www.dividend.com/dividend-stocks/financial/property-management/?utm_source=Dividend.com&utm_campaign=6b12a56f00-Free_Engage_Content_Dispatch_LI_12_28_2015&utm_medium=email&utm_term=0_5465108463-6b12a56f00-34547085&goal=0_5465108463-6b12a56f00-34547085

@MJG:
>> if a portfolio were assembled using all 10 funds in equal parts, that portfolio would have delivered a higher compound return with less standard deviation than an S&P 500 benchmark.
I have been following that analysis since the 1980s when some of these Selects were introduced, and have found it to be mostly true as well, somewhat inexplicably, and always wondered why Fido did not offer a fund of funds.
>> Diversification is alive and well.
You are saying 10 Selects is more diversified than SP500?
>> So is the Aerospace and Defense industry. That's a huge industry employing over 2 million workers. It's like a battleship; it's hard to change direction.
As someone who has been downsized three times the last decade from large and taken-over defense R&D companies, I can attest that this is not altogether true, not at all.
>> The commercial part of it will continue to grow slowly (like 3% this year) as aircraft deliveries are solid. The military budget is similarly solid.
Uh, maybe in some senses, but mutual funds do not invest in (say) VA hospitals, and the Darpa-dependent (ONR, ARL, NSF) companies whose work and products may get hit in an HRC administration may not do as well as in the past. Otoh, Fido manager track these sorts of developments and budgets funding very closely and presciently.

Hi InformalEconomist,
Thank you for bringing the discussion back on topic. We sure have a tendency to divert our attentions elsewhere.
Fidelity does have an impressive lineup of fund choices. I ran a quick analysis of the .10 funds mentioned in the referenced article. Over the last 10 years, if a portfolio were assembled using all 10 funds in equal parts, that portfolio would have delivered a higher compound return with less standard deviation than an S&P 500 benchmark. Diversification is alive and well.
So is the Aerospace and Defense industry. That's a huge industry employing over 2 million workers. It's like a battleship; it's hard to change direction. The commercial part of it will continue to grow slowly (like 3% this year) as aircraft deliveries are solid. The military budget is similarly solid. The need for American military supremacy is not challenged by either our population or our elected government officials.
Have a happy New Year. I certainly will.
Best Wishes.

I should maybe take that back, since Jeb's econ and tax policies are laughably destructive:
http://www.slate.com/blogs/moneybox/2015/11/10/jeb_bush_and_marco_rubio_want_absolutely_insane_tax_cuts.html
Whoa.

FYI:
A 2.2% gain in the S&P 500 is roughly the best anyone could do

@Ted Except for the Linkster! ;)

@ MFO Members: It was not the double-digit year I expected, but I can complain about my fund portfolio.
Regards,
Ted
As Of 12/24/15:
PRHSX: 13.70%
FBTCX: 10.70%
QQQ: 10.16%
PFF: 3.78%
SPY: 2.15%
Total Average Return:
8.098%

Continuing....
Most of the sectors are fairly close, except for Consumer Cyclical and Financial Services - pity. But the broad "super sectors" (Cyclical, Sensitive & Defensive) are spot on. It is also a shame that the blended E.R., at 45 bps, is 16 bps higher than SPHQ.
But again, after March 2016, SPHQ will no longer "be" SPHQ. It will be a very different E T F with very different holdings, "trying to pass" as the old SPHQ.
Another comment. If you look at the [Documents] tab of SPHQ, and open up the fact sheet,
you will see a graph suggesting that the ETF has underperformed the S&P 500. While this is true over the life of SPHQ, it is not true since the SPHQ index last changed at the end of June, 2010.
According to M*, over the last 5 years, SPHQ has outperformed Vanguard's S&P 500 Index Fund Admiral Class by about 73 bps per year, with risk (measured either by Standard Deviation or Beta) that was about 10% less than the 500 Index.
In other words, by stapling the new post-June 2010 index onto the SPHQ in 2010, Powershares produced an E T F that looked like an underperformer, in their own marketing materials.
Other risk measures from M* are available here:
http://performance.morningstar.com/fund/ratings-risk.action?t=SPHQ
Morningstar sector allocations are below, for MPGFX, SPLV, their 50/50 blend, and SPHQ.

Exp Ratio	65 	25	45 	29 
Sector	        MPGFX	SPLV	BLEND	SPHQ
Basic Materials	11.60 	4.31    7.96 	6.79 
Consumer Cyc	5.13    3.01 	4.07 	19.21 
Financial Svcs	12.99 	16.99 	14.99 	4.71 
Real Estate	0.00 	6.82 	3.41 	0.83 
Cyclical	29.72 	31.13 	30.43 	31.54 
Comm Svcs	0.00 	4.17 	2.09 	0.79 
Energy	        2.83 	0.00 	1.42 	1.26 
Industrials	32.25 	19.31 	25.78 	29.03 
Technology	7.37 	0.00 	3.69 	4.17 
Sensitive	42.45 	23.48 	32.97 	35.25 
Cons Defensive	8.69 	20.44 	14.57 	16.77 
Healthcare	19.15 	13.48 	16.32 	10.45 
Utilities	0.00 	11.44 	5.72 	5.97 
Defensive	27.84 	45.36 	36.60 	33.19 

FYI:
It's the worst year for asset allocation funds since 1937.
A 2.2% gain in the S&P 500 is roughly the best anyone could do
Regards,
Ted
http://www.bloomberg.com/news/articles/2015-12-28/the-year-nothing-worked-stocks-bonds-cash-go-nowhere-in-2015

I have to admit to buying two stocks this past year that followed his basic tenets. I kept watching people buying Sketchers ( SKX) and always out of stock in some styles at the stores, I started researching it. Took the plunge at $39, but sold out at $57 after watching it stall, go down, back up to 60 etc. Of course then it soared up to $150 by the time run was over. Then it split. Well still made some money. #2 was White Wave (WWAV) which I kept seeing flying off the shelves in my Supermarket. Again, researched it, bought it at 29 and still holding (its now 40), but it has been as high as 52. Long term hold this time :).

I'll take 2015 any year. I'm only a tad "richer" but 2015 is the first year since we retired that we had no major or semi-major medical events. It's been a wondrously boring year.

2015 Good Riddance! You were *#/*?& pathetic!!

FYI: The onetime mutual-fund rock star says the famous advice isn’t quite so simple.
Regards,
Ted
http://www.marketwatch.com/story/peter-lynch-25-years-later-its-not-just-invest-in-what-you-know-2015-12-28/print

FYI: exception of Japan and, less so, some in Europe, developed markets are flat or down this year-to-date.
We will use year-to-date total return (closing prices plus yield) through December 22. [1] SPY, the US equity ETF for the S&P 500 cap-weighted index, had a total return of 0.75%. The equal weighted ETF for the same 500 stocks is RSP. Its total return was -3.42%. The worst performing sector ETF was in energy. XLE was -23.29%. ACWX is the iShares MSCI global index without the US. Its total return is -5.74%. ACWI includes the US and holds over 1200 stocks in developed and emerging markets worldwide. Its total return through December 22 [1] was -2.42%.
Regards,
Ted
http://www.ritholtz.com/blog/2015/12/2015-goodbye-2016-hello/print/

FYI: Gunning for yield from bond funds is a loaded bet.
Regards,
Ted
http://www.marketwatch.com/story/junk-bond-debacle-has-bond-fund-investors-feeling-like-its-2008-again-2015-12-28/print

Mutual funds that might be useful in replicating - to some degree - the soon-to-vanish SPHQ (an E.T.F. that currently follows the S&P High Quality Rankings Index) would seem to include the following:
DRIPX: The MP 63 Fund http://portfolios.morningstar.com/fund/summary?t=DRIPX
MPGFX: Mairs & Power Growth Fund http://portfolios.morningstar.com/fund/summary?t=MPGFX
VDIGX: Vanguard Dividend Growth Fund http://portfolios.morningstar.com/fund/summary?t=VDIGX
The first fund [DRIPX] is obscure but available at TDAmeritrade.
ETFs that could be used to construct similar exposure include:
FTCS: First Trust Capital Strength http://portfolios.morningstar.com/fund/summary?t=FTCS
NOBL: ProShares S&P Dividend Aristocrats http://portfolios.morningstar.com/fund/summary?t=NOBL
SPLV: Powershares S&P500 Low Volatility http://portfolios.morningstar.com/fund/summary?t=SPLV
VIG: Vanguard Dividend Appreciation http://portfolios.morningstar.com/fund/summary?t=VIG
XRLV: Powershares S&P500 Ex Rate Sensi L V http://portfolios.morningstar.com/fund/summary?t=XRLV
However, I have mixed feelings about the third and fifth ETFs [SPLV & XRLV], since they are offered by Invesco Powershares, the same folks that are in the process of monkeying with (i.e., IMHO destroying) SPHQ by switching its index to one that has a very different exposure - in terms of sectors and industries - than that (currently) used by SPHQ when it was posting it's admirable record over the last 5 years or so.
Keeping it 'simple' (HAH!), a 50/50 blend of MPGFX and SPLV appears to have very similar exposures and performance, based on historical performance (and for 2009 - 2011, when SPLV did not exist for full year,using SPLV Index returns from S&P website less SPLV tracking error of 26 bps from E T F.com).
Looking at individual holdings of each...

MPGFX owns 50 stocks
SPLV owns 100 stocks
SPHQ owns 132 stocks (current index, until March 2016)
The 50/50 blend of MPGFX & SPLV has 139 stocks. There are 11 stocks shared between MPGFX & SPLV, representing about 19% of the balance of the blended 50/50 portfolio.
Comparing the "BLEND" (MPGFX+SPLV; 50/50) with SPHQ, there is an overlap of 61 stocks. This represents, by dollar balance, 45% of BLEND and 49% of SPHQ.
Of course, most of the "heavy lifting" is being done by SPLV, since both it and SPHQ are subsets of S&P 500. Comparing SPLV only with SPHQ, 51 stocks are shared between these two ETFs. They represent, by balance, 51% of SPLV and 39% of SPHQ.
Again, let me know - via a post here - if you folks come up with other potential 'substitutes'. Thanks.

FYI: Convertible bonds offer access to two otherwise separate security markets. They start out as corporate bonds, which are debt instruments that carry the normal attributes of bond offerings: protection of principal, income generation and favorable position in a bankruptcy situation. If certain criteria are met, the holder of the bond may convert the corporate bonds into common stock of the issuing company. This allows investors flexibility in terms of equity appreciation or an escape from interest rate risk.
Regards,
Ted
http://www.investopedia.com/articles/investing/122415/top-6-convertible-bond-funds-2016.asp
M* Convertible Fund Returns: http://news.morningstar.com/fund-category-returns/convertibles/$FOCA$CV.aspx

Always, ALWAYS book taxable losses.

As I tried to describe above, I don't agree with this, except as a simple rule of thumb if you don't want to get into more detailed calculations.
For example, suppose you are married. The 15% bracket goes up to $74,900. Suppose your taxable income (Form 1040 line 43, notordinary income) typically runs about $76K, including $2K of recognized cap gains.
Let's suppose you've got a loss of $2K that you are debating about taking (for tax purposes).
By assumption, you've got $74K of ordinary income, and $2K of cap gains. The first $900 of those cap gains are taxed at 0% (because $74K of ordinary income, plus $900 of cap gains is still below the 15% bracket limit of $74,900).
The other $1100 of cap gains is getting taxed at 15%.
If you recognize a loss of $1100, you get to save that 15% on the last $1100 of gain. Relatively speaking, a nobrainer. But if you choose to recognize your whole potential loss of $2000, the extra $900 in losses is wasted. It reduces your cap gains to $0, but the last $900 weren't getting taxed anyway, so what's the point?
Instead of having $900 worth of losses "in the bank" that you could recognize January 2, for 2016 taxes, you've squandered the opportunity by using those losses to reduce a gain that wasn't being taxed.
Similar reasoning applies at the 39.6% bracket, where cap gains rates transition again - here from 18.3% to 22.3%. You may be better off deferring the loss if it takes you below $464,850 in taxable income. A problem we should all have. I mention it simply to illustrate that it is not the 0% tax on cap gains that creates this situation, but any transition in tax rates.
There are other situations where recognizing losses may be suboptimal. The ones I'm familiar with follow this general pattern of crossing a threshold amount (often some form of MAGI).

I think bear funds can be used in conjunction with long only funds as a far cheaper synthetic substitute for long-short mutual funds. While I respect investors who object to any sort of shorting on principle, it seems hypocritical to me for any investor to embrace long short mutual funds and not consider the cheaper alternative of building their own. Not only are the fees far less for buying a low cost long-only fund like VASFX or DODGX and combining it with a short fund like GRZZX than the average l-s mutual, but there is also a far greater level of flexibility. You the investor control the amount of hedging you want to do. If you are also investing in a taxable account, you can harvest tax losses far more efficiently than a l-s fund. If the market is up and your bear fund is down, you can sell some of your shares to realize capital losses for a write off. If the market is down and you have losses on your long only fund, you can sell those shares for a tax loss instead. A l-s fund lacks that kind of flexibility and you are essentially paying 1.85% on average for a lightly hedged long portfolio.

Some years I do, others I don't. I look at AGI figures as well as how much tax I'm going to pay. There are reasons why one wants to control AGI (e.g. eligibility for Roth contributions, taxation of SS, etc.).
So my personal answer is: yes I sell losers to offset gains, but no, not necessarily for the purpose of reducing taxes.
Since I am focused on AGI, one of the cons of selling when one doesn't need the loss to reduce AGI below a threshold is that one does not have the loss available to use next year when one might need it.
Another con is that you cannot immediately repurchase the same, or substantially identical fund (e.g. swap one S&P 500 index fund for another, though there's never been a ruling on that). This is rarely a big deal as you can usually find a reasonable substitute. Still, if it's a unique fund you're selling ...
Wash sale rules apply to MFs, so you need to watch out for automatic reinvestments. I usually turn them off before I'm expecting to sell. Otherwise they can trigger wash sales. But if you're liquidating (permanently or at for least 30+ days), those reinvestments don't matter - you'll get the whole loss.
A pro of taking losses with MFs (as opposed to individual stock) is: if you sell before December distributions, you avoid getting taxable dividends. It comes out even (selling before or after distributions) if all the dividends are cap gains and qualified income. But if any of the divs are nonqualified income, you're better avoiding them by selling before the distribution.
With stocks, the dividends are generally qualified, so you can't reduce your tax liability the same way with this maneuver.
Another pro of doing loss harvesting with MFs as opposed to stocks: with MFs, you have a choice of average cost or actual cost. If you're selling in a down market, using average cost will reduce the cost of your short term shares (increasing your short term losses) and increase the cost of your long term shares (decreasing your long term losses). That's a good thing, since short term losses can be more valuable than long term losses.

I can see why one might be interested in NOBL compared with VIG or SCHD, but why when compared, at any point in its life, with RPG, FCNTX, FLGEX, or any cheap SP500 index? When you look closely at the curves, it doesn't even seem to offer downside cushioning particularly. So what's the notional appeal?