'Specially like this wording:
Funds would also be prohibited from acquiring any asset that couldn’t be sold within seven calendar days if it would mean that such assets would account for more than 15% of their net assets.
Funds would be required to invest a minimum percentage of their net assets in positions that could be converted to cash in three business days.
Hey........good luck with the above in bold.
Have the investment companies abide with some simple rules as noted in the article. The SEC will legally note to them that a violation or failure of the organization to be "liquid" will result in the "nationalization" of the firm, all employees are terminated and all account assets will be automatically converted to 10 year Treasury issues with notification to all account holders; who may them rotate their funds into another investment company on the "chosen one's" list.
Management, please sign on the line following the X _______________________
None of the above is not unlike the special actions taken during the 2008 melt. Many FDIC institutions have since been terminated and the accounts move to bank "X".
The "gov" can guarantee the whole thing. Tis in the best interest of the country in general.

Daisy Maxey, writing for the online version of the WSJ, announced "Mutual fund's overhaul hits investors with a big tax bill." It's the same "F P A Perennial becomes F P A U.S. Value" story that we warned people about in June. Remember "F.P.A. Perennial: Time to Go"? Remember: "If you are a current Perennial shareholder, you should leave now"?
Highlights of the story:
Morningstar channeled Bernanke. Ben was adamant that there were no clear signs of trouble brewing in the years leading up to the 2007 implosion. Dan Culloton of Morningstar seemed equally surprised by Perennial's $39/share payout: “It’s certainly a big, shocking distribution. It exceeded my expectations."
Why? In the parallel case of F P A's conversion of Paramount from small growth to large value, virtually the entire portfolio was liquidated within a few months. Morningstar's own data back in June suggested a $36/share payout. The only reason you'd be surprised is if you weren't paying attention. How could Morningstar not ... oh, right. The fund only has $280 million in AUM!
Wall Street Journal practiced "safe" journalism. Two tenets of that strategy. Talk to Morningstar. Avoid hard questions.
"F P A declined comment". Yep. You could sort of feel the temperature drop after we complained about raising the management fee at Paramount when it was converted from a clone to Perennial to a global absolute value large cap. Since that change, perhaps coincidentally, assets are down nearly 50% and the fund is underwater.
(sigh)
David

Doesn't fire-proofing funds reduce the potential return? Can I still invest in a very risky fund if I want to - knowing that increased risk often leads to increased return over longer periods? Do you really want your emerging markets bond fund or small cap equity fund to be as safe and secure as bank deposits (now yielding less than 1%)? Something in me doesn't like all these new rules.
However, if investors refuse to read the prospectus and excercise common sense in their fund purchases - perhaps this is the only alternative. I'd like instead some type of uniform "risk" label applied to all funds sold to the public. 4 or 5 different risk levels should be adequate. This would also give fund companies an incentive to structure their funds so as to qualify for a lower risk rating. Novice investors, those near retirement, etc. would know in advance which funds represented the higher risk of principal loss over the near term and would be cautioned to avoid these.
Many companies do exactly that. T Rowe Price does an excellent job displaying risk using bar graphs and than elaborates on that risk in their fund commentary. Even here, however, I suspect many ignore those classifications and invest more aggressively than prudent for their circumstances.
AAA

I own DLFNX since Sept, 2012. $50 BILLION AUM in DBLTX. That fund oughta be closed. With so much in there, he's driving the market, not investing in it. $50B is nuts. This thread caused me to look once again at the portfolio. DLFNX is 47% in AAA-rated stuff. If I was aiming for a not very risky solid, reliable, tame fund, I guess I found it.
Signed,
----The MFO resident Rank Amateur.

I noticed the quality numbers, too. Still, if 47% is AAA rated, then why is the average quality only BB for the fund? He must own some real junk in there.

A section from blog of Steve Blumenthal, CEO of CGM Capital Management Group, Oct 2
On My Radar: Defaults Will Breach the Historical High Next Year – The Fed is the “Wild Card”
http://www.cmgwealth.com/ri/on-my-radar-defaults-will-breach-the-historical-high-next-year-the-fed-is-the-wild-card/
High Yield – Rising Defaults
Edward Altman, the New York University professor who developed the Z-Score method for predicting bankruptcies, says “defaults will breach the historical high next year and the Fed is the “wild card” that has the power to determine how quickly the current credit cycle ends.” (Bloomberg)
“We have blamed the wider Junk Bond spreads on Energy issuers, but last week there was a buyer’s strike. If this continues, you can say goodbye to easy financing for M&A which will remove one large pillar of support from stock prices”. (361 Capital)
* Altice on Friday sold $4.8 billion of junk bonds to fund its $10 billion purchase of Cablevision Systems Corp., according to S&P Capital IQ LCD. When the deal was shopped earlier this month, Altice expected to sell $6.3 billion of debt, investors said. A 10-year bond was priced to yield 10.875%, compared with yields as low as 9.75% that were suggested by bankers initially, according to S&P Capital IQ.
* Olin on Friday sold $1.2 billion of bonds to pay for its pending acquisition of Dow Chemical Co.’s chlorine-products unit. Earlier in the month, Olin was expected to sell $1.5 billion of bonds, fund managers and analysts said. The annual interest rate on Olin’s 10-year bonds sold Friday was 10%, up from 7% expected earlier in the month, according to S&P Capital IQ.
* Companies have announced $3.2 trillion of M&A this year, according to Dealogic, emboldened to merge by cheap debt and the long stock rally that began after the financial crisis. That puts 2015 on pace to rival 2007 as the biggest year ever for takeovers. Issuance of junk bonds backing M&A deals hit a year-to-date record of $77 billion through Friday, according to data from Dealogic.
* A souring of investors on junk bonds could limit the availability of financing for deals that require a lot of borrowing. Banks have been under pressure from federal regulators to reduce their loans to such companies, and a pinch in the bond market could leave those deals struggling for financing. (WSJ)
* After investors snapped up more than $37.5 billion of bonds issued by junk-rated energy companies in the first six months of 2015, just $5.9 billion has been raised since then, according to data compiled by Bloomberg. (Bloomberg)
* Junk-bond investors are bracing for a surge in corporate defaults that would exceed the most pessimistic forecast from credit raters as the Federal Reserve contemplates its first interest-rate increase since 2006.
* A measure of distress in the market is suggesting investors have priced in a default rate of 4.8 percent during the next 12 months, according to Martin Fridson, a money manager at Lehmann Livian Fridson Advisors LLC. That’s almost two percentage points higher than the pace being projected for June next year by Standard & Poor’s, the world’s biggest credit rater, as concern mounts that energy companies that loaded up on cheap debt are going to struggle to refinance. “Unless there is a miraculous turnaround in oil prices there is likely to be a lot of defaults,” Fridson said. “The rating agencies’ approach isn’t capturing the fact that a large part of the economy is far out of step with the overall picture of the mark” (Bloomberg)
* On HY fair valuation from Martin Fridson this week: Now that the sector has sold off sharply, it’s finally at fair value, finds Fridson, chief investment officer at Lehmann Livian Fridson Advisors. He uses a model that includes current economic and market conditions to judge valuations. (Barrons)
* Note that fair value can move to significantly undervalued as happened in 1991, 2002 and 2008. Recessions are a bear (no pun intended).
* The S&P U.S. High-Yield Corporate Bond Index posted a yield to maturity of 7.51% on Tuesday, up from a recent low of 6.21% in late February. Morningstar data shows that the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has lost 3.6% in the past six months.

Remain tactical with your HY exposure. We are seeing liquidity issues in the market. [...] Corrections create the next great opportunity. As prices decline, yields move higher. Defaults are only a bad thing if you sit on the bus as it falls over the ledge. It will be higher defaults and declining prices and higher yields that will bring us returns like those achieved after the prior crisis.
@AndyJ @Edmond
Well, I hope you two get your signals straight this year about who is going to send the memo re. positive "Oct-Dec seasonality." Last year, Q4, Mr. Junk Bond Market didn't get it. :)

FYI: Investors and fund companies should brace themselves for a blizzard of new mutual-fund rules.
Regards,
Ted
http://www.wsj.com/articles/the-new-mutual-fund-rules-what-you-need-to-know-1444010541

FYI: The tremendous volatility in the third quarter—the worst three-month period that stocks have experienced since the same period in 2011—was bad news for many previously highflying mutual funds.
Regards,
Ted
http://www.wsj.com/articles/a-tortoise-wins-the-stock-fund-race-1444012054
M* Snapshot POLRX: http://www.morningstar.com/funds/XNAS/POLRX/quote.html

I own DLFNX since Sept, 2012. $50 BILLION AUM in DBLTX. That fund oughta be closed. With so much in there, he's driving the market, not investing in it. $50B is nuts. This thread caused me to look once again at the portfolio. DLFNX is 47% in AAA-rated stuff. If I was aiming for a not very risky solid, reliable, tame fund, I guess I found it.
Signed,
----The MFO resident Rank Amateur.

"I actually don’t know of anything other than U3 [the official unemployment rate] that would make you want to tighten. All the price indicators (including wages) scream weakness, as do all the other labor market indicators. If we didn’t have the unemployment number, nobody would see a reason to hike.”-Paul Krugman, Econ professor, Graduate Center of the City University of New York, op-ed columnist for The New York Times, Nobelist.
Wow! I'm worried that I agree with this guy. Then again he had a 50/50 chance of being correct.

This interesting 'survey' might be of interest:
https://www.washingtonpost.com/posteverything/wp/2015/10/02/are-there-any-economic-indicators-pointing-towards-the-need-for-a-fed-rate-hike-some-of-my-econ-pals-weigh-in/

Just some ramblings from perspective of a T. Rowe Price investor,
I owned PRHYX for many years. It's one of those conservative funds that are said to earn a "B" during up markets and an "A" on the way down. Vaselikov is good. He's been there nearly 20 years however - a long time by TRP standards. He also manages their new Global High Income Fund, RPHIX - in existence less than a year. I'd view that as a good alternative to PRHYX, which is closed, as long as Vaselikov stays.
Not very familiar with the HY sector since selling PRHYX couple years ago. But as one who sometimes likes to speculate on beaten up sectors, I'd urge caution. That's always the case with beaten up sectors. You just don't know how long and how far they'll tumble.
An outside-the-box thought is to consider Price's RPSIX (Spectrum Income) for some moderate growth potential. While not fond of the investment grade bond part, I like that the fund is experiencing a rare bad year and that approximately 50% of its holdings (owned through other funds) are having miserable years. These include high yield bonds, EM bonds and a dividend-paying stock fund (PRFDX). When these beaten up sectors turn, you'll get some nice payback out of stodgy RPSIX - without having undertaken a lot of risk.

I've been looking at both funds to round out my bond portfolio and noticed a few things:
DBLTX seems like a mortgage fund disguised as a total return fund. Essentially, Gundlach must have at least 50% of assets invested in mortgages. Thus far, he's been very successful. What happens when that sector hits the skids?
DFLNX has been slightly less successful with Gundlach at the helm when he spreads out to treasuries and corporates. Again, this fund has a large part dedicated to mortgages, but not as much as Total Return.
Do you consider DBLTX a true "Total Return" bond fund or just a mortgage fund? Also the AUM for DBLTX is enormous compared to DFLNX. Do you think that will hurt performance in the future? It doesn't seem to have been an issue thus far.
Thoughts and input/suggestions?
Thanks.

@little5bee, She left on her own to run a new fund. I read that she would expecting to succeed Dan Fuss as he retires, but that was not his plan. There are already two other (more junior) co-managers, thus the transition plan is to be more team-managed.

@Sven
In going head to head Katleen Gaffney (EVBAX) vs. Dan Fuss (NEFZX) here are my findings for total return ... EVBAX ytd -13.79% and for 2014, 4.69% ... NEFZX ytd -7.62% and for 2014, 5.65%. Seems as though the additional risk Ms. Gaffney (EVBAX) has taken on thus far has been a detractor when compared to the results of Dan Fuss (NEFZX). I am going to keep NEFZX and most likely will pass on my repurchase of EVBAX anytime soon. I am thinking about opening a starter position in BAICX now that I have dialed the number of funds owned down to 45 form 52, that I once owned. I did this during my recent process of raising my cash allocation to about 25% and reducing my allocation to equities to about 50% while keeping my allocation to income at 20% and to other assets (as classified by M*) at 5%.
Skeet

Final amount $39.67...ugh!!!!
http://www.fpafunds.com/docs/fund-announcements/2015-09-div-distribution.pdf?sfvrsn=2

FYI: (Click On Article Title At Top Of Google Search)
The third quarter of 2015 started off well, but the volatility that followed was dramatic. Stock and bond funds, almost regardless of type, ended with a loss.
Regards,
Ted
https://www.google.com/#q=A+Bad+Quarter+for+Stock+and+Bond+Funds+barron's

FYI: (Click On Article Title At Top Of Google Search)
The sky is not falling for high-yield bonds. Eight funds and ETFs with yields ranging from 5.7% to 12.8%.
Regards,
Ted
https://www.google.com/#q=High-Yield+Bonds+Look+Attractive+barron's

As someone who (like so many here) studies the Commentary texts intensely, I am trying to fathom the extreme Leuthold valentine.
>> They’re an independent firm that produces financial research for institutional investors.
okay
>> They do unparalleled quantitative work deeply informed by historical studies that other firms simply don’t attempt.
Seriously, unparalleled?? Not just unsurpassed? Did you really mean to write that?
>> They write well and thoughtfully. x 2
Moreso than the best of the others who do so?
>> Quite beyond that, they put their research into practice through the Leuthold Core (LCORX) ...
k, who doesn't?
>> Core was a distinguished “world allocation” fund before the term existed. $10,000 entrusted to Leuthold in 1995 would have grown to $53,000 today (10/01/2015).
Lots of different managers were making decisions during those two decades, per M*, unless you are claiming Leuthold himself really ran the show, regardless of the group dynamics and inputs, until 2011, but also still, albeit mostly retired, that he has major say from jealousy-inducing Bar Harbor.
>> Over that same period, an investment in the Vanguard 500 Index Fund (VFINX) would have growth to $46,000 while the average tactical allocation manager would have managed to grow it to $26,000.
Not sure whether to go there, using many owned oranges. One would not want, over those two decades, to compare Core with FPACX or OAKBX; but are they tactical? One would not want to compare Core with FCNTX or FLPSX or PRBLX (management change here) or even GABEX, listed here since all equities (SP500) was mentioned.
>> All of which is to say, they’re not some ivory tower assemblage of perma-bears peddling esoteric strategies to the rubes.
All righty then.
>> The bottom line is that a cyclical bear began in August and it’s got a ways to go.
Huh. If they say so. Maybe they're right.
Whence this valentine and pitch ?

Ted's post has the info you need.....
http://www.mutualfundobserver.com/discuss/discussion/23855/wealthtrack-preview-guest-kathleen-gaffney-manager-eaton-vance-bond-fund

What's the 10-year telling us? Very little I suspect. But a little ...
It says,
1. Trend persistency is alive and well (borrowing one of Junkster's phrases).
2. There's an aging population (pushing people into annuities and bond investments viewed as "safe").
3. There's fiscal uncertainty in the U.S. (the battle over the budget and a bunch of fruit-cakes running for President).
4. There's a slowdown in China (Surprise! Economies don't always grow exponentially and markets sometimes correct.)
That should cover it.
Crash's link is on Jeff Gundlach's forebodings about a rate hike (around the time of the last FOMC meeting). Fair enough. But I wouldn't read a tremendous amount into it. Economists seem about equally divided on the question. And, Gundlach does have a dog in the fight - so to speak.
http://news.investors.com/100915-775007-compounding-interest-and-investment-returns-to-help-your-kids.htm