Interesting link, Ted, thanks for it. I'm curious what some of the many saavy bond investors here think about current junk valuations, @junkster and @dex maybe?

@expatsp I think Dex was driven away by trolls on this site. I haven't seen a post of his in a while.
Junk bonds have a high correlation with stocks. And that makes sense negative news about the health of company puts in doubt the ability of that company to pay interest and pay off the debt. My thoughts that are not all mine (some are from Dex) are that the environment for bonds will be positive for longer time then most would consider.
Inflation fear have not materialized - not with all the FEDs actions and not with oil over $100. The classical causes of inflation - low unemployment, high factory utilization, high material costs - have been blunted by job offshoring and easy capitol movement. Workers wages are flat and benefits are down, that causes poorer workers who are afraid. Not an environment for inflation. The retiring baby boomers will be looking for interest and high yield bonds of any type to fulfill their needs. And I think as others here have said that there will be a VAT in this country. That will put another damper on economic activity and keep inflation low. GDP growth is in the 2% range. There is nothing on the horizon that will change that. Then consider automation/robotics and artificial intelligence and workers wages and the number of workers will be negatively impacted. Nothing is telling me that high yield bonds are in jeopardy.

Government, emerging markets, and long term bond funds up over 7%. World and corporate bond funds up over 4%. Junk corps up 3.62% with some of the larger ones up over 5%. Even some of the stodgy bank loan funds are up in the 3% to 4% range and some of the steady eddie funds in this category have had but one or two down days in the past two months. The junk munis are trailing at 2.62% albeit some of the better ones are near 4%. Munis in general seem to be overloved. Never a good thing from a contrarian point of view. Entering today I was 41% bank loans, 29% junk corp, 26% junk munis, and 4% emerging markets. That could be subject to change (as it is almost everyday) as may exchange more out of my Nuveen junk muni (NHMRX) into more of my Nuveen junk corporate (NCOIX) This scattered and diversified approach is normally not my thing but it sure has been less stressful. Hopefully can incorporate more of that strategy as I continue to age. Up around 4.35% YTD (edit: 4.99% through 4/22) and would be thrilled to get 10% for the year - or whatever the market has to offer. I am always more concerned with a smooth ride upward in my account with as least volatility as possible than I am hitting it out of the ballpark Harper style.

Interesting link, Ted, thanks for it. I'm curious what some of the many saavy bond investors here think about current junk valuations, @junkster and @dex maybe?

Not an investor but the "experts" are all over the ball park when it comes to the prospects of the junk bond market. In Ted's linked and bullish article we see this comment Payson Swaffield, chief income investment officer at Eaton Vance, thinks we are at the beginning of a new cycle of positive junk returns that could last a few years. Yet, in this week's Barrons we see an interview with Michael Weilheimer, head of Eaton Vance's Income Fund who is cautious and thinks we will be rangebound and are anywhere from the 6th to 9th inning of the credit cycle. Same firm yet two entirely different opinions on junk bonds. Marty Fridson the junk bond guru says ex oil we are an extreme valuations in the junk bond market. And of course we all know the Bond King's (Gundlach) constant and continual bearishness on the junk bond market.
The market though, who never listens to the experts has been very bullish and the average open end junk fund is up 3.62% YTD with many up over 5%. So unless oil goes back to $30 it is looking more and more like double digits gains for 2016 will be achieved.
Edit Ted's linked article was a good one as it highlighted the dampened volatility of junk bonds.

If you own the fund in a taxable account and have a large, unrealized gain, maybe best to hold but watch. If in a retirement account, at least move to watch status with no additional purchases, or sell if you are so inclined. Keep in mind FPACX has underperformed its category in 2015 and 2016 YTD, not a long period. Performance itself is not problematic for me. The fund should not be compared to an S&P Index. Yeah, it was convenient for management to do this when their numbers looked good by comparison, but we never compared it to the index. The sudden change of comparable index by management, however, is troubling, especially when the selected index does not resemble the fund in any way.

@kevindow, I want to ensure you that I am sincere. Over 10 years ago I was seeking an all-weather fund and seriously considered FPACX, but picked T. Rowe Price Capital Appreciation, PRWCX instead. Even though the smaller AUM, Steve Romick' track record, and flexible mandates were attractive attributes, Richard Howard, the former manager of PRWCX also have consistently good record despite having bigger AUM.
I understand that back-testing is not possible when the ETFs that don't exist in the period of question. Perhaps VWIAX in combination with VDIGX would work since both go back to 2000. With respect all active managed funds, the AUM is always an issue. Many tend to close to new investors too late in my opinion. That is one of the reason we are increasing our allocation to index funds.

Though not quite as "pure" regarding currency hedging as Vanguard, PIMIX is supposed to limit its exposure to 10% of its portfolio.

@willmatt72: I agree with the article linked by Ted. For a core fund which may and currently does venture into foreign and emerging markets FI, I would take a look at PIMIX. As of 3/31/2016, this fund has about 41% of the porfolio allocated to developed foreign and EM FI as shown HERE. I would be comfortable with 100% of my FI allocation being invested in PIMIX.
Kevin

@Sven
Hopefully, your question was sincere and not rhetorical. As I'm sure you realize, those ETFs were not in existence in 1993 (the inception of FPACX), in 2000-2002, or in 2008. One would have to come up with some other fund combination which would resemble the portfolio compositions of FPACX during those time periods. I was unable to find the portfolio x-rays of FPACX for those periods so I can't use PortfolioVisualizer to answer your question.
Also, according to BrightScope, FPACX had only $84M in AUM at the end of 1999, and only $1.3B in AUM at the end of 2007. So during those time periods, FPACX likely had very little resemblance to the fund it is today with $17B in AUM -- 15% down from the all time high of $20B -- in terms of exposure to SC and MC equities, its ability to short equities, and its ability to move in and out of stocks with agility. Also, because of huge differences in AUM, I don't think anybody can draw any conclusions about how FPACX will perform in future downturns based on how it performed in past downturns when AUM were much, much smaller.
Kevin

@davidmoran
I hope your Selects did better than mine. I just played around a year or two with non-retirement money. Probably little gain or loss.
Memories! In '81 my joints didn't ache. And I could consume half a case or more and still function the next morning. :)

Boy, I think I recall buying a second Select and paying the commission. Or so I remember now. Huh. They were offered in the first 401k I had available, early 1980s.

@msf
Thanks for the background links.
Here's another article focused on early cellphones. No desire to detract from Lewis' article. But suspect cell phones and their modern variant smart phones play a critical part in today's investing, be it tracking current investments or (as was often the case with the Fido Selects) actively trading. Since my Fido investments in the early 80s probably amounted to a couple K, plunking down $3,995 for an early cellphone (1984 price) probably would have been imprudent. :)
"Somewhere in either Chicago, Baltimore or Washington, someone plunked down $3,995 to buy the Motorola DynaTAC 8000X, the first handheld cellphone, on March 13, 1984 — 30 years ago today."
http://mashable.com/2014/03/13/first-cellphone-on-sale/#uyYq9kRydaq6

Hi @expatsp,
Interesting question and one that I have explored myself in looking for an answer. I am not sure my findings will fully answerer your question but I'll share my discovery. To begin, I looked at what an index bond fund's weighted price was and found it to be around 108. To me, this suggest the index is selling at about an eight percent premium over par. Then I looked to see what the average weighted price was in my income sleeve of my portfolio and found it's average weighted price for the bond funds that it holds to be about 95. With this, I took it that the bonds held in the funds found in my income sleeve were priced, on average, at about 5% below their par value.
This amounts to about a 13 point spread between the index and the bonds found in my income sleeve. And, with this, I am thinking, some upward price appreciation might be expected. Naturally, there are some influences and factors that I did not mention that will effect bond prices. However, this was my down and dirty quick look. The return, five percent price appreciation if held to mauturity plus interest.
Perhaps, the above information might be helpful in you finding an answer, you seek, to the question.
For me, I think, I found mine.
________________________________________________________________________________________________________________
Additional comment: In addition, I found that the index fund I used as my proxy to have an average maturity of 7.6 years with a duration reading of 5.4 years while my income sleeve has an average maturity of 4.8 years with a duration reading of 2.9 years. With this, I am thinking there is more downside risk for the index over my income sleeve in a rising interest rate environment. Please note, not all the funds contained within my income sleeve have great exposure to junk bonds although some representation to the sector can be found in most of them. For information purposes their ticker symbols are as follows: GIFAX, LALDX, LBNDX, NEFZX, THIFX and TSIAX.

MStar shows 1.03% ytd, -2.69% over 1 yr, and 6.39% over 3 years. That's less than 60% IVV and 40% cash over all periods for the fee of 1.11%. Nothing confusing about that.

FYI: At first glance, high-yield bond funds had a strong start to 2016 with a first-quarter gain of 2 percent. But if you were paying closer attention, the ride was anything but smooth.
Regards,
Ted
http://www.nytimes.com/2016/04/10/business/mutfund/junk-bonds-never-stodgy-and-steadier-than-you-might-think.html

The instant AT&T divested itself of the RBOCs (1/1/84), it started marketing its 3B line of minicomputers, developed at Bell Labs. Coincidence?
https://en.wikipedia.org/wiki/3B_series_computers

Nice point in Lewis' article about dispersion.
Many years ago I posted in misc.invest.mutual-funds opining that Fidelity's use of inexperienced managers in its Select funds really didn't matter, because they were effectively buying bunches of similar stocks (i.e. no skill needed). It seems I was half right - correct only for sectors where companies tend to move together, not for all sectors.
A few bits of inconsequential trivia:
- Fidelity Select Funds started in 1981(if there was anything older, it hasn't survived)
- Those funds appear to have been FSENX (Energy), FIDSX (Financials), FSPHX (Health), FSPTX (Technology), FSUSX (Utilities), and Precious Metals and Minerals (merged into Gold in 2000)
- The funds were sold with a 3% load, plus a 0.75% redemption/exchange fee for equity funds held under 30 days, and a flat $7.50 for shares held 30+ days
- Daily pricing started in 1986
- There are still funds priced more than once daily, viz. some Rydex funds are priced at 10:45 and 4PM
- Cell phones were invented before Fido Selects. Bell Labs' Advanced Mobile Phone Service ("advanced" being handoff from cell to cell) was invented in the mid 1970s. There was trial service in 1978, and the first commercial service was in 1982.
https://www.researchgate.net/publication/2377716_Advanced_Mobile_Phone_Service_-_An_Overview
(Years ago I spoke with people from Bell Labs who had worked on AMPS. They felt that but for regulatory issues, cellphones would have been deployed earlier.)

Per -- US news & world report Money----FPACX ranks # 31 in Mod Allocation
= cut & paste
#31
FPA Crescent Portfolio Fund (FPACX)
Performance (1-yr.): 5.18% Expenses: 1.11%
Performance (1-mo.): 5.05% Total Assets: $18.12B
See all details for FPACX »

Hi Catch,
Yes, I remember playing with Fido's Select Funds too. Way back in the 70s or early 80s. Minimums weren't very high. Maybe $500 or $1,000? Closest thing to legal gambling in our state than.
Must have been a lot of fun. Remember pulling off I-75 on the way north one Friday afternoon to phone in a trade at a coin-operated pay booth. (Cell phones hadn't been invented yet.) :)

Value investors generally have had a tough go the past couple years.
Here's good post by the folks at AlphaArchitect ...
Update on the Valuation Metric Horserace: 2011-2015
and even better ...
Has the Value Investing Pain Train Ended?
c

@LewisBraham
Your write takes me back to my time machine. :)
In the way back days with Fido in the mid-80's, I used to "trade/swap/move" using Fido's select funds. Fido had established their F.A.S.T. system (Fidelity Automated Service Telephone) which allowed buy/sell/pricing info via the touch tone telephone. At the time, Fido's select funds could also be traded each hour of a trade day with pricing set at the top of each hour. Using Fido's fund numbers and touch tone character codes, one could move money around among the majority of their fund offerings.
I also used the phone system for obtaining closing prices on many funds which were placed onto a paper graph and/or chart. I used this info to establish moving averages via hand graphed charts/tables of funds drawing my attention. The "other" method for we retail investors at the time was to await a paper copy of the WSJ or Barron's for printed pricing of funds.
Some of this "work" was eventually performed on a real pc at the time (1987). This magic pc, a N.E.C built in Japan; had a massive 20 MB hard drive and 640K ram (the upper limit usable by MS at the time). Twas cool at the time, but very expensive with the monitor and printer.
A proper reply to your write is that "yes", money can be made using Fido select funds and/or the many combinations available today. We here are well aware of the many choices via select funds or etf's. Folks who are on the ball with what is going on in the markets may obtain excellent returns with these methods. Lots of folks have traveled this road over the years since the introduction of these select funds.
A Fido time line at the below link:
https://www.fidelity.com/static/dcle/welcome/documents/Timeline_fid_092709fla.swf
Regards,
Catch