FYI: If you were stranded on an island for years, what is the one mutual fund you would own?
Regards,
Ted
http://investorplace.com/2015/03/the-one-best-mutual-fund-to-hold-forever-naesx-vimsx/print

FYI: After more than six years of a bull market, investors should stare a cold, hard truth straight in the face: Future returns on stocks are likely to be far slimmer than the fat gains of the past few years.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2015/03/27/the-new-era-of-low-stock-returns/tab/print/

FYI:
Regards,
Ted
http://www.mfwire.com/common/artprint2007.asp?storyID=51347&wireid=2

Hi Guys,
I’m with Mark on this issue. He is on-target. Color presentation does influence the human decision process.
Like Mark, I’m not a marketing expert and have never been in that business. But the advertising specialists have been, and they’ve amassed an impressive array of tools to engage and to influence the general public.
Some of their endless bag of tricks reflect field experience; many others reflect application of psychological academic and industry studies that have generated influencing techniques for decades.
Richard Wiseman is one such researcher. He has written several excellent books that summarize the discipline’s findings and he suggests tips to deploy these findings. His book, “59 Seconds, Think a Little, Change a Lot”, is a worthwhile visit if the topic peaks your interest. Wiseman is a prolific U-Tube contributor. Here is a Link to a collection of his video presentations:
https://www.youtube.com/channel/UCZJ0mCXRo7jNIUnWcoaX_3Q
Wiseman reports that, historically, the color Red means danger and demands immediate action, whereas the color Green is more relaxing and contributes to better decision making. These findings are consistent with Daniel Kahneman’s System 1 reflexive and System 2 Reflective bifurcation in his “Thinking, Fast and Slow” book.
Changing the color scheme on the Mutual Fund Observer site will surely not attract more new visitors, but it should increase the likelihood of them staying. The psychological experiments also suggest, that the soothing Green will promote better decision making. The most shocking observations reported by the psychology community for me is that small presentation changes can make a substantial difference by supplying mostly invisible clues and prompts.
For example, folks act more reflexively when scarcity or time constraints are suggested. Cookies are judged tastier when a “victim” is offered one from a tray of only two cookies over the same cookies presented in massive numbers. When tests are printed in both red and green formats, the green respondents stay the course longer and score higher. This is data based and not speculation.
I want to thank Chip for her dedication to the site, and the changes that have made it more attractive and more useful.
Best Wishes.

Robert Arnott often touted as one of the smartest manager in the business. Why are his Pimco funds, All Asset and All Asset All Authority, are so uninspiring! Let's hope they can use his talent better.

Arnott's two key funds are not exactly aiming for home runs - I want to say isn't All Asset All Authority's goal for a total return of something like CPI + 6.5%?
That said, I think he turned sour on the economy, ultimately too early.

Thanks for all the great contributions. I've used the MFO risk tool to compare. I've restricted it to funds in the 1st risk group to approximate the risk category of RPHYX and organized them according to Martin Ratio. For the 3 year group, RPHYX is the winner. for five years, NTAUX. For the 20 year group, GSTGX is the winner. (Disclaimer: As clearly explained by others in the thread, an investment in one of these funds is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Unlike individual debt securities, which typically pay principal at maturity, the value of an investment in the fund will fluctuate. You could lose money by investing in the fund.)
Edit-I meant to include FNPIX, but somehow forgot.

FYI: We’ve all heard the predictions - low interest rates as far as the eye can see. European Central Bank President Mario Draghi is sticking to his 1.1 trillion euro easing program, the equivalent of about 1.2 trillion dollars worth of bond buying to keep rates low in the eurozone. His goal: to stimulate economic growth and inflation.
Numerous central banks around the globe continue to cut rates for the same reasons. Sweden, Denmark and Switzerland all have those astounding negative rates on their short term government debt. That means lenders, who are buying their debt have to pay the countries, the borrowers, for the privilege. As Ken Leech, the Chief Investment Officer of major bond firm, Western Asset Management wrote recently, quoting Alice in Wonderland, it’s getting “Curiouser and curiouser!”
Even the Federal Reserve, which is planning to start raising short term rates in June or September - our sources say September is more likely - has cut its interest rate forecast for the year. Instead of anticipating short term rates of over one percent by December, it is now targeting .625%.
Then there is the strength of the dollar. Another universal expectation is that the dollar will continue to strengthen against other major currencies. The rationale is that the U.S. economy will continue to grow, while other economies, in Europe for instance, will struggle. And the interest rates we are offering on our Treasuries, even though meager to us, will be much more attractive than those on other top quality government debt.
Not so fast says this week’s Great Investor guest. He is Stephen Smith, Co-Lead Portfolio Manager of Global Fixed Income at Brandywine Global Investment Management, which he joined in 1991 to build its bond business.
Smith is the Co-Lead Portfolio Manager of the highly regarded Legg Mason Brandywine Global Opportunties Fund, which he launched in 2006 and has a history of beating the market and its Morningstar World Bond category since inception. In 2014, Smith and his Co-Portfolio Managers David Hoffman and John McIntyre were nominated for Morningstar’s Fixed-Income Fund Manager of the Year award.
A contrarian investor, Smith and his team invest in global bonds and currencies, with an emphasis on government bonds. In this week’s exclusive interview he lives up to his maverick billing. I asked Smith where he disagreed with market expectations. He takes on consensus views about oil prices, interest rates and the outlook for global growth.
Have a great weekend and make the week ahead a profitable and productive one.
Regards,
Ted
(WealthTrack Interview Willl Be Linked Tomorrow 3/27/15 When It Becomes Available For Free)

FYI: Are you—or your spouse or your teen or your parents—among the financially illiterate?
Regards,
Ted
http://blogs.wsj.com/totalreturn/2015/03/25/a-three-question-test-of-financial-literacy/tab/print/?mg=blogs-wsj&url=http%3A%2F%2Fblogs.wsj.com%2Ftotalreturn%2F2015%2F03%2F25%2Fa-three-question-test-of-financial-literacy%2Ftab%2Fprint&fpid=2,121

FYI: Pacific Investment Management Co., the firm best known for bonds that's been seeking to expand its stock offerings, will rename some of its equity funds as it plans to open new products with Robert Arnott's Research Affiliates.
Regards,
Ted
http://www.investmentnews.com/article/20150326/FREE/150329931?template=printart

@Old_Joe I haven't forgotten you, really. It's just that what I've found is a lot different than what I expected, and I'm having to re-scale the package. The changes to money market function, and what various kinds of MMkt funds can hold, is so profound that I'm having to go to primary sources (rather large regulatory documents) to understand the what and why of things; if I were to simply post these, it would be a big turn-off for most, who would see the page length and flee. Fortunately, the writing is pretty good, so I think I need to finishing perusing them, and select the sections that describe what a typical retail investor would what/need to know to make an investment decision about MMkt funds. Maybe a couple extra days, please?
Humbling to learn how little I have understood how the different kinds of MMkt funds really worked, all these years. Surprising to learn that, in the past 25 years, there were 11 financial events severe enough to cause 158 MMkt funds to break the buck, had it not been for fund sponsors dashing in with cash to hide it and preserve the NAV at 1. In 2008-9, the industry simply ran out of luck--- their Black Swan flew in.

Background: Earlier, I had said: "Money-market funds use their capital to make relatively short-term loans, and, in the old days, their so-called "dividends" were really just a cut of the interest that the MF company obtained while lending those funds. While they also had disclaimers... it was generally believed to be with "a wink and a nod", as the MF companies tried very hard to maintain the $1.00 NAV, and generally succeeded."
And heezsafe replied: "Old_Joe your thinking about MMkt funds is incorrect (both pre-crisis and certainly post-crisis); but if I can find a good synopsis to go with other things I've found (hey, I realized I needed a refresher on this, too!), then I'll have a "package" of interesting things I'll post for you in the next few days."
••••••••••
@heezsafe- Hello there. I'll admit I just ran that off from memory, but your note inspired me to check Wickipedia for more info, and it seems to me to be pretty close to what I was saying:

"A money market fund (also called a money market mutual fund) is an open-ended mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. Money market funds are widely (though not necessarily accurately) regarded as being as safe as bank deposits yet providing a higher yield."
"[M]oney market funds are important providers of liquidity to financial intermediaries."
"The portfolio must maintain a weighted average maturity of 60 days or less and not invest more than 5% in any one issuer, except for government securities and repurchase agreements."
"Unlike most other financial instruments, money market funds seek to maintain a stable value of $1 per share. Funds are able to pay dividends to investors."
Investing in "short-term debt securities" is equivalent to making short term loans, yes?
In any case, this has been an interesting thread, and I'll look forward to your "package" of interesting things".
Regards- OJ

I bought a small position in SBIO on the dip this morning and was happy by the end of the day. This eft is all over the place. In the last 3 months compared to the price it started at it's been everywhere from down 3% to up roughly 31%. In the last week it's lost 15%. If you're an adrenaline junky this is a great fund but otherwise you'd have to stick it in some deep dark corner of your portfolio where you wake up 10 years later and hope its a nice surprise. I'm pretty sure it'll be a surprise one way or the other, I'm just not totally sure which way it'll be.

With $2.9 million of assets and an expense ratio of 1.50% on the retail share class, they're dragging in at most $45K of revenue. After deducting trading costs and what they undoubtedly had to pay Schwab to be a OneSource fund, you'd have to guess the fund manager does this in his spare time on the weekend, since he is after all the CEO of a media company in addition to having day to day responsibility for the fund. Considering his background, all $2.9 million of AUM might be his own!

Look at CELG for example. Closed yesterday at $116 and change. Pre-market down to $115ish. Opens at 8:30 and falls to $114. 8 minutes later over $117 on no news. 15 or so minutes in, $119. $5 move in minutes for a nearly hundred billion dollar company.

FYI:
Regards,
Ted
WSJ Slant:
http://www.wsj.com/articles/u-s-stock-futures-point-to-fourth-session-of-losses-1427372564
Bloomberg Slant:
http://www.bloomberg.com/news/articles/2015-03-26/u-s-index-futures-signal-stocks-to-drop-for-fourth-day-on-yemen
Reuters Slant:
http://www.reuters.com/assets/print?aid=USKBN0MM1OG20150326
MarketWatch Slant;
http://www.marketwatch.com/story/us-stocks-futures-down-sharply-as-middle-east-tension-adds-to-risk-averse-mood-2015-03-26/print
WSJ Markets At A Glance:
http://markets.wsj.com/us
Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-tracker
Current Futures:
http://finviz.com/futures.ashx

Sorry I always gotta check my Bond funds for comparison...Baird 5 yr avg +5.9
PRHYX +8.28 VWEHX +8.2avg ...5-6 yr maturity

Wait long enough, and a lot of what one has in mind will be said. Thanks to Hank for his most recent post above about what cash means. That was some of what I wanted to point out - that if you're thinking about cash as something used for paying bills, you need stable (or very nearly stable) prices. But if you're using "cash" for asset allocation, you can tolerate fluctuations.
In the latter case, these days I wonder about the use of bonds at all (rather than cash) for ballast. Is 1% or so extra return over cash worth the extra risk? While some people are wondering how to get any return on cash, I'm wondering whether 2% on short-intermediate term bond funds is worth the risk. If one does want to take that risk, I'd look at FPNIX - it's always been non-traditional, using derivatives as much to preserve capital as to improve returns.
Back to cash. Regarding I-bonds - which I think are great for cash allocation but not day-to-day cash (since you can't redeem them for a year) - not only can you buy $10K/year/SSN from Treasury Direct, but if you have a refund coming on your 1040, you can buy $5K more using Form 8888.
A similar idea to I-bonds (stable, insured, liquid albeit with penalty) is long term CDs. Many banks offer CDs where you come out ahead of cash even after a year or so (like an I-bond), even after penalty. But there are risks - being able to access your money (early withdrawal may be at the discretion of the bank), and interest rate risk (the bank could increase the early withdrawal penalty). Here's a good post on that. The site (depositaccounts.com) also has a CD calculator showing the net APY after penalty.
Comparing muni bond funds with RPHYX - BobC addressed this to some extent. He likes NEARX. I've been a little uncomfortable about the risk it seems to take (investing heavily in low graded states), but if memory serves, it seems to have cut back significantly on Illinois (lowest graded state), and generally gotten more conservative. Here's a nice graphic on state ratings (you'll need to zoom in to read it well). But NJ's rating (5% of NEARX) has dropped further than the graphic shows.
I tend to look at SEC yield, especially for investments that are not intended to be short term (i.e. used for monthly payrolls and the like) - this is a calculation that's designed to reflect total return (i.e. it accounts for increase/decrease in values of discount/premium bonds). Near the top of short term munis is Vanguard Ltd-Term (VMLUX, VMLTX), a more conservative muni fund that BobC has also suggested in the past as a conservative alternative to NEARX. I feel it offers better risk/reward, in the sense that even though its return is less, its risk is much less. And right now, its SEC yield tops most funds, including NEARX.
It does this, as you'd expect, with low costs. So its portfolio can be shorter term, and higher grade than any of the funds with similar SEC yields. Specifically, its average duration is 2.5 years, and average AA rated (M*). Its SEC yield is 0.86%. There are only two AA rated funds with SEC yields about 0.5% that are comparable - AUNAX (NTF at TDAmeritrade) 2.2 year duration, but high expense and high M* risk (volatile), and DFSMX 2.7 year duration, but 0.52% SEC yield and, well try to buy DFA funds.
Compared to cash (I use 1% as a baseline, since that's about what one can get in FDIC-insured online banks) and a 28% tax bracket, the expected return of 0.86% beats the 072% post tax cash return. Go shorter with munis and you won't beat cash; go longer and you'll be taking on higher interest rate risk that I feel pushes the fund too far away from cash. YMMV.

Derivatives expose difficulties in classifying asset classes. Do you want to classify something based on how it behaves (if it returns 100% of the SP 500, less expenses, call it a LC Blend asset), or by the actual, literal assets that it holds?
For a simple example of how derivatives expose this problem, consider structured investments like index-linked CDs. (An issuer of index-linked vehicles often constructs them by buying zeros to protect principal and then investing the remaining cash in index call options. Each of these investments is a derivative.)
These are CDs - insured (no risk of loss), issued by banks. Looking at them as CDs one would them "cash". But looking at how they fit into one's asset allocation (how they behave), one might better consider them equities.
Now, make a minor tweak - instead of an index-linked CD, consider an indexed linked note, perhaps (but not necessarily) an ETN. Same return, but now has issuer risk, reflecting the fact that it is a promise of payment by a company. The actual vehicle is a bond, but in terms of asset allocation, it fits into one's portfolio as equity.
One begins to see the difficulties in classifying something that is based on derivatives.
Return to my problem statement - classification by behaviour vs. classification by actual assets. M* classifies investments by their behavior - otherwise (IMHO) all ETNs would wind up classified as bonds. So M* classifies CASE as LV (equity), not as a bond.
But M*'s X-ray does what the name implies - it "xray's" investments to see what they hold. ETNs are opaque, so M* shows nothing. (0% of its holdings are reported.) In contrast, DSENX is transparent, so X-Ray shows what it actually holds, not how it behaves. The tool is doing what it is defined (and designed) to do.
Derivatives by design transform behaviour - so that what shows up as actual holdings does not match the behavior of the overall portfolio. Pretty much by definition.

@Hi Willmat72,
Here is a brief description of my sleeve system which I organized to help better manage the investments that were held in five accounts. The accounts consist of a taxable account, a self directed ira account, a 401k account, a profit sharing account and a health savings account plus two bank accounts. With this I came up with four investment areas. They are a cash area which consist of two sleeves … an investment cash sleeve and a demand cash sleeve. The next area is the income area which consists of two sleeves. … a fixed income sleeve and a hybrid income sleeve. Then there is the growth & income area which has more risk associated with it than the income area and it consist of four sleeves … a global equity sleeve, a global hybrid sleeve, a domestic equity sleeve and a domestic hybrid sleeve. An finally there is the growth area, where the most risk in the portfolio is found and it consist of four sleeves … a global sleeve, a large/mid cap sleeve, a small/mid cap sleeve and a specialty sleeve. Each sleeve consists of three to six funds (in most cases) with the size and the weight of each sleeve can easily be adjusted, from time-to-time, by adjusting the number of funds and the amounts held. By using the sleeve system one can get a better picture of their overall investment picture and weightings by sleeve and area. In addition, I have found it beneficial to xray each fund, each sleeve, each investment area, and the portfolio as a whole monthly. Again, weightings can be adjusted form time-to-time as to how I might be reading the markets and wish to weight accordingly. All funds pay their distributions to the cash area of the portfolio with the exception being those in my 401k, profit sharing, and health savings accounts where reinvestment occurs. With the other accounts paying to the cash area builds the cash area of the portfolio to meet the portfolio’s monthly cash distribution needs with the residual being left for new investment opportunity. In addition, most all buy/sell trades settle from, or settle to, the cash area.
Here is how I have my asset allocation currently broken out in percent ranges, by area. My neutral targets are cash 15%, income 30%, growth & income 35%, and growth 20%. I do an Instant Xray analysis of the portfolio monthly and make asset weighting adjustments as I feel warranted based upon my assesment of the market, my risk tolerance, cash needs, etc. Currently, I am heavy in the cash area, light in the income area and a little light in the equity area.
Cash Area (Weighting Range 5% to 25%)
Demand Cash Sleeve… (Cash Distribution Accrual & Future Investment Accrual)
Investment Cash Sleeve … (Savings & Time Deposits)
Income Area (Weighting Range 20% to 40%)
Fixed Income Sleeve: EVBAX, LALDX, THIFX, LBNDX, NEFZX & TSIAX
Hybrid Income Sleeve: AZNAX, CAPAX, FKINX, ISFAX, PASAX & PGBAX
Growth & Income Area (Weighting Range 25% to 45%)
Global Equity Sleeve: CWGIX, DEQAX, EADIX & PGUAX
Global Hybrid Sleeve: CAIBX, IGPAX & TIBAX
Domestic Equity Sleeve: ANCFX, CFLGX, FDSAX, INUTX, NBHAX, SPQAX & SVAAX
Domestic Hybrid Sleeve: ABALX, AMECX, DDIAX, FRINX, HWIAX & LABFX
Growth Area (Weighting Range 10% to 30%)
Global Sleeve: ANWPX, PGROX, THOAX, DEMAX, NEWFX & THDAX
Large/Mid Cap Sleeve: AGTHX, BWLAX, HWAAX, IACLX, SPECX & VADAX
Small/Mid Cap Sleeve: AJVAX, IIVAX, PCVAX & PMDAX
Specialty Sleeve: CCMAX, JCRAX, LPEFX, SGGDX & TOLLX
Total number of mutual fund investment positions equal fifty three.
The "other" that I referenced in my portfolio's asset allocation, and is the subject of your inquiry, comes from Morningstar's Instant Xray analysis of the above positions for assets held that does not fit the categories of cash, bonds, or stocks.
I hope this is helpful.
Old_Skeet

Perhaps the market cycle has reached the point that it will be easier for active managers to justify their fees. The author writes:
"While seeing accounts in San Francisco recently, I read a story about Boston-based Fidelity having a good year in 2014 from an earnings and revenue standpoint, but that they were losing assets to passive investments, aka index funds, ETFs, etc. Here the observation is that this is what you see at inflection points where individual investors are doing the exact wrong thing at the wrong time."
advisorperspectives.com/commentaries/20150325-raymond-james-active-vs-passive-redux