Do any of the AQR funds outperform over a long time frame, say; against healthcare funds or long term Treasury issue funds?
Appears that many of the AQR funds are more suited to a down or bear market function.
I smile at this notation regarding AQMIX:
Fund Overview Objective:
The investment seeks positive absolute returns.
No s&#t, our house; too !!!
What the heck; let us take a look at total return: AQMIX v FSPHX v EDV Jan. 2010 to date.
http://stockcharts.com/freecharts/perf.php?AQMIX,FSPHX,EDV&n=1978&O=011000
I'll call this one, take the money and run.
Take care,
Catch

FYI: In 1989, Morningstar, Inc., an advisory service, issued a strongly worded and unusual recommendation to its clients who had placed money with a firm then called the Steadman Funds (later known as the Ameritor Funds). “We urge you to cut your losses and get out,” Morningstar counseled. Doubtless, some investors heeded this advice. Many couldn’t, though, because they were dead
Regards,
Ted
https://longreads.com/2017/11/09/ameritor-dead-mans-fund-charles-steadman/
LA Times 1/4/98 Chuck Jaffe Article
http://articles.latimes.com/1998/jan/04/business/fi-4852
Forbes 8/23/99 Article:
https://www.forbes.com/forbes/1999/0823/6404124a/

(This is a follow-up to the David Swensen's interview posted by bee below.)
Yale Endowment CIO David Swensen doesn’t make too many public appearances so I was excited to run across a back and forth he had with Robert Rubin this past week at the Stephen C. Freidheim Symposium on Global Economics.
Regards,
Ted
http://awealthofcommonsense.com/2017/11/swensen/

My university employer recently sold most of my Fidelity funds (I was limited to TIAA or Fido, I chose Fido) and placed my money in Vanguard index funds (not previously available and probably not the best time to invest in index funds), but all my European and Asian bond funds seemed to become stateside, so I sold the bond funds and went to cash for that amount aside from (over)restoring my investment in FNMIX. Minus 1.3% later, I'm happy with the cash funds.
The only Fido fund of my multiple holdings they held was Contra, FWIW.
Now, i assume they had good consultants, and I really like Vanguard, but I do wish they had access to Primecap and Capital Opp, which I hold in an IRA.
Since I am retiring next year, and since I remember an episode in the late 70's when one of Rukeyser's panelists said the market was a "table pounding buy" (he was correct), I feel confident that people with a long horizon (like Eric Cinnamond, whose blog I read) who aren't trying to time the market, are saving their money.
If you are very (remember that you are competing with smarter people with computer programs) sure you have a have a hot stock, don't buy more than you can afford to lose .

Just added metrics to screen for "Out of Step Twos" with MFO Premium MultiSearch tool (click to enlarge)...

Just added metrics to screen for "Terrific Twos" with MFO Premium MultiSearch tool (click to enlarge)...

Hi @Crash, with rising rates, in general, prices fall and yields increase.
As far as HY goes, an old rule of thumb is buy HY at a spread to Treasuries of around 8 and sell around 4 **. If you look at the last ten years on this FRED chart, 8 was way too soon during the financial crisis, but about right at the peak spreads of 2011 and 2016. The spread dipped below 4 about the beginning of Q2 this year and continued slowly down till toward the end of October, and is mainly up since.
** That 'rule' refers to HY in general, on average, as that FRED chart tracks. Differently rated HY credits typically run at different spreads, so there's more nuance to get into for real junk aficionados.

It's the quality of the business much more than covenants that provide protection to bond holders. You're already giving up lots of protection by investing in junk - the entire company may be shaky, or these may simply be very junior bonds, the first to default if the company later develops problems.
Here's a background paper by Loomis Sayles (admittedly written at the tail end of that 33% covenant-lite junk bond period, as opposed to the current 70% environment). Its headline states clearly that what matters is credit quality. The text goes on to explain what covenants can and cannot do in terms of protection.
https://www.loomissayles.com/internet/InternetData.nsf/0/0BF67A378755F21085257B5000566A43/$FILE/CovenantLitePaper.pdf
(Remember too, that Meridith Whitney predicted a massive run of defaults in munis, which she later clarified to include "technical defaults", i.e. minor breaches of covenants; for the most part real money wasn't affected.)
LS writes that "As it turned out, covenant-lite loans did relatively well versus covenant heavy loans over the course of the global financial crisis [see graphic data in paper]. In fact, the [ratings] agencies admitted as much, but could not let go of the concern and warned that maybe next time it will be worse. Maybe, maybe not."
Gundlach continues to push his sector of the market (mortgage backed securities) without explaining the specific risks associated with the asset class that relate directly to changing interest rates:

“Buy things that people foolishly don’t understand, like mortgaged-backed bonds,” Gundlach advised.
“Get out of things, like investment-grade bonds, that people don’t understand ..."

Say what?

Let me take an "espresso shot" at this by sharing the research of Russel Napier. The last few minutes of this interview explains the historical problem of chasing yield, especially EM corporate debt (High Yield).
My paraphrasing his words:
When open ended funds, seeking a 5% yield for their client (the pensioner), invest in HY debt and that HY bond defaults on its obligation, the manager ends up having to sell something else to meet redemptions and/or cover the bad debt, the risk here is contagion (where a bad asset impacts and spreads to "less bad" assets). Something small can have a very big impact on the larger whole.

I will also link a longer presentation that is a bit "noisy" at the start of the video so fast forward through the introduction to the start of his presentation.
Much like we have come to know words like "Quantitative Easing" and "Austerity", Mr Napier discusses the next possible financial tools still left in the tool box such as "Financial Repression" and "Macro-prudential Regulation".

+1 Bee. Thanks.

I’m starting to think that managing other people’s money is a tough racket. Like Miller’s Willy Lowman -
A man out there in the blue riding on a smile and a shoe-shine. And when they stop smiling back, that’s an earthquake.
What got me thinking is the half-hour “infomercial” broadcast throughout northern Michigan by Centennial Advisors every Sunday morning. Michael Reese is a slick “advisor”/promoter, usually with one or two less articulate “associates” tagging along on the (paid-for) broadcast. The sales line never changes: (1) Mutual funds are too risky for seniors. Bad things can happen, (2) Come in and see us about our superior product (artfully dodging the “A” word), (3) To prove what nice guys we are, we’ll treat you to a free dinner while we talk.
In recent weeks these televised promotions have grown increasingly strident sounding. Appear really trying to frighten people and rope them in. I’m wondering if perhaps they’re attracting less money nowadays with public interest in the feverish equity markets so high? To top things off, I had a “cold call” (knock on the door) from a rep from Edward Jones last week. Turned the unexpected/unwanted visitor around and pointed them down the road quickly (in my usual diplomatic manner). Seem to be noticing more large ads from EJ in the area newspapers too (usually couched as “advice columns” - easy to see through).
Tough times for the financial advisory profession?
-
After thought: Words can clarify. But they can also obsucate. I’m afraid that some well known financial “authorities” are using words for the second purpose.

@catch22: I don't know how many times I've told you lighten up on the caffeine !
Regards,
Ted :)
Lipper: High-Yield Flow Chart 2012-2017
http://lipperalpha.financial.thomsonreuters.com/wp-content/uploads/2017/11/Slide1-2.jpg

The subject here reads like Goldilocks test results. The overall thought here is related to the MFO junk bond link in PART 2.
PART 1: Once upon a time, there was a little girl named Goldilocks. She went for a walk in the forest. Pretty soon, she came upon a house. She knocked and, when no one answered, she walked right in.
At the table in the kitchen, there were three bowls of porridge. Goldilocks was hungry. She tasted the porridge from the first bowl.
"This porridge is too hot!" she exclaimed.
So, she tasted the porridge from the second bowl.
"This porridge is too cold," she said
So, she tasted the last bowl of porridge.
"Ahhh, this porridge is just right," she said happily and she ate it all up.
How can we trust Goldilock's assessment of hot, cold and just right? What is the baseline, how does she compare with a peer group of porridge temperature testers?
PART 2: Now. A recent link here (not directed at you @Ted , but the article author)
https://www.mutualfundobserver.com/discuss/discussion/36721/u-s-junk-bond-funds-post-4th-biggest-week-of-outflows-ever
--- relative to the article:
.....would be nice if these data folks related the money values relative to 1992 or whatever time frame they choose to a "percentage" of total values involved; as to have a reference point for now.
What is this $4.4 billion withdrawal in terms of total monies in the HY sector? And how does this relate to 1992 values?
Oh, well; reader beware, eh?
GOSH, couldn't resist: All data believed accurate.
---U.S. high yield bonds outstanding value, July, 2017
$1.5 Trillion
So, HY outflows at $4.4 billion were .29% of total value, yes? Is this going to blow up the HY bond area and take equities with it.......???
PART 3: As to the .29% sell off/withdrawals in the HY sector; this could be similar to my telling the lady down the street who was born in 1925, that the St.Gaudens,1925-D, $20 gold piece presented to her on her birth day, by an uncle, recently declined in value by .29%; but that she should not be too concerned, as the worth of the coin was still acceptable.
https://www.ebay.com/itm/1925-D-ST-GAUDENS-20-NGC-MS-65/172873495315?hash=item2840103313:g:CvQAAOSwIdpZwVnz
NOTE: By reading this far into this write, you have electronically signed my "hold harmless" agreement regarding content and accuracy; as this document was formalized while under the influence of OTC head cold medicine.
Comments, corrections or suggestions wholly accepted.
Summary: I'm just asking for a bit of proper reporting, i.e.; junk bond outflows.
End of whine !!!
Thank you.
Catch

Hi @Art,
Below are some funds that I own (by sleeve and my classification) that kick off some good income.
In world equity I use CWGIX, DEQAX & EADIX
In domestic equity I use ANCFX, FDSAX & SVAAX
In global hybrid I use CAIBX, PMAIX & TIBAX
In domestic hybrid three I favor of seven owned are AMECX, FRINX & HWIAX.
In hybrid income three I favor of seven owned are APIUX, FKINX & PGBAX
In tactical hybrids (income) I use BAICX & PCGAX
Funds of funds I use CTFAX, ISFAX & LABFX
Multi sector bond funds I use LBNDX, NEFZX & TSIAX
I am not saying these are the current very best funds to own; but, they are the ones I have would up with through my many years of investing; and, I feel they have treated me well.
Know that I own some other funds as well (in the growth area of my portfolio) that kick off some good income in the form of capital gains with some paying dividends as well
Global growth sleeve I own ANWPX, SMCWX & THOAX
Large mid cap sleeve I own AGTHX, AMCPX & SPECX
Small mid cap sleeve I own IIVAX, PCVAX & PMDAX
Specialty & theme sleeve I own LPEFX, NEWFX & PGUAX
In short words most funds that I own kick off some good income in some form and fashion. Usually, my portfolio's distribution yield usually runs from a range of 4 to 6 percent which includes interest, dividends and capital gain distributions. Over the past five years my total return ranges form 8 to 12 percent. Generally, I take no more than one half of my five year average return has been. In this way, principal builds over time.
Old_Skeet

I don't think this is a 'challenge' at all and in fact I think it supports this theory. I understand Gundlach as warning that investors are too interested in bonds that have interest rate risk and they most likely don't understand what will happen when rates go up.
Here's another piece on Gundlach's current perspective and hopefully it hasn't been posted before: https://advisorperspectives.com/articles/2017/11/17/gundlachs-top-etf-recommendation?
He warned of dangers in the high-yield market. “Covenant-lite” (bonds with weak protections for investors) as a percentage of total loan issuance has averaged over 70% for the last three years, versus never being above 33% from 2003 to 2012.
With regard to the investment-grade market, he said the average duration is 7 but investors “don’t think prices can go down. Watch out, they have interest-rate risk.”
Is there any way to evaluate whether a high yield manager is investing in "covenant-lite" bonds? I presume the ratings of bonds don't tell you as they focus on the health of the company and the risk they'll default rather than the protections investors have if they do default.

FYI: With U.S. asset flow data for the first three quarters of 2017 in the bank, the trends are pretty clear: Investors love bond funds of just about all stripes, they’re choosing international stocks over U.S. stocks, and there’s no letup for the hemorrhaging of active funds. And then there's Vanguard.
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=837447

FYI: A record month for inflows into corporate bonds is "setting up a disaster for when rates rise & `investors' learn that, yes, these bonds have rate risk" was yesterday's latest tweeted warning from Jeffrey Gundlach. So what would the billionaire bond manager make of the first BBB-rated borrower actually getting paid to sell new bonds?
Regards,
Ted
https://www.bloomberg.com/news/articles/2017-11-17/a-french-challenge-to-gundlach-s-disaster-bond-theory

FYI: WHAT’S A GOOD REASON to dial down your stock market exposure? A year after Donald Trump was elected president, many folks are still smarting from their decision to bail out of stocks. Clearly, we shouldn’t lighten up on shares just because we don’t like the guy in the White House.
Regards,
Ted
http://www.humbledollar.com/2017/11/all-the-right-reasons/

Chuck shows ALMGX inception as 12/29/16. MS the same. That would make it 2 years young 12/29/18.
Derf

Thank you David. You highlighted Alambic Small Cap Value Plus Fund ALAMX. Alambic is another California-based shop. A quant shop. Each of its four young funds have outperformed out of the gate (click image to enlarge) ...