FYI: Dividend mutual funds as a group lagged the S&P 500 stock index over the 10 years that ended going into Monday.
The reasons for the underperformance are worth keeping in mind whenever you make buy or sell decisions in your portfolio, particularly the diversified portion — your mutual funds and ETFs. They could boost the octane in your funds’ fuel tank.
Dividend funds lagged despite having outperformed as a group over the first half of the decade. But as the post-financial-crisis bull market picked up steam, the S&P 500 began to top dividend funds in total return.
Regards,
Ted
http://www.investors.com/etfs-and-funds/mutual-funds/did-you-see-why-the-sp-500-is-outperforming-dividend-mutual-funds/

FYI: While the major equity indexes continue to scrape and crawl their way higher in this market bounce, many of the following markets left for dead have now entered NEW bull markets: Greece, Russia, Brazil, Crude Oil, Oil Service, Energy MLPs, Gold, Metal and Miners, and even the Transports. After years of outperformance from the FANG and Momentum stocks, the market of 2016 is seeing a shift toward underperforming, highly leveraged, worst quality companies and geographies that it can find.
Regards,
Ted
http://dailyalts.com/plates-are-shifting/

Thanks, Msf! Not the smoothest read and I was simply looking at the data section.
Also, I agree that the 10% filter does not make any sense and appears arbitrary. I wonder whether these results still hold without this filter.

IMHO, trying to infer anything from a class name other than perhaps A, B, C, I, and Investor is an exercise in futility, since there's no standardization.
For example, Federated funds have classes A, B, C, F, R, and Institutional (IS). A,B, C, and F shares are all available to individuals directly or through brokers. See, e.g. this prospectus for Federated Capital Income (CAPAX, CAPBX, CAPCX, CAPFX, CAPRX, CAPSX) - "How is the fund sold?"
The F shares (at least for this fund) cost a basis point more than the A shares, which are available load-waived - you don't even need to go through an adviser. So these F shares don't seem limited to use by advisers, and they don't even seem to be cost effective.
These days, many load families (though not American Funds) waive loads if you go through discount brokers. The A shares may have a 12b-1 fee that's higher than the fund's share class (if any) designed for wrap accounts, but the net cost to you is still lower (since you avoid the wrap fee). For example, Templeton Bond Fund A (TPINX) is available load-waived, but carries a 0.25% 12b-1 fee (total ER 0.88%), while the Advisor share class (TGBAX) has no 12b-1 fee (total ER correspondingly lower, at 0.63%).
Traditionally, load families waived the load on A shares if they were sold in a wrap account. So we've now identified some F shares, ADV shares, and load-waived A shares sold through wrap accounts. I'm sure there's more.

I looked at this study but could not figure out whether the authors' data suffer from survivorship bias. If the dead funds are not included in the database and analysis, the findings of this paper could mean nothing. Suppose that a fund disappeared due to poor performance in year t. If this fund was kept in the database, a strategy of including it in the loser portfolio at t-1 or t-2 would generate poor results.

"If a fund [from t-1 or t-2] disappears from our dataset [in year t], then the capital that was invested in it is equally allocated among the remaining funds" in its cohort, i.e. top decile, middle decile, bottom decile.
Yes, dead funds are included. Note that they also excluded the 10% most expensive funds, since high costs drag performance down. Why 10% you ask? So do I.

Dimensional Funds are mainly sold by fee only advisors, but some of their funds may also be available in 401K plans.

I looked at this study but could not figure out whether the authors' data suffer from survivorship bias. If the dead funds are not included in the database and analysis, the findings of this paper could mean nothing. Suppose that a fund disappeared due to poor performance in year t. If this fund was kept in the database, a strategy of including it in the loser portfolio at t-1 or t-2 would generate poor results. From a strategy implementation point of view, this makes sense because at t-1 or t-2 an investor would not know that this fund will be liquidated at t. And given that there is a large number of dead funds, the strategy of picking loser funds would end up picking funds that fail.

Just to clarify AWF is a global fund in which 70% is invested in the USA. DSL has 40% foreign debt. Both of them reached near 15% discounts during the oil panic.

I went right to the results of this paper. Everything else puts me to sleep.
Results from the this investigative paper:

…a strategy of hiring managers with mediocre track records outperforms one of hiring past winners, and a strategy of hiring past losers turns out to be the best of all.
…the practical implication of our paper is that asset owners should focus on factors other than past performance when selecting managers.
…the “investment thesis” that drives a fund’s portfolio management strategy should be a key criterion for consideration.
…a variety of objective characteristics that predict future performance… :the presence of performance-linked bonuses in fund manager compensation packages (Ma, Tang, and Gómez (2015)), a high level of fund manager ownership (Khorana, Servaes, and Wedge (2007)), board of director ownership (Cremers, Driessen, Maenhout, and Weinbaum (2009)), a high active share (Cremers and Petajisto (2009), Amihud and Goyenko (2013)), lack of affiliation with an investment bank (Hao and Yan (2012)), outsourced execution of shareholder services (Sorhage (2015)), the presence of a short-term redemption fee (Finke, Nanigian, and Waller (2015)), having PhDs in key portfolio roles (Chaudhuri, Ivkovich, Pollet, and Trzcinka (2013)) and having strong positive firm culture (Heisinger, Hsu, and Ware (2015)).
In conclusion:
Evaluating a manager’s strategy ex-ante and taking account of fund characteristics may be more difficult than making decisions based on historical performance. Nonetheless, our research suggests that it is a better approach to delegated portfolio management.

Much if not all of these results have been stated by different people here at MFO, which makes this site so enlightening. It strengthens my resolve that there are only a few places where you might hire a fund manager. For me, International, EM's maybe small caps need active fund managers. Balanced funds for sure if you want to leave it up to a professional to adjust investment weightings (which I do).

FYI: We empirically investigate the investment results of commonly used fund selection strategies that involve redeploying assets from underperforming to outperforming funds. Based on portfolios constructed using U.S. mutual fund data over typical three-year evaluation periods, we find that investors who chose funds with poor recent performance earned higher excess returns than those who chose funds with superior recent performance. Our findings pose a challenge for asset owners: If past performance is used at all in selecting funds, it is the best-performing funds that should be replaced. Realistically, however, a policy of replacing successful funds with poor performers is unlikely to gain widespread acceptance. Instead, the practical implication of our paper is that asset owners should focus on factors other than past performance. We offer alternate criteria for selecting funds.
Regards,
Ted
http://poseidon01.ssrn.com/delivery.php?ID=438094071086119066002010083088101123024020030032038022077085101018094027090108104009120036123104050034053099090030004100110109109040002033054075065068084123004103058015033101012027103091100086127029094104004097087071074014106113086015101099123013103&EXT=pdf

@msf - I noted the 15-yr baseline but not David's suggested start date. In my look I started with the TIBIX start (inception) date of 12/24/2002 when running my comparison since I basically jumped on board then. Stop, we're both right? I don't know. It just seemed like a good place for me to begin, creaming included. I'm not sure there's a true apples-to-apples way to go after this.

I just compared the above top rated Forward Income Builder fund (AIAIX) to the fund I've been using in this space for the last 13+ years TIBIX. No thanks, I'll continue to remain oblivious.
Edited to add: I'm sure I'm missing something but it doesn't appear to be performance. I'd be thankful for any insight. FWIW, I'm not totally thrilled by the Thornburg offering as they have faltered in their objective of "income building" but I haven't been able to find or settle on a suitable alternative.

An obvious observation - TIBIX couldn't show up in the cited article, since it hasn't been around for 15 years.
What you're missing seems to be the fund's relatively poor performance through 2008 (falling further than both M*'s moderate allocation benchmark and the average world allocation fund). See this M* chart
For the chart, I used 9/30/2007 as the start date (David suggested fall 2007 as a start point, this date seemed as good as any). Over this period of time, TIBIX performed in line with AIAIX and the moderate allocation benchmark, though it significantly outpeformed world allocation funds.
It's that oversized dip that's killing it. It doesn't get brownie points for upside volatility with Sortino.
Over its lifetime, TIBIX has indeed excelled. Here's that same M* graph, stretched to lifetime.
While I'm not a fan of asking "what have you done for me lately" (e.g. YTD), I think it is fair to point out that all of that outperformance is due to the fund's first five years. Since then it has been doing well, but it's not beating a few other good funds. However, by the same token, if you throw out its 2008 performance, it again looks great.
If one is willing to live with the idea that the fund could get creamed (relatively speaking) in a bear market, it's a fine, high performing fund.

Just adding a little fuel to the fire so to speak (from Dow Jones via M*):
Oil Prices Lifted by Supply Cut Hopes
http://news.morningstar.com/all/dow-jones/us-markets/201603072580/oil-prices-lifted-by-supply-cut-hopes.aspx

@Mark & MFO Members: Here the YTD-10 Yr. returns for AIAIX and FIBIX. Neither of the two funds are ranked in the World Allocation Fund Category by U.S. News & World Report:
Regards,
Ted
http://www.marketwatch.com/tools/mutual-fund/compare?Tickers=AIAIX+TIBIX&Compare=Returns
U.S. News & World Report Ranking of World Allocation Funds;
http://money.usnews.com/funds/mutual-funds/rankings/world-allocation

I just compared the above top rated Forward Income Builder fund (AIAIX) to the fund I've been using in this space for the last 13+ years TIBIX. No thanks, I'll continue to remain oblivious.
Edited to add: I'm sure I'm missing something but it doesn't appear to be performance. I'd be thankful for any insight. FWIW, I'm not totally thrilled by the Thornburg offering as they have faltered in their objective of "income building" but I haven't been able to find or settle on a suitable alternative.

The short version: a former Morningstar analyst ranked "balanced" funds with more than a billion in assets by their 15-year Sortino ratio. Sortino is an offshoot of the well-known Sharpe ratio, but it's more sensitive to a fund's downside deviation. By that measure, the best balanced fund is F P A Crescent.
Two quick notes:
1. a lot has changed for Crescent over the past 15 years, not least growing to 100 times their previous size. That is, from $170 million in 2002 to more than $18 billion now.
2. different parameters give different results. Lipper categorizes Crescent as a "flexible portfolio" fund, which seems more appropriate than benchmarking it against staid 60/40 funds as Morningstar does. If you look at 60/40 funds over the course of the current market cycle, which began in the fall of 2007, Crescent finishes sixth:

1. Forward Income Builder
   
2. Chicago Equity Partners Balanced
   
3. Bruce
   
4. Marsico Flexible Capital
   
5. Intrepid Capital
   
6. FPA Crescent
   
7. Provident Trust
   
8. JP Morgan Income Builder
   
9. Prudential Income Builder
   
10. Loomis Sayles Multi-Asset Income

If you sort by Martin ratio, Charles's preferred metric and the basis of our fund ratings, you get most of the same funds but Crescent pops to fourth:

1. Forward Income Builder
   
2. Intrepid Capital
   
3. Chicago Equity Partners Balanced
   
4. FPA Crescent
   
5. Provident Trust
   
6. Bruce

For what interest that holds,
David

Maybe these strategists know something that the other strategists in the past 5 - 7 years didn't.... The brilliant Ray Dalio of Bridgewater has had outsized positions in international / emerging markets for the last 7 years and they haven't budged. Because of the influence of the Modern Portfolio Theory crowd, there has been increasing pressure, over the last 10 years for investors to "go" emerging. And ETFs make it too easy for investors to attempt it ..... IMO, the domestic U.S. market is still the best and easiest to contemplate, even if it has occasional declines every 3 - 5 years ...

FYI: Go outside the ‘style box’? That worked for some funds over the past 15 years.
Regards,
Ted
http://www.wsj.com/articles/mutual-funds-rally-by-not-sticking-to-a-style-1457321007

There are so many ways of closing a fund that it's hard to fathom cash flow management being a difficult issue.
There is of course the hard close, where even existing investors cannot add more money. This should not impede funds with excess cash, as Lewis pointed out. Then there are funds that allow money to trickle in by restricting the amount that existing investors can add. The Vanguard Primecap funds that Mona mentioned are a good example of these. They used to be restricted to $25K addditional per SSN per year. Vanguard has since relaxed that a bit, allowing $25K per account type per SSN per year. (Vanguard also allows Flagship clients to open new accounts.)
Most funds that are closed still allow existing investors to add money (soft close). Some go further. Many funds allow new accounts via retirement plans (usually if the plan already has some minimum amount in the fund when counting all participants). Or they may allow clients of investment advisers to open new accounts.
Some funds that are closed via third party intermediaries are still open to investors that invest directly. American Century Midcap Value (ACMVX) and Vanguard Wellington (VWELX/VWENX) are good examples of that. I've seen funds that close off access through major brokers (typically Fidelity and Schwab) but leave access open through other brokers. Sorry, no current examples come to mind.
The point is that cash inflow is more like a spigot than an on/off switch. It's fairly easy to turn that knob. The problem with inflows comes about not because there's no spigot, but if there's no pressure behind it. That is, a fund won't attract cash when the market is plummeting and no one wants to put money in, regardless of whether it's closed or not.