Hi Old_Skeet,
That's a very interesting approach. It sounds like rather than a pure 50/50 allocation to the two trending areas, you overweight them. How do you decide the extent to which you overweight the trending categories? And if you're using mutual funds do you ever run into difficulty with short-term redemption fees?
Thanks, LLJB

From the article: "Earlier this month, Bank of America Merrill Lynch warned that we’ll see a 10% to 15% correction this autumn."
Glad to know this "prediction" is from the Merrill group and not B of A's accounting group. :)
Does B of A's "prediction mean they will position their client accounts properly, prior to autumn???
Okay........gotta run; and finished with the tough question.

@Old_Skeet
Howdy,
I took a quick look at one of the short term bond funds, ITAAX, in your list. I am not familiar with this fund or its prospectus, as to what methods are available to the managers; but find that the most current report (12-31-13) indicates about 35% of the bond holdings are long term, with duration between 10 and 30 years. I note this, as apparently the manager(s) have some amount of wiggle room. I would consider ITAAX a flexible short term bond based upon the holdings.
Of course, not unlike many active managed bond funds, the wiggle room allowed, may be of value, if the managers get things right about the direction of interest rates.
As an example, Fidelity's FSHBX, per the current report, is indeed a short term bond fund. FSHBX internal composition view
You asked: " My question. Would you swap the short duration funds into something else perhaps believeing that interest rates are headed upward sometime in the future and deal with it when this happens or would you just sit tight with the way it currently is configured? And, if you were to swap the short duration for longer duration funds how far out would you go?"
>>>We seldom use short term bond funds; and when used, we consider these as "cash" accounts for use to park monies from something that has been sold. 'Course, the consideration (an example) is that if we sell an equity fund that is beginning to move, too far, in the wrong direction; the monies "could" go into a short term fund to park the money for a future purchase, of whatever.
In this example, I suppose the main thought is why one chooses to use a short term bond fund. More often than not, when we sell an equity position(s), the monies would more likely move into a multi-sector bond fund, versus short term dedicated.
As to interest rates. Well, we surely don't know; but until I believe there is more strength in the economy(s) that would put pressure on rates moving upward, our house is comfortable with multi-sector bond funds, in particular; and let the managers make the choices. Our current largest holdings are: LSBDX, PIMIX, FRIFX (about 1/2 bonds), OPBYX, DGCIX, FAGIX and 5 other high yield bond funds. Begining around Feb. 24 we reduced our equity percentage to about 15%, with the remainder in bond funds....no money market/cash holdings. Our current equity holdings are: PRHSX, VSCPX, GPROX and some equity inside of FAGIX, LSBDX and FRIFX.
Lastly, per your question: "And, if you were to swap the short duration for longer duration funds how far out would you go?"
>>>I would personally prefer a multi-sector bond fund to let the managers decide about duration, and the type of bonds used in the mix. We have held funds in the past dedicated to the long end of bonds (20+ years). We are not as comfortable with such a position today.
A kinda summary for our actions since the end of February, is that the large 2013 equity run needed to have a break and that some bond sectors were oversold in 2013. I also feel that pension funds (lotta monies) have and may still be restocking their holdings of bonds.
If equity runs higher again, in the near term; we likely will be caught with our investment pants down !!!
Time to get back to the house remodel project.
Take care down there, and hoping the nasty spring weather is not causing problems for you and yours.
Regards,
Catch

@Tony: Suggest in the future, when linking from ETF.Com you link the full article.
Regards,
Ted
http://www.etf.com/sections/blog/21950-hougan-how-to-get-an-almost-free-etf-portfolio.html?showall=&fullart=1&start=2

ETFs mentioned could be used in a version of The Ivy Portfolio:
http://www.etf.com/sections/blog/21950-hougan-how-to-get-an-almost-free-etf-portfolio.html

Effective at the end of market trading (4:00 p.m. EST) on May 9, 2014, the Wasatch Frontier Emerging Small Countries Fund (WAFMX) will close to new investors. The Fund will remain open to existing Fund shareholders, as well as current and future clients of financial advisors and retirement plans with an established position in the Fund.
The Fund will also remain open to new and existing shareholders who purchase shares directly from Wasatch Funds.
Wasatch takes fund capacity very seriously. We monitor assets in each of our funds carefully and commit to shareholders to close funds before asset levels rise to a point that would alter our intended investment strategy. At this time we believe it is appropriate to begin limiting future access to the Frontier Emerging Small Countries Fund.
If you have any questions, please don't hesitate to call us at 800.551.1700.
Regards,
Gene Podsiadlo
Director of Mutual Funds
Wasatch Funds

I expected FAIRX to be down quite a bit. FAIRX only went down -0.02%. AIG (+1%) didn't help that much even though it was featured in Barron's this weekend. Weird.

It works out when you take each stock's weighting and each stock's 4/28 performance.
Use a Microsoft Excel Spreadsheet:
AIG: .47 (weighting) X .97 (today's performance) = .4559
BAC: .147 X -6.27% = -.92169
SHLD: .1028 weighting X 4.04% today's performance= .415312
JOE: .0467 X .17% today's performance= .007939
LUK: .0399 X -1.24% today's performance= .04948
FNMAS: .0417 X .19 = .007923
FMCCG, etc..........
add it up, and you get something very close to the -.02 return of FAIRX for today

The Market Leadership Strategy always has two holdings with nominal weighting of 50% each. Based on the rankings, one of the positions can be a money market fund. This strategy will buy the top two (2) ranked funds and hold them as long as they are ranked as a top-5 fund. If a holding drops below #5, the strategy will sell it and purchase the highest ranked style not already owned. Additional information on interpreting and following this strategy can be found below. - See more at: http://investwithanedge.com/leadership-strategy#sthash.c88qMSRA.dpuf

Part 2:
That put commodity investors in a strong position, and many rushed to take advantage. Investors had less than $1.8 billion in mutual funds and ETFs that focus on commodities at the end of 2003, but that amount had swelled to more than $182 billion at the peak in August 2011, according to Chicago-based investment-research firm Morningstar.
Now, the situation is different. China's economy is growing more slowly, and ramped-up production of many materials is helping to keep a lid on prices. While many commodity markets are rising, some are falling.
For example, coffee has shot up 94% this year through Thursday, due to a drought in top exporter Brazil, while a virus that has killed millions of pigs has pushed the price of lean-hog futures up 48%. But copper—widely used in appliances, homes and elsewhere—is down 8.2% due to concerns about Chinese growth, while lumber has lost 9.5%.
"When China was growing at 13%, it was almost a no-brainer because China consumes 40% of global commodities," says Shelley Goldberg, an independent commodity strategist who advises institutional clients on investing in sustainable resources. "Today, it's not such a simple story."
Yet there are signs that at least some ordinary investors still hope to ride a hot market.
Between August 2011 and the end of last year—a period when commodity prices were in a funk—investors pulled more than $23.3 billion out of commodity mutual funds and ETFs, according to Morningstar. After pulling out more money in January, investors put $400 million back into the funds in February and March, as commodity markets rebounded.
A Proliferation of Funds
Investors considering following suit have an often-bewildering array of funds to choose from, most of which have relatively short track records by which to judge performance.
The funds fall into two broad categories—those that invest in a wide variety of raw materials across the various commodity subsectors, such as energy, agriculture and precious metals, and those that focus more narrowly on a single sector or even a single material, such as gold, copper or corn.
Broad-based funds are the better choice for an investor who wants general commodity exposure and lacks expertise or conviction about what will happen to prices for a particular type of material.
The broad funds typically track an index of materials, though some follow their index more closely than others.
For example, the iPath Dow Jones-UBS Commodity Index Total Return exchange-traded note closely tracks the Dow Jones-UBS Commodity Index. The fund charges 0.75% in annual fees, or $75 for every $10,000 invested, according to Morningstar.
The largest commodity mutual fund by assets, the $14.1 billion Pimco CommodityRealReturn Strategy Fund, also follows the index to a great degree, but fund managers have some leeway to tweak exposure by, for example, increasing or decreasing holdings of a specific commodity relative to the index or buying futures contracts that won't come due until months later, if they think prices for a certain material are more likely to rise further down the road. The fund charges annual fees of 1.19%.
The funds also have different ways of handling a quirk of the commodities markets. When commodity contracts mature each month, fund managers typically buy the next month's contracts to replace them.
But if prices for the new contracts are higher—a phenomenon known as "contango"—the additional cost can significantly erode the fund's returns. Contango can occur when, for example, there is sufficient supply in the near-term but either a shortage of supply or a surge in demand looms.
Plain-vanilla commodity index funds often don't try to mitigate that risk, which also can work in an investor's favor if the new monthly contracts are less expensive, which is known as "backwardation."
Other funds, such as the PowerShares DB Commodity Index Tracking Fund ETF—the largest broad-based commodity ETF by assets, at $5.7 billion as of Thursday—pick monthly contracts that will come due months down the line in some cases, to limit the damage from contango or maximize the benefit of backwardation. The fund charges 0.85% in annual fees.
Commodity funds can carry other risks that might catch investors off-guard. Purchasing a commodity futures contract typically only requires that an investor or a fund put up a small percentage of the contract's face value, so funds have to decide what to do with the remainder of their assets.
The Pimco fund, for example, has less than a quarter of the fund's capital tied up in commodity contracts, and it tries to give returns a boost by investing most of the remainder in Treasury inflation-protected securities and other Treasurys.
Morningstar noted last August that the fund's declines for the year to that point were largely because bond prices fell as investors began to anticipate a reduction in the Federal Reserve's efforts to stimulate the economy by buying bonds. The fund is up 11% year to date.
Funds that focus on a single type of commodity tend to be smaller. One exception: popular funds backed by gold or other precious metals, which often have lower fees because the cost of actually storing the materials is relatively low.
For investors with strong views on the future prices of particular commodities, there is an array of funds available that track, for example, corn, natural gas or crude oil. But the funds can be risky and sometimes carry high fees.
Hard and Smart
Experts say there are smart ways to hold hard assets, including understanding what purpose they are meant to serve and finding low-cost ways to achieve that aim.
"When we're constructing a portfolio for high-net-worth clients, one of the objectives is to protect real spending and quality of life," says Jeffrey Heisler, investment strategist at TwinFocus Capital Partners, a Boston firm with about $2 billion under management.
"People are natural consumers of food and energy," he says. "Commodities hedge out and diversify and balance that risk we all naturally hold."
The firm's clients collectively held about $3.4 million in a broad basket of commodities through the PowerShares fund as of Thursday, and another $23.3 million in SPDR Gold Trust, an ETF backed by gold bullion. The SPDR fund is the largest retail commodity fund of any kind, with $32.9 billion in assets, and charges 0.40% in annual fees.
Some investors prefer a similar fund also backed by bullion, iShares Gold Trust, which charges 0.25% in annual fees. Individual shares also cost less, because a single share represents 1/100th of an ounce of gold, rather than 1/10th of an ounce for the SPDR fund. The iShares fund has $6.8 billion in assets.
Perhaps most important, investors need to have realistic expectations. Throughout history, commodities markets have gone through periods of boom and bust, and investors who were fortunate enough to hold commodities during the run-up last decade saw what a boom looks like.
But investors also risk a bet going bust. Researchers have found that spot prices for raw materials are flat over time, once inflation is accounted for. In other words, they offer no positive return in the long run.
"An ounce of gold bought a good men's suit or a toga 2,000 years ago, and it buys a good men's suit today as well," says William Bernstein, author of "The Investor's Manifesto" and a co-principal of portfolio manager Efficient Frontier Advisors, based in Eastford, Conn.
"The relative value hasn't changed
.
WSJ In-Depth

@Bee, Hank & Others:
Regards,
Ted
Commodities: To Buy Or Not To Buy ? 4/25/14: Christian Benthelsen WSJ
Part 1
Commodity prices are on the rise, as gold, corn and other basic materials climb back from steep declines—and outpace U.S. stocks.
The rebound may stir hopes that a longer-term boom has resumed after three rough years for natural resources, and a measured bet could pay off.
But for ordinary investors, commodities often are a raw deal. They should take a hard look before loading up.
First, weigh whether you need the exposure. Perhaps the main reason investors hold commodities is to hedge against inflation. But inflation remains muted in the U.S. Moreover, many investors in broad-market index funds already hold shares in companies that could make more money if crude oil, nickel or some other material gets more expensive—and those companies can often turn a profit even if prices stagnate. Companies in the energy, utilities and basic-materials sectors represent about 17% of the market value of the S&P 500, for example.
Then consider the drawbacks. Commodities can provide diversification from stocks and bonds, but they generate no income in the form of dividends or interest payments. They also are vulnerable to prolonged declines, such as the three-year tailspin that culminated in 2013, when a 9.5% drop in the Dow Jones- UBS UBSN.VX +0.50% Commodity Index made commodities the worst-performing major U.S. asset class—including stocks, bonds and real estate—based on total return to investors. By contrast, the S&P gained 32%, including dividends.
"To invest in commodities, you would have to take away from something else in the portfolio. You're taking from equities, with higher returns and the same volatility, or you're taking from bonds that have the same return and less volatility," says Mark Keating, a partner at Willow Creek Wealth Management in Sebastopol, Calif., which oversees $700 million.
Associated Press
The Dow Jones-UBS index has generated a 9.9% return for investors this year through Thursday, compared with a 2.3% return on the S&P 500, according to FactSet.
Even advisers who think commodities can be useful often recommend only small doses, perhaps 3% to 5% of a portfolio. An investor who is particularly concerned about the risk that the U.S. dollar will lose much of its value might hold some gold, which can act as a store of value at times, though it also can behave like a risky asset.
In addition, investors need to carefully study the many mutual funds and exchange-traded funds that have cropped up over the past decade or so to offer exposure to commodities, experts say. The funds often carry steep fees and hidden risks that could eat into returns, so investors should understand how they work.
Here is what investors need to know about what drives commodity prices and how to place a smart wager.
China's Voracious Appetite
From the start of 2000 through the end of 2010, the Dow Jones-UBS Commodity Index, which follows future contracts for 22 commodities from aluminum to zinc, more than doubled. Copper gained 417%, and cotton 184%. The single biggest reason for the rally was that China was growing rapidly.
Still, that only addresses the demand side of the equation. Supplies of many raw materials also were constrained in the years leading up to that decade, because tepid sales and prices had led commodity producers to limit outlays needed to boost output.

Referencing a previous thread here:
5 Ways To Protect Your Retirement Income
This was kinda my point regarding target date funds. They often get you "to" retirement. When you step off into retirement a target dated fund may not be designed to get a retiree "through" retirement.
Cman's comment (condensed paraphrased version):
Someone ought to do a target dated fund with a strategy of moving from indexed funds to all managed funds that have a good record of balancing performance with downside protection. Interpolate smoothly between them. It is not that difficult to do on your own either.
For me, the search is on to create this type of portfolio...Help welcome.

I've never thought about this at the fund family level but I think its something that deserves specific decision making rather than backing into whatever happens. My key focus is on big picture allocation, and I want to be overweight small cap and emerging/frontier markets and underweight large cap and developed international markets generally. At the end of last year I rotated away from small caps a bit because I thought the valuations were extended and into emerging markets because of last year's poor showing. I've picked a couple of funds in each of my categories, which are U.S., foreign developed markets and emerging/frontier markets, then large cap and small/mid-cap within those, plus bonds and "other", that I think can outperform their categories over time. Luckily, I didn't end up investing in multiple funds with more than a couple fund families. As I thought about this more, I would also include newsletters along with mutual funds families. I found that I have a bit less than 18% allocated to one newsletter and just over 10% at Wasatch.
I think I'd prefer to limit my exposure to one strategy or "culture" to 15%, maybe 20% in special cases, and that means I'll be slightly reducing the size of my positions as I follow the newsletter so I rotate back towards 15%.
Thanks to all for the thoughts and especially Shostakovich for starting the discussion.

Note in the article's pie chart which asset allocation from conservative to aggressive had the best returns over time.
Regards,
Ted

Thanks for the article Ted.
Here's an approach I would like others to comment on if you would be so kind.
For simplicity, I propose using Retirement Dated Mutual Funds to help a retiree properly allocate their overall retirement distribution needs during 30 or more years of retirement. Retirement Dated Mutual Funds have a built in mechanism that, over time, allows them to follow an "allocation glide path" from aggressive growth to conservative allocation at a specific date in the future. This eliminates the need for an individual investor to "manage" their retirment portfolio. Allocation decision are built into the overall protfolio by virtue of fund selection. in addition cost as low to resonable dpending on the fund selected.
I propose that these Retirement Dated Funds be thought of as Distribution Dated Funds. The date would coincide with the start date of a 5 year distribution period during retirement. As each five years period end another Distribution Dated Fund would be gliding into position to help fund distributions for the next five years of retirement.
If a retiree were able to determine what periodic distributions they would need (adjusted for inflation and in addition to their retirement income pension, SSI, annuities) and (over each five year period of time in retirement) they could then work backwards and determine initial funding levels using historical performance data as a guide.
So, for example, if one were to retire in 2015 at age 65 their retirement distribution portfolio might look something like this:
Retirement (Distribution) Dated Funds
2015 - Will provide distributions from age 65-70
2020 - Will provide distributions from age 70-75
2025 - Will provide distributions from age 75-80
2030 - Will provide distributions from age 80-85
2035 - Will provide distributions from age 85-90
2040 - Will provide distributions from age 90-95

Thanks guys. I haven't done the math yet, but it makes sense to me that even with commissions I'd be saving money and collecting more of the dividend stream over PRBLX, VDIGX or even VIG.
Just at a glance I really like the QCOM rec. Solid expansion of dividends and earnings for a decade witn low payout. Is there something specific about MAT you don't like?
Thanks much for the feedback.

Happy to help! :)
Qualcomm remains a fairly significant holding for me, with a long-term view. I believe the company can make inroads into new areas, such as retail (their beacons, which I think have a lot of potential for a wide variety of uses) and health. They recently raised the div quite a bit.
As for Mattel, I just don't really love the industry. I grew up as a kid in the '80's with Transformers and GI Joes and Starting Lineup and all those things. A kid today doesn't want an action figure, they want an IPad/Iphone and an XBOX One (or Sony PS4). Kids today probably don't know GI Joe, but are more than aware of "Halo" and Master Chief (which is owned by Microsoft/MSFT, which are coming out with more "Halo" games (see below) and a "Halo" series produced by Steven Spielberg.)
Board games? I don't know, it would seem those are on the way out, as well. Although, EA games is happy to sell you various Monopoly games on mobile, as well as other board games. Either the game is for sale, or it's difficult to get far in the game without buying additional in-game money online.
Microsoft also has money rolling in (it certainly does from me) for XBOX Live subscriptions. XBOX Live also has money coming in from users streaming media and buying downloadable content for games. Obviously, XBOX is not a large part of Microsoft as a whole, but when it comes to discussing what kids want these days, they want XBOX (and Playstation.) Additionally, Microsoft's handling of the "Halo" franchise (they created a studio to handle video games, novels and other products) is an example of how video game companies will likely to continue to have successes that will roll into other products (toys, books, movies, etc.)
When I was a kid, I loved going to the arcade. Then I went to an arcade where you could play against other people in the same room and that was amazing. Now I can play on XBOX Live against someone in another country. I think online gaming and mobile are just huge pulls away from the traditional toy industry as I knew it when I was a kid.
The video game industry was - I think - revolutionized by online gaming. The video game business is going to continue to do well with new avenues, especially micro transactions.
Game company Take Two has said that these transactions are "the gift that keeps on giving." "For Take-Two's quarter ended December 31, the company reported that net revenue from digitally delivered content grew 42 percent year-over-year to $132.8 million. This was led by GTA Online, Zelnick said at the time."
"GTA V has shipped 32.5 million copies and some 70 percent of all users have played Grand Theft Auto Online. Take-Two is keeping the all-important ARPU (average revenue per user) figure a secret, but from the enthusiastic way in which Zelnick talks about GTA Online, it wouldn't be surprising to learn that the online mode is performing quite well monetarily."
(http://www.gamespot.com/articles/gta-5-s-online-mode-is-the-gift-that-keeps-on-giving-take-two-says-about-its-monetary-opportunity/1100-6418882/) Whether gamers like it or not, I think there will be more of "you buy the game, but if you want xyz, that's another cost."
From MSFT's latest quarterly conference call: "Xbox Live members continued to embrace the service with transactional revenue growing 17%."
Hasbro and Mattel will probably keep doing fine - there's certainly licensing money for these companies - but you really have to hope that these companies continue to innovate and understand the changes in the way that they have to reach their target audience as times change and technology has really taken attention away from physical toys that dominated for so many years. Browsing through Hasbro's 2013 annual report, they at least seem to be saying the right things.
Long-term though, I guess I just don't think the toy industry is very compelling.
"Toys R Us" has not done well at all, although that's certainly due to a good degree from Amazon competition.
http://blogs.reuters.com/great-debate/2013/02/20/why-the-toy-industry-isnt-having-any-fun/
Halo 5:

hi all, in the last few issues of Barron's, I have noticed insider buying for PIMCO dynamic credit income (PCI) and PIMCO dynamic income fund (PDI). the discount to NAV has narrowed recently: PCI -5.7% (vs. 3 year avg of -7%); and PDI -1.4% (vs. 3 year avg of -5.1%). Not sure if Gross and co are banking on lower interest rates in the future or if the yield is tempting? Total distribution rate for PDI is 7.1% and PCI 8.1%. I have thought of buying but held off too long as discount has narrowed. Wondering what your thoughts are.

Since I happen to own both PRBLX and a number of individual stocks, since the 1970,s and 1990,s, why not own both? It has served me well and now I'm 80 and my wife and I have enjoyed our retirement with a portfolio that will take me to age 95+ but don't expect to make that age. good luck. I like my stocks but also that PRBLX portfolio and management, who is the best there is

"An American man who’s reached age 65 in good health has a 50% chance of living 20 more years to age 85, and a 25% chance of living to 92. For a 65-year-old woman, those odds rise to a 50% chance of living to age 88 and a one-in-four chance of living to 94."
Ouch!

In my opinion T. Rowe Price has a lot going for it.
When I compare TRP fund's to other funds in their category they seems to exhibit a better combination of higher alpha and lower beta in up and down markets making it easier for an individual investor to hold on through market gyrations.
Secondly, T. Rowe Price is an asset management company that is publicly traded ( as TROW) which makes it somewhat unique for a mutual fund company.
Here's an interesting long term chart of TROW and PRWCX:

Some investors might prefer to invest in the management companies that manage investments (mutual funds) of companies and TROW might be a consideration. I might suggest that when these asset managment companies under perform their Balanced funds (i.e. PRWCX compared to TROW) they are a great buying opportunity.
Right now TROW is trading at a 5.4% discount to PRWCX:

Here's an Article on the topic on Publicly Traded Assets Management Companies:
Buy The Fund Managers, Not Their Funds

To echo what Charles said, this is down to M*'s system which takes a snapshot of results at 10, 5, 3, and 1 years, weights those results, and compares them with the group the fund belongs to. VDIGX, VIG, PRBLX, et al suffer in stars because they deal in areas of the market that lags where the bull market, specifically last year's, was strongest.
It's sort of an apples to oranges comparison. Div growth funds are all still relatively predictable wealth compounders. But they're going to lag in strong upmarkets.
Edit: also keep in mind that VDIGX changed its mandate in 2003 from a utilities fund to a broader market fund. Similarly PRBLX changed from a balanced fund in 1998. Those changes aren't really reflected in ranking systems. I believe both are great owls, or as close to it as can be, taking that into account, fwiw.

Hello,
I am thinking of adding another member to my fixed income sleeve and raise the sleeve's fund count to seven. The fund is LIGRX and it will become fund number 52 within my well diversified portfolio which consist of twelve asset sleeves. This fund carries a M* rating of five stars and has earned a gold medal ranking. This fund has a wide asset base consisting of about cash (5%), stocks (4%) , bonds (83%) and other assets (8%) which are comprised of mostly convertible and some preferred securities. It currently has a duration of 4.6 years with an average credit quality of BBB. I have linked its M* report for those that would like to have a look.
http://quotes.morningstar.com/fund/f?t=LIGRX&region=USA
I am currently of the mind set I'll be cutting this sleeve back to six funds and adding to my equity holdings should equities experience a good pull back in the near term. The current members of this sleeve are ITAAX, LALDX, THIFX in the short term section and LBNDX, NEFZX and TSIAX in the multi sector income section. With the addition of LIGRX the duration of the sleeve as a whole will become about 3.8 years, up from 3.6 years.
I wish all ... "Good Investing."
Old_Skeet