@mrdarcey will provide his own rationale.
The problem I have with these "zero sum game" arguments is that they assume the index literally contains every stock in the category which is not true of any index or in the case of Sharpe, the market is defined by him as only those stocks that are in the index and the active manager in his framework is constrained to only buy from those stocks.
The reality is different as you can imagine. S&P 500 is only 500 stocks and the total stock market is only about 3000 and because of the selection criterion the latter overweights large caps in its composition. So there is a large umiverse of stocks that are not in the index. If the active manager buys stocks in his category (no style creep) that he believes are undervalued but not in the index at the time, the zero sum arithmetic argument assumptions don't apply. Sharpe has no results applicable to this case.
Note that these arguments including Sharpe state that their conclusions follow only from arithmetic (of zero sum game) and not from empirical results of performance studies. But for that to be true, the active manager HAS to buy only those stocks that are in the index. A theoretical argument, not of much value in practice.
Of course, indexologists explain away any over performance when an active manager overperforms with the equally fallacious argument that he picked stocks that were riskier (even if they are classified in the same category) than the index and therefore the index was not the right index for that fund!
In other words, the average active managed dollar (not any particular manager) cannot win by definition in these theoretical framrworks. :-)

Matthew 25 - Do unto others as you may them to do unto you. Something like that.
I have owned this fund off and on for the longest time. I have been lucky to buy it and sell it always with a profit and have used it repeatedly to offset losses on the books. I currently own a small position in the fund, the shortest I have ever held. I plan to add to this in market corrections.

Early bird catches the worm. ;)
http://www.mutualfundobserver.com/discuss/discussion/13596/josh-brown-on-seasonality-sell-in-may-and-go-away#latest

Hi cman.
I took a closer look at funds in the High Yield Muni category since HYD inception.
There are 31 funds that have been around 61 months or more through this March. HYD is the only EtF in the bunch. The few other EtFs in this category are younger.
Many of the funds are loaded and/or impose early redemption fees.
Honestly, most have done pretty well and rather small values (versus say equities) can move the risk adjusted return rankings.
Here is summary sorted by annualized return...all metrics, including risk and return rankings based on performance since Mar '09.

Here's same list sorted by Martin:

Hi Guys,
I too believe that the referenced article undervalues the likelihood of a market meltdown. How quickly we forget 2008.
I particularly disliked the article’s assertion that Bear markets are “relatively rare” events; it is especially at odds with the historical data. The referenced work is utterly devoid of supportive statistics. It reflects a probability blindness. Where is their data to backstop this flamboyant claim?
We need probabilities. In golf, what is the likelihood of making a hole-in-one? What is the probability of marrying a millionaire? What are the odds that shape a market meltdown?
The answers to the first two questions can be found in Gregory Baer’s book “Life: The Odds”. It is an excellent fun and informative summertime read that often illustrates that we folks are terrible at guesstimating life’s odds. That’s especially so when estimating the odds and the payoffs of low probability events.
For a PGA professional, the hole-in-one odds are roughly 2,500 to 1. For those of us in the amateur ranks, the odds vary greatly from 10,000 to 1 to about 15,000 to 1, depending on hole distance. The professionals have improved their odds over time.
The marry a millionaire odds are approximately 215 to 1. Baer provides guidelines on how to improve those odds. With that tease as a motivating factor, you’ll have to read the book to get more information.
To rectify the market meltdown statistical deficiency, I defaulted to Sam Stovall’s recent Las Vegas MoneyShow presentation. In that presentation, he included relevant market overall crash stats.
Of special interest is the historical frequency at two levels of market disruptions: a 10% to 20% Correction and a Bear market loss greater than 20%. Stovall’s S&P 500 data from 1945 recorded 19 and 12 downturns for these categories, respectively. Since the data set incorporated 68 annual returns, the likelihood of a Correction is 28 %, and the probability of a Bear market is slightly over 17 %. This is not rocket science, but I don’t rate these probabilities in the “relatively rare” happenings group. These are scary numbers and demand attention.
The average negative downward thrust for the Correction and for the Bear markets were about -14% and -28%, also respectively. That’s not peanuts and must be worrisome for most investors.
For the Correction markets, the crash duration was 5 months followed by a 4 month recovery period. Overall, the complete cycle was 9 months. That’s bad enough, but likely manageable from an emotional perspective.
For the full Bear market category, the S&P 500 tailspin duration was 14 months with an elongated 25 month recovery phase. That’s a stomach churning and patience testing total of 39 months; wow, over three years of anxious agonizing. That’s a draining experience both from an emotional and from a portfolio wealth depleting perspective.
Indeed No! Bear markets are surely not “relatively rare” happenings. Defensive portfolio diversification, and some careful watching of those market and economic signals that potentially foretell a Bear market must be continually monitored. InvesTech’s Jim Stack and others do a good, but imperfect, job at providing candidate signals. Investing is never without risk.
The developing behavioral finance science has made measured progress at establishing and explaining our mental deficiencies in properly assessing stressful life and investing scenarios.
For example, the 911 disaster killed about 3,000 folks. Because of the manner in which the terrorism was executed, people abandoned air travel in favor of auto travel, even though air travel is statistically far safer than car trips. During the following one year when this fear persisted, it is estimated that the extra auto travel killed an additional 1,500 folks. We do not make rationale decisions for uncertain, low probability events. Typically, we overrate the frequency of occurrence and also the final impact of the event.
The referenced article summarized the development of what Daniel Kahneman called our fast-acting System 1 brain component (the Gut instinct), which was necessary for survival eons ago, but not so efficient for today’s market investment decision making. In contrast, the slow-acting reflective System 2 brain component (the Head instinct) should be more fully exploited in our decision making process. When investing in mutual funds, speed is not an essential element.
Best Regards.

Ted: Just to clarify that Matthew 25 has nothing to do with the fine Matthews fund family. The name of the fund is a bible verse.

FYI:
Regards,
Ted
http://www.bespokeinvest.com/thinkbig/2014/5/21/some-high-multiple-stocks-on-the-rebound.html?printerFriendly=true

I am passing on an experience I recently had with this fund. The fund is 5 stars at Morningstar with only 28 stock holdings and 7% turnover with an expense ratio of 1.06%. It will sometimes hold high percentage positions in its portfolio as it currently has a 13% position with Apple. I attempted to purchase this fund online through T. Rowe Price Brokerage a few days ago. At one point in the process a message popped onscreen to inform me that the fund was not available to be sold in my state and I was unable to complete the transaction. I called the mutual fund to verify that it was available in my state and then called T Rowe Price to try to get the transaction completed, which ultimately I was able to do. But the reason for me writing this message is the fact that later that afternoon I got a call from Matthew 25 re-confirming the fund's availability and the call came from Mark Mulholland, the portfolio manager. I wasn't even a shareholder yet, but it was the portfolio manager who called me back to handle a customer service issue that I had raised. I was impressed with this level of followup by Matthew 25 and thought it deserved a mention on this forum when we are all so used to robo-calls and an inability to actually reach a human when calling with a complaint or question.

FYI:
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2014/05/21/fund-doh-only-8-of-large-growth-managers-are-beating-the-index/tab/print/
In case you didn't know the meaning of D'oh: Homer Simpson:

I have a lot of positions but can't imagine 150 different mutual funds...

Last week, WallStreetRanter posted some data and incited a pretty good thread. One of his concerns re. unconstrained bond funds and the risks they were taking on. Here is a longish article (news, not white paper) from last month, that gets into general characteristics of some of these funds, and what one can expect when they state an orientation of "absolute return" (which some of them do, and some don't.... but probably do, or will do).
http://www.institutionalinvestor.com/Article/3335100/Asset-Management-Fixed-Income/A-Brave-New-World-for-Bond-Investors.html?ArticleId=3335100&p=1
[I hope this isn't something posted last month here; using the search engine for key words, and the link itself, I came up with nothing..... so I tried.... Ted]

FYI:
Regards,
Ted
http://www.marketwatch.com/story/portfolio-killers-5-common-investing-myths-2014-05-21/print?guid=23FEE4F8-B026-44AF-B764-F78872DA323F

I suppose 5 years from the last crash is long enough period to start coming out with these "Don't worry, be happy" articles on the rarity of crashes. :-)

The new ERs, for retail, are 1.05% for Wedgewood and 1.17% for RPHYX.
As ever,
David

FYI:
Regards,
Ted
http://www.ritholtz.com/blog/2014/05/you-dont-understand-risk/print/

FYI:
Regards,
Ted
http://www.bloomberg.com/news/print/2014-05-20/the-cheap-pimco-fund-that-has-gross-reaching-for-wallet.html
M* Snapshot Of PDI: http://cef.morningstar.com/quote?t=PDI&region=usa&culture=en-US&ownerCountry=USA

FYI:
Regards,
Ted
http://www.ritholtz.com/blog/2014/05/josh-brown-forget-seasonality-and-just-invest-smarter/print/

FYI: Copy & Paste 5/20/14: Kelly Kearsley: WSJ
Regards,
Ted
The couple had been investing and saving for years, accumulating $4 million.
However, they had been too busy with work and travel to manage their investments according to an organized strategy, and as a result had 18 different accounts that held 150 mutual-fund positions.
They planned to retire within three years, but they couldn't decipher whether their assets would support this next life stage.
"They needed us to look at their entire portfolio, analyze it and then figure out if it was appropriate for them." says Marilyn Plum, director of portfolio management for Ballou Plum Wealth Advisors, which manages $273 million for 180 clients in Lafayette, Calif.
Ms. Plum's analysis revealed that the couple's accounts included old IRAs and 401(k)s that hadn't been monitored for decades, as well many underperforming mutual funds.
Most of the accounts were allocated primarily to stocks and far too aggressive for clients who were now more concerned with preserving their assets. Additionally, the couple had both nontaxable and taxable accounts, which meant that Ms. Plum had to pay attention to potential capital-gains taxes as she consolidated those investments.
So she crafted a plan that turned their scattered assets into a strategic portfolio, spreading the capital gains over three years to minimize taxes. "We had to develop a battle plan for moving from point A to point B," Ms. Plum says.
The first priority was to get rid of the funds that were severely underperforming. The adviser jettisoned several funds that had been high-performers years ago, but now provided lackluster returns. Ms. Plum also sold funds that were too volatile for the couple's needs.
"Portfolio management isn't set it and forget it," she says.
Next, she focused on eliminating several small holdings that had little to no impact on the couple's portfolio. The positions accounted for less 2% of the couple's investments, with most just languishing inside old 401(k)s or IRAs. Eliminating these holdings made the portfolio easier to manage and freed up cash for Ms. Plum to invest in funds that were better aligned with the couple's investment goals.
Within the first year, Ms. Plum reduced the couple's accounts from 18 to five and eliminated more than half of their 150 mutual-fund holdings. Throughout the process, the adviser worked closely with the couple's certified public accountant, who had determined that the couple needed to keep their capital-gains income under $80,000 to avoid climbing into a higher tax bracket and creating other additional taxes.
To that end, Ms. Plum timed fund sales with the couple's tax picture in mind, knowing that she must divest more of the holdings in another year or two. In the meantime, Ms. Plum is letting the dividends and earnings from those funds go to cash so that it can then be reinvested into funds that fit better with the couple's portfolio.
She also sold bond funds with no gains, or with losses, to diversify the couple's fixed-income holdings. Then, she added municipal-bond ladders to their non-retirement accounts to lower their risk and add more tax-free income.
All told, the adviser's moves generated only $36,000 in capital gains in the first year. And the couple's revised portfolio allocation is now a more appropriate 65% stocks and 35% fixed income.
Ms. Plum's work isn't done, and she'll continue refining the couple's asset mix in the two years remaining until their planned retirement. But now, they at least have a portfolio with a strategy that matches their life goals.
"Sometimes people just need help looking at the big picture," she says.

FYI:
Regards,
Ted
http://www.sfgate.com/business/networth/article/S-F-San-Jose-workers-stash-more-cash-in-401-k-s-5493137.php

Regarding RPHYX, Is this accurate? Morningstar shows their top 25 holdings as maturing in 2015-2019

Those holdings might be callable bonds, meaning that the issuer has the option to pay off the bonds early in certain circumstances. Part of RPHYX's strategy is to buy bonds that have already been called (i.e. the company has already announced that it will be paying off the bonds early) and will be paid out soon.