vectors AMT-Free Interm Muni (ITM) makes sense since investors will benefit from higher yields in this steep part of the yield curve. But if the Federal Reserve starts to seem like it will raise interest rates again soon, the municipal yield curve is likely to flatten. At that point, he thinks it will make sense for investors to move out to a longer duration ETF like Market Vectors AMT-Free Long Muni (MLN).

http://www.vaneck.com/blogs/muni-nation/utility-and-sensibility-april-2016/

It is important to understand that seasonal shifts in supply and changes in the yield curve can impact a municipal bond’s total return and present investors with tactical opportunities. For the first quarter, according to Barclay’s, their Municipal Bond Index returned a positive 1.67%. Taking into consideration the seasonal supply/demand trends that have prevailed during the second quarter for the last 15 years suggest that favorable entry points may potentially become available.

That big pop is what happens when a hyper-concentrated fund has a holding which spikes up 35%.
It appears that Bruce's lawsuit to free up Fannie and Freddie may turn out well. It looks like our esteemed Congress knew that the two were solvent and in no trouble when they decided to abscond with their profits.
And that is the first time I've ever used "abscond" in a sentence on the intertubes.

It appears to be contrarian to making money. In your 5 year time frame, it has made about 60% less then the Russell 2000 index fund from Vanguard, NAESX.
More and more I think it is a scam to buy any domestic large, mid or small cap fund that follows an Index. A managers ONLY contribution is to adequately distribute between asset classes, like a balanced, global or allocation fund - maybe. The day of finding the best domestic large cap or the best small cap manager that will beat the index consistently is a joke played on all of us here.

Let me be the first to mention that Fairholme is up 7.51% today - and yes, it's for real.
Bruce is getting pretty close to zero for 2016.

FYI:
Regards,
Ted
http://www.reuters.com/article/usa-funds-texas-idUSL2N17E19W
M* Snapshot HDPCX
http://www.morningstar.com/funds/XNAS/HDPCX/quote.html
Lipper Snapshot HDPCX:
http://www.marketwatch.com/investing/Fund/HDPCX
HDPCX Is Ranked #131 In The (SCB) Fund Category By U.S. News & World Report:
http://money.usnews.com/funds/mutual-funds/small-blend/hodges-pure-contrarian-fund/hdpcx

Hi Guys,
Charles, thank you for the atta-boy. Although I don’t always agree with the positions that Junkster advocates, I always respect his analysis and his clear communications of those positions. Indeed, good, actionable stuff.
I overstated my position when I claimed I draw a completely blank slate when having access to superior investors. That is not true. Although I do not have direct contact, I do have access to the combined wisdom of both Warren Buffett and Charlie Munger. This tandem is gifted, talented investors with an impressive track record,. Mutual funds that I own have shares in their Berkshire Hathaway operation.
Munger, like Buffett, learned from the wisdom of Benjamin Graham’s classroom lectures at Columbia. Here is a terrific Link that summaries some of that wisdom by way of their succinct sayings:
http://www.forbes.com/sites/chanderchawla/2015/05/07/the-wit-and-wisdom-of-warren-buffett-and-charlie-munger/#be2c8599ba67
The article is a collection of some of their wit and wisdom expressed at a recent conference, but gained across several decades of experience, talks, and papers. Enjoy.
Best Wishes.