I am looking at a chart of FCFAX. Is this drawdown on June 1 caused by a dividend or distribution?

A look at the numbers...

Hi Davidrmoran
You asked if the risk-reward curve has a distinctive character such that it attracts special financial attention. The simple answer is No.
The marketplace risk-reward curve rises in a continuous well-behaved manner as the equity fraction increases; higher risk, higher rewards. There are no outstanding features.
Note that I did not answer the title question in the original post; “How Much Of Your Retirement Portfolio Belongs In Bonds?” One size does not fit all; there is no single overarching reply. Each investor has a logical different answer to that question for very disparate logical reasons. The answers lead to the complete spectrum of the equity-bond tradeoff.
One historical standing rule is that younger folks should have a portfolio that heavily favors equity positions, while older folks should be more conservative with a portfolio weighted towards bond products.
Today, some industry experts are challenging that wisdom. In the end, it depends on the individual investor, his wealth, his plans, his risk aversion. One size definitely does not fit all.
To help answer your question, I input the annual returns (AR) data and the cumulative annual growth rate (CAGR) data into a curve fitting program available on the Internet. The program automatically “best fits” the data sets to Linear, Exponential, Power, and Logarithmic equation formats.
This statistical curve fitting was done on the following mathematical website:
http://www.had2know.com/academics/regression-calculator-statistics-best-fit.html
Goodness of fit values (correlation coefficients) were high for all the tested equations. The Logarithmic form was slightly superior for all cases examined. However, the Linear modeling did an excellent job also. For simplicity, I’ll report the Linear modeling. Here are the equations:
AR = 0.452 X SD +6.41 Correlation Coefficient = 0.972
CAGR = 0.369 X SD + 6.71 Correlation Coefficient = 0.950
The percentage signs were just ignored in these correlations (use 5 for 5%). You get to choose whatever volatility (Standard Deviation) you find comfortable, and the equations provide an estimate of returns using the historical data sets.
For every unit that you move up the risk curve, estimated AR increases by 0.452 units and the CAGR increases by 0.369 units. If the more complex Logarithmic formulation were deployed, a slightly more refined estimate would be predicted that is not constant over the entire range of Standard Deviations.
This submittal might be a little more than folks wanted, but it puts the trends and relationships into a rigorous statistical framework that uses historical data. I hope you find this first-order analysis of some utility.
Best Wishes.

Actually , as I recall from the period (1990s), AC encountered numerous legal challenges to their stipulation that the money couldn't be touched for a set number of years. In other words, certain investors tried to take the $$ out early (for a myriad of different reasons) and than went to court and fought AC after they declined. I believe some of the plaintiffs were successful. Whether from exhaustion over fighting these challenges, or perhaps based on their own legal research, they threw in the towel.
A great idea in concept. Leave the money alone and let the managers run the fund for the long term. Go fishing or whatever - and stop reading or viewing the financial press for 10-20 years. (The "Rip Vanwinkle" approach to investing). For whatever reason, the public's attitudes changed. It's possible, too, that AC screwed up in their execution of the fund's investment mandate. But my guess is the downfall was more related to changing investor behaviors and the legal challenges mentioned.
-
Here AC discusses a (new) 2005 Missouri law (their home state) that affected/altered the status of gift-trust accounts: https://www.americancentury.com/content/americancentury/direct/en/investment-products/mutual-funds/giftrust/trust-law-information.html
Here owners and former owners vent their frustrations with the fund - particularly their difficulties withdrawing money. While I can't vouch for the accuracy of any of these complaints, they do provide a sense of some of the issues that arose: http://www.consumeraffairs.com/finance/american_century.html

If it had LEAP options I might buy some on a pullback for a long-term bullish position.
That said, paying .75 ER and not even having a dividend to help (or completely) offset it rubs me the wrong way.

http://finance.yahoo.com/news/cyber-security-etf-flies-1-160852126.html
Certainly one of the biggest themes right now.

FYI:
Regards,
Ted
http://www.mfwire.com/common/artprint2007.asp?storyID=52037&wireid=2

I found this while researching. It explains the matter pretty well.
http://www.wsj.com/articles/SB10001424052970203687504576655152479572910

Wow, what a handjob valentine that is.
fwiw, since its week-before-Halloween launch, it has beaten SCHD, RSP, RPG, RPV, SP500, but not FCNTX. Maybe another one to keep an eye on.

"I see that at age 70 a 15 year $125,000 deferred annuity pays out some $4600 monthly (over $55,000 annually) beginning when I am 85."
That may be what you're missing - the age 85 part.
-
Thanks for the links Junkster. Both sides make compelling cases.

We have had many discussions recently about retirement planning (thanks Dex) I sense most, if not all of us including me, tend to far overestimate their longevity. Obviously that optimism is warranted less we outlive our nest egg and the consequences thereof. But the other side of the coin also has drawbacks primarily dying too rich and not fully enjoying the fruits of our labor over a lifetime of investing. Longevity tables tell us that the first wave of baby boomers should expect to live to around 85/86. But I have my doubts about that statistic. I know a lot of widows and females in my neighborhood who are in their mid 80s+ but not one widower or male. I am just curious if any males who actively follow this board are over 85. I know Ron and MJG are around 81 but can't recall anyone much older. Maybe a stupid question so just humor me.
Edit: I don't mean to imply that there aren't any of us males around over 85. Just few and far between.

I tried this calculator for N=10 (payments to age 95) and came up with 7.61% rate.
With N = 5 (payments to age 90), the return is 4.49%.

Thanks - neither of those returns seem very interesting.

Many thanks msf for your usual exhaustive and excellent research. I think I may pass on the deferred annuity and just stick with the junk bond funds. A simple buy and hold on some of the longer tenured ones ala T Rowe Price has exceeded 8% over its lifetime. And because junk bond funds lend themselves better than most asset classes to various timing strategies double digits lifetime returns would have been attainable. Either way, passive or proactive, better than annuity returns.

I tried this calculator for N=10 (payments to age 95) and came up with 7.61% rate.
With N = 5 (payments to age 90), the return is 4.49%.

Thanks - neither of those returns seem very interesting.

I guess the question for those with at least a moderately longer term view is - what's changed?
With stuff like this:
http://www.mutualfundobserver.com/discuss/discussion/21815/look-how-much-weight-we-ve-gained-since-the-1960-s#latest
I just see continued tailwinds for healthcare. I don't know if I want to add too much more to the sector, but I'm open to adding more if I find things that compliment what I already own rather than adding more similar names.

@Ted, M* says $10,000 become $35,280 in 10 years with VGHCX so you should probably send the bill for 2 dinners!

No problem Ted....just email me the bill along with your bank account number and password so I can deposit the funds. Also, 10K invested would be $35,279.17 per M* so I can pick up dessert as well.

@PRESSmUP: You make an excellent point short-term. However, over the long-run I still believe health care and especially biotech funds will give enhanced returns.
Regards,
Ted
http://www.cnn.com/2015/06/18/politics/obamacare-aca-supreme-court-exchange-state/index.html

FYI: Biotechnology stocks Gilead Sciences (GILD), Amgen (AMGN) and Biogen (BIIB) were at the crest of Thursday’s stock rally, powering the largest biotech exchange-traded fund to a fresh record high.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/06/18/biotech-etf-hits-record-how-much-higher-can-it-go/tab/print/
M* Snapshot IBB: http://www.morningstar.com/etfs/XNAS/IBB/quote.html
IBB Is Ranked #8 In The (H/B) ETF Category By U.S. News & World Report:
http://money.usnews.com/funds/etfs/health-biotechnology-funds/ishares-nasdaq-biotechnology-index-fund/ibb
(If IBB closes at its present price it will be up 23.8% YTD)

Hi Guys,
Paul Merriman is predictable with his workmanlike analyses of the marketplace. The current article is no exception.
The red meat in the article is the reference he makes to his “fine-tuning table”. The table provides equity/bond mix returns data starting in 1970. The second part of his table shows several summary Bear market drawdown measures to help assess market risk.
Here is a direct Link to this useful data presentation:
http://paulmerriman.com/fine-tuning-asset-allocation-2015/
The Merriman tables are very comprehensive. They even degrade annual returns by subtracting an assumed 1% management fee. However, I find one major shortcoming in the presentations that is easily rectified.
The summary data shows annual returns and standard deviations, but does not include Compound (geometric) returns. Compound Annual Growth Rate (CAGR) measures actual integrated investment returns over the long haul.
Volatility (standard deviation) subtracts from average annual returns in terms of determining end wealth. Given equal average annual returns, the portfolio that accomplishes this with lower volatility rewards the portfolio holder with a higher end wealth.
If annual returns and standard deviations are accessible, it is an easy task to calculate CAGR. Here is the equation:
CAGR + 1 equals the square root of the entire two terms (1 + AR) squared minus SD squared.
The AR is the average annual return and the SD is the annual standard deviation. The Merriman data presentation permits the calculation to be made.
If you don’t like using the full 45 years of data incorporated into the Merriman summary stats, the tables are sufficiently complete that a user can select his favored timeframe, and do his own summary statistics.
I calculated the CAGR for the Merriman equity/bond mix tables. Not surprisingly, the portfolio CAGR end wealth rewards are not quite so bushytailed, but they still monotonically increase as the equity percentage increases. The Wall Street axiom that ties reward and risk together remains intact.
The simple equation that couples the more pertinent CAGR to annual returns and its standard deviation is a useful addition to your toolkit. I hope you are or become familiar with it. It will make you a better informed investor and/or better able to challenge your financial advisor.
Best Wishes.

So he's in the same neighborhood as Bill Gross ($2.3 billion in 2015 from Forbes). I'm not a huge fan of Bill Gross, but he co-founded PIMCO, ran a fund with 10 times as much money in it than Baron has in his entire firm and was widely touted as the best bond investor of his time. @BobC has a very good point about those expense ratios!