FYI:
Regards,
Ted
http://www.bespokeinvest.com/thinkbig/2014/4/1/sp-500-back-at-all-time-highs.html?printerFriendly=true

FYI:
Regards,
Ted
http://www.marketwatch.com/story/doubleline-total-return-lags-53-of-peers-in-march-2014-04-01
http://www.marketwatch.com/story/pimco-total-return-lagged-95-of-peers-in-march-2014-04-01-13912112/print?guid=5B28F55B-C518-4521-9C4F-C93F140CADCE

SPY continues to climb, despite "dips" along the way. Volume seems to be falling off a bit on up days. At this rate, 8% for year? =).

AGG too, now up above 10, 50, 200 day averages, although it seems to be looking for direction:

Looks like @ $160MM in assets will be going over to MJFOX. That's about 1/3 of MJFOX's current size. I assume there is overlap between the funds, so turnover might be limited.
Kind of meh from a Matthews' investor point of view, but great news for those who hold Namura's turkey with its 1.85% ER and 5.75% front load.

Pretty good article...

What went wrong for risk-parity funds in 2013, and how concerned should investors be going forward? For one thing, a long-expressed concern about risk-parity funds--that their leveraged exposure to bonds is exactly the wrong stance in the face of a potential secular rise in interest rates--reared its head when the bond market slumped at midyear on fears of early tightening by the Fed. While bond exposure remains a longer-term issue, it wasn't the only problem. Indeed, risk-parity strategies are designed on the assumption that not every asset class will be cruising at the same time, and stocks certainly held up their end of the bargain.
Commodities were another story. Many of the models likely assume that rising inflation usually accompanies falling bond prices, a positive for commodities. But that wasn't the case last year. Not only did inflation remain tame, but demand in key markets such as China continued to slacken. In contrast to the merely de minimis returns of the Barclays Aggregate Bond Index last year, commodity indexes generally lost money (the Dow Jones-UBS Commodity Index lost 9.5%, for example), and the active strategies used by certain risk-parity managers in some cases lost even more than the indexes.

But I think it concludes a bit too politically correct, based on my (poor) experience with AQR Funds...

More broadly speaking, the recent difficulties of risk-parity funds point to the challenges that advisors and investors face integrating outcome-oriented investments (such as many alternative strategies) into traditional, benchmark-oriented portfolios. As much as investors in theory may favor the notion of curbing downside risk and improving diversification, when they see the S&P 500 rocketing skyward they are likely to wonder, "Where's my beta?" Thus, it's incumbent on fund companies and advisors to properly educate investors on the purpose of vehicles like risk-parity funds, and to point investors to a wider array of benchmarks and risk-adjusted metrics (such as Sharpe ratio and beta) than the standard stock-only comparisons.

Basically, I found that when AQRIX was doing well, the firm was quick "to properly educate investors on the purpose of vehicles like risk-parity funds..." But when things headed south, the classroom door shut and communication about strategy shortfalls, lessons-learned, and needed improvements stopped completely. The emperor appeared to have no clothes after all...the strategy was just a black box!
Honestly, I remain intrigued by risk parity and other alternative strategies. Just need to ensure more shareholder friendly fund houses/managers, which I find in WBMIX, ALSIX, and RGHIX...to name a few.
It is when strategies are not doing well (and that will happen to all funds at one time or another) that its managers need to "educate investors" the most. So, with that foot-stomp (and venting), I believe Josh Charlson is spot-on.

Here are a couple of other choices to look at in this area:
Lazard Global Listed Infrastructure GLFOX - 5 Star Fund with strong results so far and only 15% US stocks. A bit cheaper than TOLLX and a better yield.
Northern Multi-Mgr Global Listed Infrastructure NMFIX - Management is split between Brookfield and Lazard as sub-advisors along with a couple of managers from Northern. Expense is .99%

FYI: How about forgetting forever !
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=641507
Barron's Slant: http://blogs.barrons.com/focusonfunds/2014/04/01/risk-parity-funds-have-risks-too/tab/print/

FYI:
Regards,
Ted
http://www.morningstar.com/cover/videocenter.aspx?id=641175

A famous article, so thanks for bringing it back to attention.
>> I choose to position myself on the shoulders of these giants, including the acknowledgement that simplification does reach a limit.
That said,I bet that, like me, you do not have everything in one or two or three of the AOx ETFs, nor does anyone else here either. Talk about simplicity, and a 0.3% fee too, for a single ETF comprising in various proportions S&P 500, S&P midcap, S&P smallcap, EAFE ETF, emerging markets, total US bond, high-yield, short treasury, REIT ETF, and TIPS.

Hi Guys,
I am a long standing member of the DIY clan, sometimes successful, sometimes not so successful.
One lesson that I have learned is that an essential element for improving the odds for successful investing is keeping it as simple as possible.
I’m certainly not the Lone Ranger in that belief. Henry David Thoreau said: “Our life is frittered away by detail. Simplify, simplify.” Leonardo da Vinci proclaimed that “Simplicity is the ultimate sophistication”. Finally, Albert Einstein cautioned: “Everything should be made as simple as possible, but not simpler.” I choose to position myself on the shoulders of these giants, including the acknowledgement that simplification does reach a limit.
The bulk of MFO readers have reached a similar conclusion. I suppose that is the primary reason why we invest in the mutual fund/ETF universe because it is an enormous simplification in contrast to assembling a diverse portfolio of individual equity and fixed income holdings.
To answer DavidV’s question requires a fuller understanding of his commitment to either an actively managed or passively managed mutual fund philosophy. His example funds suggest an actively managed program, but most of us, perhaps DavidV too, deploy a mixed strategy. The answer partially depends on the response to this binary decision.
If the current commitment is towards an actively managed mutual fund sleeve, then a shorter group of active funds is more likely to deliver positive Alpha, excess returns relative to a benchmark.
That observation is a direct output from Monte Carlo studies recently completed by Rick Ferri and Allan Roth. It results from the fact that most active funds fail to outdistance relative benchmarks, so adding more of a less than 50 % likely outcome mathematically reduces the odds of outperformance on a cumulative basis.
Here are the Links to the Ferri study and a summary of the Roth simulations:
http://www.rickferri.com/WhitePaper.pdf
http://www.forbes.com/2010/04/22/mutual-funds-etfs-active-management-personal-finance-indexer-ferri.html
Both studies demonstrate a dramatic falling of success probability (again defined as outshining an Index benchmark) as the number of active products are added to a portfolio. These results do not address the issue of the benefits of diversifying across asset classes, but rather show the shortcomings of adding extra active funds within a given group. Also, these studies did not explore the advantages of using a few screens, like lower expense ratios and lower trading frequency, to enhance the odds of selecting winning active fund managers. These tasks remain to be done.
On the other hand, there does not seem to be a downside disadvantage when adding passively managed funds to benefit from broad international diversification. Costs are minimized and the likelihood of market average outcomes are maximized.
The totally passive strategy minimizes stress levels, workload, and monitoring efforts. These are such attractive pluses that many investors, including even the outperformance zealots, include a mix of actively managed and Index-like products in their portfolios.
With a basic passive investment philosophy, a minimum of three Index holdings can grossly cover the waterfront. However, a more refined portfolio that includes between 7 and 10 Index holdings (REITs, small value oriented funds) can marginally enhance returns (order 2 %) while simultaneously, and most importantly, control risk by reducing portfolio volatility by perhaps 40 %. That reduction in volatility is particularly significant since it will encourage an investor to “stay the course” during stressful plunging markets.
To summarize: when choosing active fund positions within a category, more is definitely not better, and when selecting Index products, it doesn’t much matter except for the needed recognition that all Index products are NOT created equally.
I hope this posting is just a little helpful.
Best Regards.

Thanks for the explanation of market makers cman.
Is there anything slower than the price discovery of a mutual fund daily price discovery (which I assume is referred to as the "daily NAV")? In today’s day and age, when a market is trading somewhere in the world (kind of like, "it's 5 o'clock somewhere"), don't mutual funds have a more difficult time determining their daily NAV? I have always thought a mutual fund NAV could be shaded during the day as well as after hours using something similar to FinViz color code. I try to approximate my mutual funds daily NAV by tracking an etf's price (i.e. SPY for VFINX) intraday.
I always wonder when my mutual fund manager actually executes its trades...very differently I would guess than when I decide to buy or sell shares of that mutual fund. Much of this buying and selling might even settle within the fund family itself under normal market conditions. Excessive selling by mutual fund owners must add a real challenge to fund managers. Are they waiting until the end of the day to act on these sell orders that queue up all day until 4 pm? Mutual funds with small AUM must really have to monitor their own in house accounts as well as outside trading platform that trade the funds.
For those not familiar with FinViz:
finviz.com/futures.ashx

There is a bit of financial demagoguery going on. Hopefully, it results in some transparency and increased knowledge. The problem with HFT is not in "front-running" but what else happens around it. HFT isn't competing with common investors or mutual funds in the way it is portrayed here.
The key to understanding this is price discovery. Imagine a trade in very slow motion. Someone puts in a bid to buy a stock at $5 because he thinks it is fair value. Another puts in a bid to sell the same stock at $4 because he thinks that is a good price to get out for him. Now, is it fair to sell it at $5 or at $4? In either case, one of them got shortchanged given the buy/sell interest. This the basis of a market trade and a problem that needs to be solved.
One might say, buy at the lowest sell bid price or sell at the highest buy bid price. But that only works if a buyer publishes his bid and the seller doesn't or vice versa. So neither have an incentive to publish their bid. What happens if there are no buyers or sellers at a reasonable price at some point in time and some one wants to sell or buy and has no reasonable basis to bid?
You might say, each publishes their lowest and highest prices and sit on it until someone bites. The problem with this system is that the spreads become high and may diverge from the actual value of the share. We see this happen with thinly traded ETFs for example.
This problem existed long before electronic trading and was solved by using Market Makers. These are designated entities who put their own both buy and sell orders to provide a current floor and ceiling around the current price. They are not investors competing with regular investors but entities providing a financial service. Not unlike the spreads created by foreign exchange kiosks with a buy and sell price. These entities were allowed access to current investor bids to determine their bids.
These entities are risking money with their bids and they are not charities but they are not investing for stock appreciation but rather arbitraging the spread and do what might be called front-running, if they see an imbalance in bids. That is the price of the service offered to create price discovery not considered fixing the market. The effect of that arbitrage is to decrease the spreads and give orderly movements of the price up or down rather than a sequence of crashes. Investors tend to lose more without this system in place.
This human solution didn't scale to electronic trading and when the trading was moved to pennies than fractions, the returns for market makers became too low for them to provide that service. In addition, with multiple exchanges, real time spreads between exchanges became a problem.
It is incorrect to think that long term investing doesn't require instant price discovery. There are buyers and sellers at any instant whether they are investing for the long term or not. The fair pricing of assets for mutual fund transactions, for example, requires a "correct" price at all times even if all investors are investing for long term. Without efficient price discovery, there is no sensible investing possible without losing money to pricing inefficiencies.
The solution for the electronic world was to move this market maker arbitrage to traders themselves who would create that price discovery with their own bids. Again, these are not investors that compete with regular investors but help keep the price discovery efficient and get incentivized by the spreads. Faster the trading ability, more efficient the price discovery as the spreads are arbitraged away. Note that while they make a penny or two, it helps investors with a correct price rather than a stale price at any time.
The money made by these entities for this purpose is the cost of that service, not unlike the transaction fees by credit card companies for the credit card service they provide. As in a true free market solution, rather than select and designate market makers, anybody can become one by investing in the infrastructure to do fast trading. The competition keeps the spreads low.
So, the common objection to HFT as "front-running" or trading with an advantage over small investor is more demagoguery than reality because it caters to ignorance and prejudices.
That is the theory.
If you want to fix this, one ought to come up with another system for this that provides similar price discovery and equally scalable.
The problems with HFT are potential abuses of this access and the unintended or unexpected quantum effects as the decisions are made faster and faster relying on software that is prone to bugs and limitations. But that has nothing to do with this massive book related PR.

In the comments section, someone suggested a short-term tax. A tax of >50% on the gains made in less than a minute and also a substantial transaction tax for any round-trips done within seconds may work.

@hank: I was very disappointed in Sparty & the Wolverine's, and now am forced to pick Wisconsin as the 2014 NCAA champ.
Regards,
Ted
Go Badgers !

FYI: Market liked what she said.
Regards,
Ted
http://www.marketwatch.com/story/yellen-feds-extraordinary-aid-to-last-for-some-time-2014-03-31/print?guid=95F93562-600B-4078-8EBA-3B2B998AF05D

Barron's claims there are a thousand such funds, a number which I'm skeptical of since journalists rarely distinguish between portfolios and share classes. That's why you forever hear folks prattle on about the 25,000 mutual funds being greater than the number of publicly-traded stocks; there are closer to 7000 funds with an average of 3.5 share classes each.
In our coverage universe, all of the Aston and Harbor funds are sub-advised, as are several of the RiverPark funds. Some of the RiverNorth funds are in-house/subadvised hybrids.
David

Thanks John. I always enjoy looking at various allocation models and the author lays out several nicely.
I'll withhold judgement on the overarching thesis here. Mainly because I see a tremendous amount of "mis-categorization" as regards the labeling of funds by M* and others. So ... I know that just because somebody labels a group of funds "global growth" or "equity income" doesn't mean members of the group are all that similar in approach or in their likely responses to different market conditions. Therefore, I'm always a bit suspect of such comparisons.
We shouldn't ignore the "hot money" aspect either - though suspect it's extremely difficult to gage. (Max Funds makes an effort.) Sudden shifts in investor sentiment are likely, in my estimation, to impact newer smaller funds more greatly than their longer established competitors. Some of this has to do with investor psychology and some with a smaller AUM being more easily impacted (as a % of the whole). To the extent their AUMs are increasing more rapidly during strong bulls, they should enjoy an advantage by having ever greater amounts of $$ to throw at their top performers. However, it seems to me equally plausible that these "less established" funds may well find themselves trailing their older and larger brethren under much different (negative) market and sentiment conditions. (And ... on re-checking the article to make sure I wasn't missing something here, I'm really amazed that he would base his "study" on such a brief period as 5 years.)
Still, I think it's a "given" that, all else being equal, smaller newer funds should outperform older more established ones (primarily because they are much more nimble). Than again, you're probably taking on more risk with a newer "less-tested" fund having a shorter track record. There are additional values to be had with many of the larger established houses that smaller firms may not provide. Things like easy to exercise exchange privileges into a wide assortment of family funds, often great phone support and record keeping, check writing privileges, slick websites with a host of additional resources, and often extensive research based newsletters. Somebody pays for these features one way or another. That somebody is you the investor. And. in many cases, that ain't all bad.
Regards

An older article (2006) but its points are interesting and still pertinent.
"Which is the better choice for client money, sub-advised mutual funds or funds managed in-house by the investment company?"
Sub-advised mutual funds allow small investors access to firms that may require initial investments of several million dollars.
fa-mag.com/news/sub-advisors-are-in-the-house-1503.html
Lipper 2011 Report on Sub-Advsors:
mfdf.org/images/uploads/blog_files/Lipper_Report.pdf
Fidelity offers Strategic Advisers Funds which manage your portfolio using subadvisors, other mutual funds and etfs to create an asset allocation that is personalized to the investor. The funds are FSCAX, FSGFX, FSCFX, FVSAX, FSMAX, FILFX, FOCIX, FUSOX and FAUDX.
personal.fidelity.com/products/wealth/pdf/multi-manager-funds.pdf
Vanguards List of sub-advisors:
https://advisors.vanguard.com/VGApp/iip/site/advisor/aboutus/subadvisorlist
Practical Guidance for Directors on the Oversight of Sub - Advisers:
mfdf.org/images/uploads/resources_files/Sub-AdviserGuidance.pdf
Anyone have a favorite sub-advised mutual fund?

Cool. Thanks Ted! Any others...?

Baloney.
Here's best part of article:

One important metric is the price-to-earnings ratio. In 2000, for the 10 biggest stocks in the S.&P. 500 by market cap, the P/E ratio was 62.6. Today, the comparable number is only 16.1. Back in March 2000, Cisco had the highest P/E ratio among the 10 biggest stocks, at 196.2, followed by Oracle, at 148.4. Those numbers were so high that when sentiment turned, the stocks plummeted.
Today, only one stock in the big 10 has a P/E above 30: Google, the sole Internet company in the group. Its P/E is 33.3, double the current average for the S.&P. 500’s 10 biggest companies, but compared with the levels that prevailed in 2000, it is reasonably priced. If earnings grow rapidly, Google could conceivably be profitable for investors at its current valuation.
The point is that even if prices are high in the overall market, they are being backed up by earnings to a much larger extent than in 2000. That’s important, because back then, when the dot-com bubble burst, the downdraft brought most companies down with it. And that’s why some people applauded when shares of King Digital, the Candy Crush maker, dropped 16 percent on their first day, while the rest of the market was largely unaffected.
Declines like that might be good news if the result is a less bubbly market over all, said Jeffrey Kleintop, chief market strategist at LPL Financial. “It’s O.K. if the market turns a little against some of the highfliers,” he said. “We seem to be seeing investors beginning to focus more on valuation this year, and that’s good because for many companies earnings will be growing.” And if the market cycle heads in a happy direction, earnings, not manias, will be driving the story.