Hi Guys,
The Meketa Investment Group (MIG) does first-class internal financial research. That’s not exactly unique but allowing individuals free access to this fine work sets them somewhat apart. Thank you MIG for entrée to your many informative White Papers.
Here is the generic Link to the MIG website immediately followed by a direct Link to their White Paper listing:
http://www.meketagroup.com/
http://www.meketagroup.com/investment-research-white-papers.asp
In this instance, I direct your attention to their most recent addition titled “ Active Manager Performance: Alpha and Persistence”. MIG only releases a few of these reports annually; it reflects the care that is exercised in their preparation.
Please examine this active fund manager update. The MIG team made a special effort to identify a complete listing including defunct entities, to cull that expanded database, to properly classify funds into their real categories, and to meticulously evaluate their Alpha/Persistence performance metrics.
The MIG team made a valiant effort to establish Alpha winners and the persistency characteristics of these rare winners for 6 fund classifications: core bonds, high yield bonds, domestic large cap equities, domestic small cap equities, foreign large cap equities, and emerging market stocks.
The findings are not shocking. I’ll summarize the most pertinent findings without further comment. In general, results are presented as each groups Median (not average) performance against a relevant benchmark. Here are MIG’s primary conclusions.
Even before fees, the core bond and the Foreign Large Cap group’s Median performance is negative relative to their appropriate benchmarks.
After fees are subtracted, the “median level of fees negated any (stock picking) advantage” for all 6 categories.
In an expansion of the US large and small cap groups into growth and value classes, small cap value equity managers made a statistically significant positive stock picking contribution.
The data were examined as a function of time. In some categories, active management made a positive difference during market meltdown plunges.
More recently, active managers have found it more challenging to outdistance benchmarks. The competition is more evenly matched and active manager investment edges are disappearing
Performance persistence among active fund managers is nonexistent. MIG concluded that “managers who outperformed over a 5-year period were no more likely to outperform over the next 5-year period than any other manager selected at random”.
The overarching final MIG conclusion is that “identifying managers that will perform ex-ante by relying on past performance alone will prove to be a fool’s errand”.
These findings need not be the death knell for active fund management. The inclusion of the word “alone” in the final conclusion is a critical qualifier. Other factors do enter into the fund manager selection equation. Keeping costs down will surely increase the outperformance odds. Situational awareness can also improve the odds of a successful selection process.
The referenced article has a pile of useful historical data and charts (especially in the appendix section). There are many lessons to be learned from this work Once again, please read the White Paper.
Best Regards and Happy Easter.

After a little investigation (emphasis on little) I have come up with a short list of low turnover equity funds:
Most Index Funds
Equity-centric Funds with less than 25% turnover:
LEXCX (0% turnover)
FAIRX(16%)
FLPSX(11%)
LCEIX(9%)
USAWX(16%)
VGHCX (21%)
ROGSX(15%)
TWEBX(8%)
FRUAX(5%)
DDVIX(6%)
NSEIX (22%)
ACSDX (12%)
LMPFX (2%)
Concentrated Funds with low turnover:
FAIRX
BCIFX
FPPFX
JENSX
and,
SHRAX - Clearbridge Investments portfolio manager Richie Freeman explains his brand of long-term investing:
Article:
Richie Freeman

There is a "gross expense ratio" of 5.27%.
Definitely would want to explore that to understand what's it's all about.
The .pdf lists 3 expense ratios: Capped, Total, and Gross.
The capped and total are clear.
How well can a fund do longer term with a "gross expense ratio" of 5.27%?

Hi Guys,
I am very pleased with the extensive response to my “Worry? Not Me” posting. You took the topic in many unanticipated directions that truly enhanced the usefulness of the exchange. Your postings contributed insightful and sometimes novel ways to explore and interpret the marketplace. I hope you profited from it as much as I did.
With so many contributors and their sub-topic interchanges, the submittals have become too cluttered, too messy. Therefore, I propose this Redux segment. It’s at least a clean sheet.
Overwhelmingly the submittals were information-based, well constructed, and generous to those taking an opposite position. We should all expect and tolerate no less. Trading markets accommodate disparate viewpoints and goals.
Unfortunately, a minority membership did not resist the temptation to toss a few ad hominem, hurtful personal bombs. Typically, these gratuitous bombs are unsupported assertions that reflect biases that are devoid of any investment wisdom or merit. Their misguided purpose is to discredit their target. They fail to focus on substance, but they do senselessly highlight personal traits and style.
Here is one blatant example that quoted George Bernard Shaw as follows: “I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it." Was this really necessary?
This saying was obliquely directed at an MFOer whose opinion conflicted from that of the writer. It’s shameful if divergent investment interpretations and opinions are not tolerated without prejudice on this website. There are a few other examples that are a little less obvious but just as uncouth. Investing is never fully black or white, otherwise markets would not exist.
In many instances the root causes for these weary and unwarranted remarks are inspired by political and/or environmental ideological differences, not investment matters. That’s a fundamental mistake. Not only does it destroy relationships, but it also compromises trust and can do portfolio damage.
There is no call for such personal abuse of their targets or the misuse of the good resources of this website. It is hateful and ultimately harmful to good investment practices. Emotional behavior erodes investment performance. There is substantial academic and industry research that documents its negative impact.
Often, the personal attacks are prompted by a careless reading of the original post or a misinterpretation of its content. Alan Greenspan observed that “ I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant”. Accurate communications can be troublesome, especially when Greenspan is part of the interaction.
That Greenspan quote was extracted from a Blackrock behavioral investing paper researched by Nelli Oster. I suggest that you review the following Link:
http://us.ishares.com/content/en_us/repository/resource/market_perspectives_feb_2013.pdf
This is a short 10-page report that is excellent. It provides pertinent observations and actionable options that just might improve your investing outcomes. Please take time to access it.
In March, I introduced the Army’s “Situational Awareness” concept as a positive potential investment performance enhancer when exploring the influence of Luck on investment performance. I still believe that is a worthwhile field for research. Like all resources and concepts it can be overemphasized. Too much of a good thing can do damage. The referenced Blackrock paper addresses that issue in a logical manner.
In thinking back to my March submittals (3 or 4 in number), I recalled that I did not provide a reference to an Army situational awareness document. I believe this is a peripheral issue, but for completeness, here is a Link to one of my March MFO postings, and followed by a Link to an introductory Army Field manual summary of situational awareness:
http://www.mutualfundobserver.com:80/discuss/discussion/11899/process-and-luck-over-outcome#latest
https://rdl.train.army.mil/catalog/view/100.ATSC/6C01FFE5-0DF6-415F-A13C-92ED36A708CA-1303039189337/1-02/intro.htm
Behavioral economics is now a hot subject, and much research is pursuing its impact on individual investor decision making. Here is an academic reference that was partially generated by authors who popularized the saying that “Trading is Hazardous to Your Wealth”.
http://faculty.haas.berkeley.edu/odean/papers/Repurchases/Once burned JMR.pdf
This too is a fine paper with loads of investor performance data integrated into an analysis that demonstrates investors are often too emotionally attached to earlier outcomes. These earlier outcomes either brought lasting pleasure when profitable or residual pain when nonproductive. These earlier results strongly influence our current investment decision making in a negative way. Again, please examine this recent study.
I anticipate that this post will excite and energize a few MFO contributors. Good. I welcome your continued involvement.
Best Regards.

This question is being pursued on an M* forum:
http://socialize.morningstar.com/NewSocialize/forums/p/337599/3534999.aspx#3534999
So far, no on Fidelity platform, no on Scottrade, yes on TRP. Note, some of these are untested responses. That is, to continue investing after closed to new accounts (unspecified as to AIP or other). AFAIK, "hard close" means no additional investments from anyone. So the platform and method wouldn't matter.

@expatsp.
Yes sir. Total Return. If you use only Price Return, the drawdown is -86% and does not recover until Aug 1954! Or, 25 years later...

I used same database here as was done for article published in David's July 2013 commentary "Timing Method Performance Over Ten Decades".

I don’t own this fund; but, I have looked at it and studied it in the past.
I have linked below its fact sheet which provides a good bit of information about it. I find it an interesting fund and one that I might position into sometime in the future. For me, the major deciding factor is to determine what it will bring to my portfolio that I don’t already have. Although I am looking for fund number fifty two I am in no hurray to tuck a fund into the portfolio just to reach this targeted number. However, this fund does interest me and if I were to purchase it, it would become the sixth member of my specialty fund sleeve. In addition, I would not put more than one percent of my overall portfolio into it as my specialty sleeve now accounts for about five percent of my overall portfolio.
Here is it’s fact sheet. Notice that it can take short positions and invest in most anything it chooses. In addition, in studing this fund through Xray I am finding that it is a fund that changes it's holdings often as it has a turnover ratio of 187% with a current listed forward p/e ratio of 12.9 ... and, it kicks off a "probally engineered" high yield at 8.5% which M* shows is paid out annually.
If you are the venturing type but don't like to trade your portfolio then this fund will do it for you. It's fact sheet says ... It strives to be in the right places and at the right times.
http://www.nb.com/documents/public/en-us/l0080_mf_global_allocation_fs.pdf
http://quotes.morningstar.com/fund/f?t=NGLAX&region=USA
Old_Skeet

I prefer a fund with a small asset base (58 mil), especially given the sudden in-flows into RWGFX. RWGFX is very concentrated.

I don't think asset base is as much of an issue for large cap funds. According to Morningstar, RWGFX has $1.5 billion under management, concentrated in around 20 stocks, meaning they put an average of $75 million in each holding.
That might sound like a lot, but consider that the average market cap of their holdings is over $58 billion. That means that if they put $75 million in each of their 20 holdings, each one would represents only an average of 0.1% of that company's outstanding stock. That doesn't seem too much that it significantly move the needle, given the huge size and trading volume of these companies.
By contrast, FAIRX has over $8 billion under management, spread over only 9 holdings. Now that might be a little scary.

@Sven - it begins at 1.50 for the first year. Then, it would appear to slide based on performance.

Management fee for the three share classes (Investor, Service and Institutional) is at 1.50% !

I and most are well aware of the recovery cycle and length from the Great Depression. And you are cherrypicking distasters other than that, come on. LTCM etc., 1987. You know all the research articles showing that 1987 was hardly even a blip.
What I posed to you was
>> For the postwar period and especially for the last 30-35 years, I do not think your other assertions really hold and should be counted on to inevitably happen:
\\\... will this time be different? Will it go -30...-40...-50%? Worse?
>> no
\\\ Stocks can go to zero.
>> no!
\\\ Markets can go to (near) zero.
>> nah
\\\ Just about every asset class in every sector in every country has proven it can draw down -70...-80...-90%.
>>> Some specific examples ***since 1945*** would be helpful, but there are none, in the way described.
This is a way of something that, actually, a great many things are different now.
Your citing of three funds is trivial and unresponsive. It is like tracking the great Heebner and saying Boo!! Or citing tulips and gold and silver panics.
Moreover, you and many still hold DODGX, and what does that tell you?
So I am wondering what such a scholar and researcher as you actually *learns* from his work! Meaning concludes, acts upon. Fearmongering is just so different from prudence. I am trying very hard not to come to a new conclusion of intellectual disrespect.
Finally, what concretely do you mean by 'be prepared'? What steps to counter your 'stocks can go to zero and markets too'?
Or would you say I simply overread you, and you were talking **only** about individual sectors and individual companies --- which only an idiot would put all of his moneys into? Is that what you were saying? I misunderstood? Well, this is a forum about funds, not individual holdings and Japanlike bubbles. It is as though you do not know what the Fed does and how it works. And we know that that supposition is not true of you and your work.

@davidmoran.
Brother Dave.
Certainly do not want to disappoint you, just the opposite. And, I do not want to come off bearish.
I remain cautiously optimistic near term. More optimistic longer term.
It's just that I feel the downside of investing does not get talked about as much as it should.
Not the alarmist predictions. There are plenty of those everyday. But the more factual realities just based on history.
Like, most fund houses do not publish max drawdown metrics. Why?
Probably because they do not want potential clients spooked by downside potential. Highly respected funds can and do fall -60%...-70%...-80%.
Prime examples in Feb 2009: DODGX -59.2%, WAIOX -65.5%, LMOPX -78.1%.
That's heavy stuff, no? And these are/were all top rated funds. DODGX remains a M* darling. I own it. My family owns it. WAIOX was launched by Blake Walker, who went on to co-found Grandeur Peaks with Robert Gardiner. And, LMOPX was/is managed by the great Bill Miller.
Buy-and-hold investors just need to be prepared for such falls. During the turn-downs, they need to hold-on...not fret each monthly statement...for years, perhaps many years.
In M*'s words: "...investors who have investment horizons longer than 10 years, need high returns, and are comfortable with a high level of risk." I think they are seriously correct.
If investors can not handle these low points, allocations need to be made accordingly. Or, there needs to be an active drawdown protection plan...in place, defined, reconciled beforehand. Otherwise, we invariably make the worse mistakes...buy high and sell low.
And those are just examples from the last bear.
Ray Dalio of Bridgewater advocates the study of all markets across history to better understand correlations and realm of the possible.
So, let's take a look back at some other market extremes ("vulgarities")...
US. I believe equity market drew down -83% in May, 1932.
Here's what it looked like:

Recovery did not happen quickly as in recent years. It took 13 years for the market to hit a new high, forget cost of money or lost opportunity cost.
I know safe-guards were instituted to help prevent a repeat, but it always seems like each crisis is triggered by something different.
Here's NASDAQ...not really that long ago:

NASDAQ drew down -75% and has still not recovered nearly 12 years later!
We suffered through the Savings & Loan fiasco in '80s/'90s only to repeat it enforce with Sub Prime Mortgage fiasco in late 00's. Credit markets froze. Just like during the Great Depression. And, if the Fed had not stepped-up to back money market funds, we could very well have had a repeat of 1932. Don't you think?
OK. Let's agree that 2008 was an outlier. But still, outliers happen...and probably more often than we like to acknowledge, especially when we are in the midst of a bull market...and, like MJG and Seth Klarman and others observe, markets usually goes up...in fact, they are predisposed to go up.
So, we'll acknowledge the Internet Bubble was an outlier.
The -23% drawdown on a single day in Oct 1987 was an outlier.
The Great Depression was an outlier.
The folks at Long Term Capital Management thought that bond spread behavior was an outlier in 1998 after Russia defaulted. Here's how that went down:

Hmmm, gold? Twenty years of drawdown...

I really don't need to plot the endgame on Enron, Bear Stearns, Kodak...do I?
Japan. I believe it is still recovering from asset collapse in the 90's, despite the healthy run-up last year. Folks in that market remain underwater.
And then there's are the classic bubbles in history: Dutch Tulips, South Sea Company, Mississippi Company...
Call them all outliers. OK. But recognize they can happen.
So, be prepared.
Enough fun.
Hoping all the above helps get me back in your good graces...if just a little.
Charles

Never heard of it. I'll go onto Morningstar and take a fresh, unbiased look. $33.5 MM in assets; 5.75% load; 1.33% expense ratio; TTM yield, an astonishing 8.54%. There is nothing listed under the 30 day SEC yield in Morningstar. I looked at the top portfolio holdings, even googled the top holding: not easy to find information about it.
A very esoteric investment portfolio. A lot of futures contracts. Maybe some fixed income arbitrage, things I know almost nothing about. I would call the fund company and discuss the portfolio with them in depth. The portfolio is extremely unusual, and that is a big understatement. The fund has 66% in cash per M*. Major short positions. One of the fund managers has a PhD, quite unusual, and one of the fund managers at the fund's inception had a PhD. Obviously a lot of brain power here. That in and of itself doesn't say anything good or bad. Long Term Capital Management had the ultimate in brain power, and that didn't end too well. Some major "Quant" brainpower at this fund! Excellent performance history compared to M*'s tactical allocation category. My opinion is that Loads are confiscatory unless one has a financial adviser, and the load is the method of payment for those services. But of course, a fund like this so unusual that you're not going to have a bunch of no load alternatives. Personally I wouldn't invest in a fund with only $33.5 million in assets. That's not a lot of skin in the game from the managers, their families, relatives and friends, the fund family itself and all their associates, the fund board and all of their associates, etc. The fund has been in operation for 3 years and 3 months, and not enough people associated with it are making significant personal financial commitments. Not a good sign to me at all. I would need to read the Prospectus and the fund reports, perform due diligence on the fund managers, explore the googled hits to see if I could find interviews of the fund managers, analysis and opinions about the fund. I'd go to Yahoo Finance and see if there are any posts about the fund in the message boards, and generally, turn over as many 'rocks' as I could. Let us know what you find out!

@MJG: Thanks very much for your reply, much appreciated.
With respect to (a different reply): "By the way, hard assets represents a fourth investment category in addition to equities, bonds, and cash. It is an investment with intrinsic value. Typically, that bucket includes holdings like precious metals, oil, natural gas, timber, farmland, and commercial real estate."
Appreciate if you would throw out some general ideas of what might be considered sensible investment approaches or vehicles for these. (The more details, the better, with respect to an investing approach toward hard assets!). For precious metals, well at least gold bullion, one could go into GLD or IAU. Or a precious metals and mining fund, such as VGPMX or others. Oil and natural gas are a bit more difficult, although I'm sure there are exchange traded funds to tap into oil or natural gas indexes, and lots of energy funds out there, such as VGENX. Timber and farmland are very much more difficult. Commercial real estate could be invested in via REITS, domestic and foreign, e.g., VGSLX or VNQ for a domestic REIT index, and VGRLX for foreign real estate.
A diversified commodities index ETF? I have zero experience with this sort of an investment.
I don't know how to value REITS, but they sure have very high P/E ratios now. VNQ has a price to forward earnings ratio of 38.34 per Morningstar. I'm a Ben Graham fan and strongly prefer investing when valuations are reasonable. Perhaps P/E ratios are not a good way to value REITS....don't know.
What are your general feelings about a portfolio weighting to the above hard assets, for example, are you somewhere in the neighborhood of 5% of a portfolio for hard assets?
Some of the "good guys", like David Swensen, favor large allocations to REITS; 20% of a portfolio per Swensen's 2005 book. Seems like Rick Ferri, don't quote me on this, but I believe he may recommend 10% of a portfolio be in REITS alone.

Dex: Oh yes, the fate of empires for sure. I'm currently re-reading "The Story of Civilization" by Will Durant. Still in early days but already dozens of empires have come and gone, and right about now, 450BC... the Greeks are heading over the cliff. Coming attractions: Alexander of Macedonia, followed by Rome. We never learn.

I owned RWGFX in my Roth IRA. Switched the entire position last year to River Park Large Growth (RPXFX), managed by Mitch Rubin. I prefer a fund with a small asset base (58 mil), especially given the sudden in-flows into RWGFX. RWGFX is very concentrated.

http://www.sec.gov/Archives/edgar/data/1449871/000110465914028443/a14-10731_1485apos.htm
Motley Fool Independence Fund, Motley Fool Great America Fund, & Motley Fool Epic Voyage Fund

@davidmoran.
Yeah, I noticed too.
But L/S doing better than multi-sector US bonds this past year =) and comparable to balanced index.
And WBMIX, MFLDX, ALSIX all within 5% of each other, looks like...since ALSIX inception.
Do think that higher fees in this class remains a headwind to success.
But, I like it and think Mr. Rivkin makes right assessment.
Here's M* performance comparison:

Dex-
Regards-

Joe,
I'm 59.
It saddens me to see how this great country that has given opportunity to many has followed the path to ruin as show in history.
If we would have followed the advise of the founding fathers and stayed out of foreign entanglements, I think, it could have all been avoided.
- you might be interested in this:
The fate of empires:
http://www.nairaland.com/1494266/fate-empires-sir-john-glubb

Hi Dex,
I do have an embedded bond allocation. Sorry that I was not clear on that matter.
When suggesting the portfolio asset allocation, I divided the portfolio into only 2 groupings for simplicity. Instead of the usual stocks, bonds, cash diversification, I mentally lumped the bonds and the cash into one grouping and call it Fixed Income.
In my earlier post, the 75% and 60% levels that I would assign to equities and hard assets would be complemented with 25% and 40%, respectively, fixed income segments to finish the mandatory 100% portfolio allocation.
As noted by MFOer Fundalarm, an investor might want to consider his SS and pension incomes as part of his overall bond asset allocation. From my perspective, that is an optional judgment on the part of each investor. I have no strong feelings one way or the other.
Remember that the portfolio that I suggested was purely hypothetical for an investor who had 1 million dollars to invest now. It does not represent my current holdings or asset allocation. I currently do own bonds, but mostly the short-term and a few intermediate-term varieties.
Best Wishes.