You trust M*'s statistics more than mine. Good idea. Seriously. Just as I would trust M*'s suggestion that 12% of funds beat VBINX over your claim that just 7.4% did. It's large discrepancies like that (1.5x) which raise credibility issues.
Over time, you'll find that a fair number of people here don't trust M* either, at least when it comes to which funds to count. You just hinted at that yourself with PRWCX.
Though closing a fund for years strikes me as a funny way to gather assets. Sooner or later you'll learn that TROW is the most investor-friendly publicly traded investment company (yeah, I know, faint praise).
Regarding which funds to count, you dismissed my selection of VBIAX as being the same fund as VBINX. Fine with me, I agree with your thought that funds should only be counted once. But then you turned right around and referenced a M* figure (12th percentile) based on 501 moderate allocation "funds" with ten year records. Two of the funds in that list of ten year funds are VBIAX and VBINX. You were the one who picked the list of funds, I just selected a fund off your sanctioned list.
You don't have to believe me. The 148 unique fund figure I cited came straight from M*. You can get it yourself. There may be around 500 moderate fund share classes with ten year records, but there are only around 150 funds (using your understanding of funds - counting VBIAX and VBINX as one fund).
One doesn't need a M* premium membership to figure this out. Just use their basic fund screener. Though it is limited to returning 200 funds (i.e. share classes), one can coax all 500-ish out by asking for them in three pieces - 4* and 5* funds, 3* funds, and then 2* & 1* funds. (Any ten year fund should have a star rating, so that captures all of them.)
Ask for moderate allocation funds with ten year performance exceeding (-10%), and do the star breakdown described. The neat thing about this exercise is that because the results come back alphabetically, it's very easy to scan for unique funds (as opposed to share classes). While this will still double count some funds (if a single fund has one share class with 3 stars and another with 4 starts), it gets you in the right ballpark.
It will show how exaggerated that M* 500 fund figure is, at least if you're not going to allow me to pick VBIAX :-) (i.e. if you're going to stick with counting unique funds only once).
I count around 70 unique 4 and 5 star funds (out of 191 share classes, including three instances of Vanguard Balanced Index). I could be off by a couple of unique funds as I counted quickly. The point is to see, in front of your eyes, M*'s (not my) data - how many unique funds there are, how some funds get counted many more times than others. Just look at that first page - it's nearly filled with different share classes of a single fund - American Funds American Balanced.
Along with 76 unique 3 star funds (out of 176 share classes) , and 43 unique 1-2* funds (out of 124 share classes), this totals 189 potentially unique funds out of 491 share classes.
We can eliminate much of the double counting by performing two more screens - checking for 2 and 3 star funds (and subtracting any fund that shows up with both 2 and 3 stars), and then checking 3 and 4 star funds.
Unfortunately, there are more than 200 2* and 3* funds combined, but even working with the 200 returned, there appear to be at least 18 duplicates there, and at least 19 duplicates between 3* and 4* share classes. Subtract 37 from 189, and we get 152 - darn close to the 148 unique funds that I said came from M* data.
Notice what I did. I showed how to reproduce the results and provided the methodology - what the definitions were, what was being counted. This adds to both comprehension and credibility. I showed that you too can come up with figures similar to the ones I gave above.
This exercise demonstrates just how much shrinkage there is going from share classes to unique funds. It offers a glimpse into how much distortion there is, when a single fund like American Funds American Balanced can get counted 16 times, while a fund like T. Rowe Price Cap Ap is counted only twice. This insight can lead to better understanding of what the numbers mean (and what the odds really are, and what factors can improve those odds).
Don't follow your 322 funds. They're not unique funds (by your definition), and they're skewed (I hope by now you're at least considering the possibility that by using Fidelity's screener to eliminate closed funds, you may be distorting your results by excluding funds like PRWCX and Wellington). Spend some time figuring out what you do want to observe, find a way to do it accurately.

@willmatt72 I agree that tax considerations are important for funds held in taxable accounts. But I also feel that the "magic number" tax cost (or after-tax return), while offering some insight, is not a particularly refined figure. The best it can do is tell you whether a fund is a stinker from a tax perspective.
Start with the basic fact that different people are in different tax brackets - I would never use a 20% cap gains tax rate, yet that is what is typically used. Quoting from M*'s tax cost ratio methodology: "Per the SEC’s guidance, after-tax returns are calculated with the highest tax rates prevailing at the time of the distribution, as if the investor were in the highest tax bracket."
(This is probably incorrect even for those in the top bracket, as I think it excludes the Medicare surtax of 3.8% on investments, and of course ignores state taxes.)
Then there is the problem that these calculations almost never (except in prospectuses) show the tax effect if one liquidates. That's important because if one is paying taxes on cap gains distributions now, one will pay less in taxes when one liquidates. So while cap gains distributions do have an effect on total returns long term, the effect is not as pronounced as one is led to believe from usual tax cost calculations.
Some of these factors increase the actual tax cost (such as state taxes, surtaxes including Medicare and phaseout of exemptions, etc.), while others decrease the actual tax cost (reduced cap gains on liquidation, not being in the top tax bracket, etc.). It's all very personal - each individual's situation is different.
That's why whatever after tax figures you get are at best crude approximations, and why I either do a much more detailed analysis or use the figures provided only as a filter (don't get a very tax inefficient fund), and not to compare funds.

I think some people use the *M tax adjusted returns feature as a guide, not as the last word on the subject. But it does serve an important purpose and does give investors a general overview of a fund's tax efficiency. The *M guide serves as an important feature to determine returns given tax considerations. Death, taxes and all that. Personally, I do compare tax adjusted returns because they can have a rather large effect on ultimate returns, especially with a high value portfolio such as mine. Having a "stinker" in terms of tax perspective can make a big difference in one's portfolio. Comparing 10-year returns without tax considerations is not an entirely accurate comparison, IMHO. It can become a rather large factor when comparing balanced funds.

PRWCX is a great great fund, but possibly an equity fund cloaked as a balanced fund in order to gather assets. I will spend some time researching in that area.

@shipwreckedandalone: Please share the results of your research when you have finished. I have myself long suspected this is really an equity fund. And having held PRWCX since the mid-'90s, I've always considered it part of my equity allocation. This has caused more than a little consternation and second-guessing as to whether I have it placed correctly. Seems to me various rating sites have classified the fund over the years at various times as equity, moderate allocation, balanced or even hybrid.
Observing its performance now for nearly two decades, I can say PRWCX consistently behaves on a daily basis like a balanced fund (the old walks like a duck, quacks like a duck test). However, Price places it among their equity funds at their website, reserving the balanced label for others (seeming to dispute your suggestion they're intentionally misrepresenting the fund). But they put the fund's recent domestic stock component at 60% - exactly where you would expect a 60/40 balanced fund to be.
Curiouser and curiouser
From T. Rowe's website: Composition of PRWCX (closed to new investors)
Asset Allocation as of 01/31/2016
Domestic Stock 60.0%
Domestic Bond 21.0%
Cash 11.1%
Foreign Bonds 4.5%
Foreign Stock 2.0%
Convertibles 1.2%
Preferreds 0.8%
Options -0.2%

Andy, Mainstay's MMHIX (no 5 million minimum at Scottrade) have been in numerous times since 2014. And you are right, not as volatile as the others in its category. However, since around mid 2015, the story has all been PYMDX as it has led the pack because of its allocation to tobacco bonds. That's pretty much been where I have had all my junk munis YTD albeit surprised I haven't been banned by them from overtrading. So if I have to ramp back up in the next couple days it will be in ABHYX which has done very well this year too. I like California munis but they have been overbought until Friday. But I worry the whole muni story is merely a tagging along with the Treasuries so far in 2016 as you alluded to. If rates do begin to rise even more reasons to get more involved in the junk corporates as risk assets get a bid. Of course, bottom line it is and always has been the past year and more all about oil. My other forays into corp junk haven't panned out in 2016 especially when I have increased so not overly confident this time around will be any different.

90 years of academic research shows outperformance of small cap value vs. all other stock universes https://docs.google.com/document/d/1kToqLWLISRk4n4YnSzv1hT5kBN54l5CvhwGgDwJKPJI/edit?usp=sharing. Money may have been flowing into large mega cap growth stocks that pay dividends over the last 12 years because of favorable tax treatment instituted during the G. Bush administration. But that universe has since become overvalued in the last couple years advisorperspectives.com/articles/2015/12/15/why-dividend-paying-stocks-are-riskier-than-you-think/4.

Don't know about junk corporates; I'm tempted to first buy more shares in the core low-vol, "quality" equity funds I own when it looks like a general turn toward risk assets is happening.
On munis, the last WealthTrack guest, Dimella of Mainstay muni funds, said he expects he'll stay fairly junky in his HY muni fund for the time being. He cited munis' yield as 95% of T's of same maturity now, down from the 100% + of the past several years but still above the long term 80-some-%. So, to him they still look good on a tax-equivalent basis.
That leaves rates, not competition with Treasuries, as the main risk, and rates have taken such a deep dive, seems pretty certain they'll be higher to some degree in the not-too-distant future. Meanwhile, several muni cef's with really overbought signals are still doing fine. There's got to be a momentum swing coming, just a matter of when.
P.S. Dimella's MMHAX looks like a decent fund - prob'ly competitive with and a little less volatile, up and down, than NHMAX.

I trust M* globally published statistics more than yours on a message board. They say VBINX is in the top 12%. Also, if just 10 balanced funds per year closed (100) the VBINX outperformance numbers will be much higher. (The reason they closed is due to underperforming the index). Of course VBIAX outperforms VBINX due to obvious reasons. Same fund ...different expense structure.
PRWCX is a great great fund, but possibly an equity fund cloaked as a balanced fund in order to gather assets. I will spend some time researching in that area.

Here are a few datapoints that might help - there are approximately 148 moderate allocation funds (not share classes) in the M* universe. (For reasons I won't go into, I don't believe that number is precisely correct, but it's accurate enough to show that the total number of funds is manageable, i.e. one could easily examine each one in detail.)
Of these, approximately 103 are available through Fidelity retail brokerage (i.e. in the Fidelity universe). Of the 103, VBINX ranks 16th (16%). The fact that it ranks lower among funds than among share classes tends to confirm that lower performing funds have more share classes than better performing funds.
Curously, VBINX ranks 25th out of the 148 (17%). Virtually no different from the Fidelity universe.

msf, 1. Can you please provide the number of Allocation funds that have closed or merged due to underperformance during those 10 years that VBINX has outperformed?

Answer: yes. Will I? No. You can spend your own time. Question is ambiguous in any case. I could expound upon that, but it would be pointless. So I'll just give one broad group of "funds" that have vanished in the past ten years for a reason other than underperformance. It's not clear from your phrasing whether you are asking for them to be included in the count or not.
Many B class shares (you're counting share classes as "funds") have folded in the past decade, because they are no longer easily marketed. They have neither been "closed" or "merged"; they have vanished by attrition. B shares automatically convert to other share classes (typically A, but sometimes other classes) in under ten years. Many fund families have closed purchases of B shares (but not shut down the share class). Consequently, after a few years, there have been no shares left. Of course the funds still exist; that's a muddle one creates by conflating share classes and funds.

You ignored that number in your misrepresentation of my numbers. Please add those back into your denominator and recalculate.

Interesting claim. Would you care to say what I misrepresented? Did you not conflate classes and funds? Did you not count index funds among actively managed funds? Did you not omit in your figures any "funds" (i.e. share classes) that one could not purchase at Fidelity despite the fact that Fidelity provided figures on the larger (i.e. M*) universe of moderate allocation funds? Did you not overstate the number of ten year "allocation" funds (without defining that term) by nearly a factor of two by including 550 funds that had not existed for ten years?
I never suggested intentional deception, just that for these reasons the figures presented were misleading.
If by "misrepresenting your numbers" you're saying that I didn't point out all your inaccuracies, that is indeed correct. Yes, there are more, such as the vanishing of "funds" (i.e. share classes) that did exist ten years ago. The fact that you had even more inaccuracies than I pointed out, regardless of their numeric impact, hardly strengthens your position that these are meaningful numbers.
Gosh, instead of ten errors, I made fifteen, and some of those balance out, so my figures are really reliable after all. Sure. If you want people to have faith in your figures, and hence to discuss them, it's incumbent upon you to make them credible. Not me. 98.6% superiority is not credible. Theoretically possible (see below), but not credible.

2. Do you believe you can pick a fund(s) to invest in today that will outperform VBINX over 10 years?

Absolutely, and I did - VBIAX. You can't have your cake and eat it too. If you are going to consider and count each share class separately, then I am free to pick VBIAX as competing "fund". If not, think about going back, fixing your "fund" data, and providing credible figures to discuss.

If VBINX has outperformed 88% over the last 10 years? Morningstar shows a rank of top 12 for 10 year performance for VBINX Moderate Allocation. Also USA Today shows 12. Also both not counting closures due to underperformance.

Or due to lack of interest by investors for any other reason as well. Glad to see that you found the same data that I pointed out to you at the Fidelity site.
What you've omitted is the size of the remaining universe outside of Fidelity. The total (per the Fidelity page giving M* figures) is 501 moderate allocation funds. Let's do a little arithmetic. 23 "funds" in the Fidelity universe outperformed VBINX. And 60 funds in the "total" (M*) universe outperformed. That means that 37 funds not in the Fidelity universe (including BTW VBIAX) out performed. That's out of an additional 179 funds (501 minus your 322 figure). So merely by selecting from the funds not offered at Fidelity, we've increased our chance of randomly outperforming from 12% to 20+%.
Not really, though, because I've built upon one of your errors. Can you identify it? I'll give you the answer at the end of this post.

I am not asking you if a fund will outperform VBINX over the last/next 10 years. That is a certain.

It's extremely likely, sure. But mathematically certain? No.
Say you have a universe of four securities; three of them return 0%, one returns 10%. The index fund invests in all of them, and so it has a positive return. All the other funds invest in some combination of the three securities returning 0%. (They leave the fourth security to the index funds and to individual investors; these are the 98.6% stupid managers you started your post with. We can hypothesize that the other 1.4% are simply inattentive, not stupid.)
We now have VBINX (or whatever you want to call the index fund) outperforming 100% of all other funds.

I am asking you are you brash enough to believe that TODAY you could pick a moderate allocation fund that will outperform over the next 10 years?

Your phrasing ("brash") exposes your preconceptions. You start with the assumption that something is virtually impossible (okay, 98.6% impossible), and therefore any suggestion to the contrary must be brash, as opposed to reasoned.

This is the basis for my post.

Yes indeed.

3. If analyst depth of T Rowe Price works well relative to performance should we blindly assume all funds will behave as such when the manager leaves? The peanut gallery opinion will be a definite "no" on that one. You assume the analysts will not change employment as well or go with the PM to their new employer..

All funds don't have the same depth of analysts, so no, we should not assume all funds will have the same degree of continuity. You're also disregarding other factors with TRP, both ones I've mentioned and others that are easy enough to discern. One is that TRP ensures a smooth handoff of management, as contrasted with, say Fidelity, where a management change is a warning sign for chaos, portfolio turnover, and changes in fund direction. Another is that when managers leave T. Rowe Price, it is typically to retire. I named the last three fund managers for PRWCX. You could have checked where they went afterward. Arricale stayed with TRP to manage another fund until 2010 when his personal life got really messed up and he was unemployed for sixteen months. Somehow, I doubt analysts followed him down that path. Bosel retired.

Thank you for alerting me to the 550.

Any time. Now you can apply that learning to identify the error that I utilized above. The number of 10 year moderate allocation funds in the Fidelity universe is not 322, but just 243. The others don't have ten year records. So the actual percentage of funds (surviving share classes, if you prefer) that beat VBINX was 23/243 ~= 9.5%. And the percentage of non-Fidelity funds beating VBINX was 37/(501 - 243) ~= 14%. Still an improvement over the 9.5% that one would get with Fidelity-sold funds, or the 12% general universe.
It still shows that one can improve the odds merely by purchasing a fund not sold in a fund supermarket. Not because of the arithmetic, but because of a latent factor - lowest cost funds tend to eschew supermarkets. One can do better still by looking for low cost, well managed funds directly. See my previous post.

Actually, if I can remember correctly, excluding the 2008 financial crisis, the worst 12 months ever since the beginning of the new Milken era of junk bonds in the 1980s. They never ring bells at bottoms so will just keep probing and exiting with tight mental stops when proven wrong. So based on Wednesday's intraday action in all markets went to 5% junk corporate bonds and pared back to 45% junk munis by Friday's close. Don't feel comfortable with so much cash but can change that in a day or two if necessary. Junk munis are but a penny off all time highs (total return) set Thursday.

@msf,
Sorry, I know its holdings, and do follow them though obvs casually and sporadically. Had not seen prior that AOR is now only 60% domestic, and, hmm, they changed the name, to Core Growth Allocation; so coulda answered my own question.
>> as opposed to a traditional 60/40 domestic allocation fund
Indeed. I assumed some of what we were discussing were not all domestic. Apologies again for not checking; did not realize VBINX was so extremely foreign-averse.
First Pacific is ~9%, FBAL and Puritan, Oakmark, and Berwyn are ~5%, Intrepid ~14%, Vang Wellesley (note) 6%.
Glad to see consideration given to manager tenure.

msf, 1. Can you please provide the number of Allocation funds that have closed or merged due to underperformance during those 10 years that VBINX has outperformed? You ignored that number in your misrepresentation of my numbers. Please add those back into your denominator and recalculate.
2. Do you believe you can pick a fund(s) to invest in today that will outperform VBINX over 10 years? If VBINX has outperformed 88% over the last 10 years? Morningstar shows a rank of top 12 for 10 year performance for VBINX Moderate Allocation. Also USA Today shows 12. Also both not counting closures due to underperformance.
I am not asking you if a fund will outperform VBINX over the last/next 10 years. That is a certain. I am asking you are you brash enough to believe that TODAY you could pick a moderate allocation fund that will outperform over the next 10 years?
This is the basis for my post.
3. If analyst depth of T Rowe Price works well relative to performance should we blindly assume all funds will behave as such when the manager leaves? The peanut gallery opinion will be a definite "no" on that one. You assume the analysts will not change employment as well or go with the PM to their new employer..
Thank you for alerting me to the 550.

Why do they outperform AOR? Any thoughts? It's more broadly diversified? Suboptimal bond sectoring?

I don't know much about the etf - I just looked at its current composition, and it looks like a world allocation fund - 27% foreign stock, 31% US stock (as opposed to a traditional 60/40 domestic allocation fund). If you look at category returns for allocation funds, you find world allocation funds in the cellar, relatively speaking, ahead of only tactical allocation funds over the past three and five years.
It appears to be actively managing its asset allocations, e.g. it used to hold TIPS and now it doesn't. (That is a move that goes well beyond rebalancing.) I doubt holding TIPS helped. Since I'm not really familiar with the fund, I can't comment on the quality of its moves, other than to observe that it has moved around.
Here's a page that will give you its holdings over time (scroll down to Holdings, and click on All, then select month of interest):
https://www.ishares.com/us/products/239756/AOR?referrer=tickerSearch

The numbers are suspect because:
(a) they refer to share classes, not funds (though you call them funds)
(b) the terms are not defined - Fidelity (using M*'s taxonomy) provides a broad category of "Allocation" funds; you appear to have selected five particular narrow subcategories (out of 17 subcategories) without identifying them or offering justification. Why, for example, would one include global (world) allocation funds when comparing with a pure domestic index fund? Other than the fact that it has "Allocation" in its name?
I inferred you were using "conservative", "moderate", "aggessive", "tactical", and "world" allocation funds from the fact that I did manage to come up with the same 1195 figure using these five subcategories. As I noted in my earlier post, this selection has problems because it excludes funds not open for purchase at Fidelity (let alone funds not carried by Fidelity).
(c) Of the 1195 "funds", 550 do not have 10 year records, so using them in your denominator is misleading and deceptive. The other faults are forgivable, this one is not - not when you call these as 10 year allocation funds and it errs by nearly 50%.
(d) The 1195 "funds" include index funds, yet you say of VBINX: "97% ... [of] actively managed outperformance". Again this is cheating with the denominator, because not all of those other funds are actively managed. (Not a big cheat, since aside from VBINX there are only five other index funds in the 1195, but still it demonstrates a certain disregard for accuracy.)
A fair question might be: okay, so the figures were a little sloppy, but why does it matter? In part because they're off by more than a little (see (c) above). But at least as important is that it opens up the question of what you are looking at.
Funds offered through supermarkets tend to be higher cost, and the strongest indicator of performance is cost. So you're starting with a stacked deck (vis a vis the universe of funds with 10+ year records).
This should be clear from the data that I already provided (using data from Fidelity's site). VBINX outperformed 88% (not 92.6%) of moderate allocation funds over ten years, according to the Fidelity page on VBINX. The difference comes from the fact that funds not available through Fidelity (or other supermarkets) tend to do better on average than funds offered through Fidelity.
The deck is further stacked by counting multiple share classes as different funds (see (a) above). This stacks the deck because load funds usually offer C class (and sometimes B class) shares - with their added embedded 1% extra fee, they start with a virtually insurmountable handicap. Simply eliminating these share classes (which you call "funds") shifts the odds appreciably. And that little "trick" doesn't eliminate a single fund (as opposed to share class) from consideration.
In short, your handicapping of the odds is way off. That doesn't mean that the odds are not still in favor of VBINX beating a dart board, just that it isn't nearly as long a shot as you're suggesting. Little "tricks" like the one above can reduce those odds significantly.
Since you have chosen to count share classes as separate funds, you've made it easy to identify a "fund" that is guaranteed to outperform VBINX over any time period one chooses: VBIAX. Mission accomplished.
One needs to understand how numbers are distorted and manipulated, in order to recognize that it is possible to significantly improve the odds of selecting solid, long term funds. Enough so that arguably there is a reasonable fighting chance of beating an index.
You did raise one good point - manager continuity. That is a consideration, and management changes could go towards explaining why many funds underperform over extended periods. In turn, that means that if one can identify funds where manager continuity presents less of a risk, one improves the odds of finding a fund that will continue to outperform.
Multiple people have already identified one such moderate allocation fund - T. Rowe Price Cap Ap. It has gone through management changes and continues to outperform. Top 1% in 1 year, 3 year, 5 year, 10 year. (Link is to a Fidelity research page, but it isn't in your 1195 funds or 322 moderate allocation funds).
Three different managers over the past ten years (Boesel, Arricale, and Giroux), yet it keeps on chugging along. You can attribute that to analyst depth and to T. Rowe Price's culture of transitioning managers slowly without disturbing a fund's style. Relatively low cost and willingness to close the fund also improve the odds of this fund continuing to do well.
I'd already mentioned another moderate allocation fund that I'd pick over VBINX - Wellington (VWENX). With a cost below VBINX (18 basis pts vs. 23 basis points), lower turnover (39% vs. 53%), and a management company (Wellington) that also transitions managers well, the odds of this fund continuing to outperform also seem good.
Finally, you stack the deck again by asking me to name all the "funds" that will outperform VBINX. Since I don't invest in a whole slew of funds, why should I have to name all of them? The objective should be to do at least as well with one's investments, whether one places one's money on a single pony or on a whole stable.

msf, I am sorry you feel my numbers are suspect. I pulled them two weeks ago. So, lets look at them again. I just got off the Fidelity website. Hot off the press.
10 year Moderate Allocation Funds = 322 funds VBINX is #24 or top 7.4%.
10 year All Allocation Funds = 1195 funds VBINX is #36 or top 3.0%.
10 year Allocation (no categories) = 1709 funds VBINX is #36 or top 2.1%.
I will let you pick how you want to view it because it is your money not mine you are investing.
My thesis is this: Can you say you can pick the top 3.0% to 7.4% of all balanced funds over the next 10 years that will outperform VBINX? That's 97% to 92.65% actively managed outperformance. How many of your 25 will fall prey to my risks mentioned in my post above? How many of those managers will still even be there 10 years from now? I will check on the 322 number to see how it does over time.
I am not fixated on VBINX. Any 60/40 index will do. FBALX is 60% equity like VBINX.
Thanks for all the comments and good luck amigos. Anybody watching "Billions" on Showtime tonight????

VBINX (a simple 60/40 fund) is ranked #16 out of all 1194 Allocation (Balanced) funds based on Fidelity's Mutual Fund research site over the last 10 years. Therefore 98.6% of all the CFA's, MBA's, ChFA and PhD's portfolio managers cannot outperform a simple low cost index. Why do we even spend time discussing the best funds?
Over any 1, 3, 5 or 10 year timeframe compared to only Moderate Allocation OR all Allocation funds, VBINX is better than 89.5% of any actively managed fund. Amazing. The really great managers are rare.

It is not clear how you arrived at these precise numbers. Here's Fidelity's fund screener for

all the allocation funds (i.e. all share classes) it carries. I get 1,870 funds. But if I sort on 10 year returns (so that all the share classes that haven't been around drop to the bottom), I get "just" 865. And that includes multiple share classes per fund.
My best guess is that you may have used Fidelity's screener to pick all subcategories of Allocation funds with "Allocation" in their name: Conservative, Aggressive, Moderate, Tactical, and World. If one does this and excludes funds that are closed at Fidelity (the screener's default - good for shopping but less so for research), that results in 1195 share classes. Close enough since these figures can shift on a daily basis.
In this cohort, VBINX isn't even Vanguard's best fund, based on 10 year performance. That goes to Wellesley VWINX. (Actually the top two Vanguard share classes would both be Wellesley, except that Fidelity doesn't sell VWIAX).
Note that I haven't disagreed with your thesis, but with your numbers. From a scientific method perspective they are suspect because they're not easily reproducible. Also, extreme figures invite inspection, and a small deviation can cast doubt up the greater thesis, rightly or wrongly.
Had you suggested that 80% or so of actively managed allocation funds did not do as well over ten years, I likely wouldn't have even looked at the data. Fidelity's own page on VBINX says that over 10 years, it beat 88% of 500 other (501 total) moderate allocation funds. Which means that over 10 years, there were about 60 moderate allocation funds (let alone other types of allocation funds) that beat VBINX. Four times as many as the fifteen implied by a #16 ranking for VBINX.
Just so we don't confuse funds and share classes, out of those 1195 funds I could coax out of Fidelity's screener, the funds (not share classes) ranking above VBINX include:
(1) Columbia Balanced (CBLAX and CBCLX), (2) John Hancock Balanced (SVBIX),
(3) Wellesley (VWINX), (4) Janus Balanced (JABAX),
(5) AMG Chicago Equity Partners Balanced (MBESX and MBEAX)),
(6) Loomis Sayles Global E&I (LSWWX and LGMAX), (7) Berwyn Income (BERIX),
(8) Boston Trust Asset Mgmt (BTBFX), (9) First Eagle Global (SGIIX and SGENX),
(10) Intrepid Capital (ICMVX and ICMBX), (11) LKCM Balanced (LKBAX), (12) Ivy Balanced (IBNAX),
(13) Wells Fargo Index Asset Allocation (WFAIX and SFAAX), (14) Mairs & Power Balanced (MPAOX),
(15) Transamerica Multi-Managed Balanced (TBLIX and IBALX),
(16) American Funds American Balanced (ABALX), (17) Tributary Balanced (FBOPX & FOBAX),
(18) Hennesy E&I (HEIFX), (19) Westwood Inc. Opp (WHGIX and WWIAX),
(20) Thornburg Investment Inc. (TIBIX), (21) Puritan (FPURX), (22) FPA Crescent (FPACX),
(23) Eaton Vance Balanced (EIIFX), (24) Oakmark E&I (OAKBX), and (25) Ivy Asset Strategy (WASAX).
T. Rowe Price Cap Ap (PRWCX and PACLX) would be at the top of the list, except that it is a closed fund, and I had to exclude closed funds to come close to your 1194 fund count. Likewise, Vanguard's other "vanilla" actively managed allocation fund - Wellington - would have come out ahead of VBINX also, except that Fidelity thinks it is a closed fund. (It's not, but you can't open a new position at Fidelity.)
If we throw out the four world allocation funds (Loomis Sayles Global, First Eagle Global, Thornburg Investment Income, and Ivy Asset Strategy), we're still left with 21 distinct funds, let alone share classes outperforming VBINX over ten years. Well more than 15 funds, and all the remaining funds are conservative, moderate, or aggressive allocation funds - no offbeat stuff like convertibles.
If I had a better idea of how you're getting your figures (or to put it another way, what factors you're looking at), it would be easier to discuss. You started with a Vanguard (marketed) fund, so one could easily ask: at Vanguard, why even look at Vanguard-managed funds (VBINX, VGSTX), when the Wellington-managed funds (Wellesley, Wellington) have done better?

Interesting analysis. Since VBINX is considered a moderate allocation fund, did you compare it with other moderate allocation for tax-adjusted returns over 10 years? As we all know. taxes can play a large part in determining the ultimate returns. I plugged in a few of the funds compared to VBINX for a 10-year tax adjusted returns and they don't hold up. For example, BERIX, TIBIX and MAPOX were behind VBINX. I didn't even look at your entire list, just popped in a few for analysis. Some investors hold balanced funds in taxable accounts so tax-adjusted returns should be taken into consideration for those who do.

VBINX (a simple 60/40 fund) is ranked #16 out of all 1194 Allocation (Balanced) funds based on Fidelity's Mutual Fund research site over the last 10 years. Therefore 98.6% of all the CFA's, MBA's, ChFA and PhD's portfolio managers cannot outperform a simple low cost index. Why do we even spend time discussing the best funds?
Over any 1, 3, 5 or 10 year timeframe compared to only Moderate Allocation OR all Allocation funds, VBINX is better than 89.5% of any actively managed fund. Amazing. The really great managers are rare.

It is not clear how you arrived at these precise numbers. Here's Fidelity's fund screener for all the allocation funds (i.e. all share classes) it carries. I get 1,870 funds. But if I sort on 10 year returns (so that all the share classes that haven't been around drop to the bottom), I get "just" 865. And that includes multiple share classes per fund.
My best guess is that you may have used Fidelity's screener to pick all subcategories of Allocation funds with "Allocation" in their name: Conservative, Aggressive, Moderate, Tactical, and World. If one does this and excludes funds that are closed at Fidelity (the screener's default - good for shopping but less so for research), that results in 1195 share classes. Close enough since these figures can shift on a daily basis.
In this cohort, VBINX isn't even Vanguard's best fund, based on 10 year performance. That goes to Wellesley VWINX. (Actually the top two Vanguard share classes would both be Wellesley, except that Fidelity doesn't sell VWIAX).
Note that I haven't disagreed with your thesis, but with your numbers. From a scientific method perspective they are suspect because they're not easily reproducible. Also, extreme figures invite inspection, and a small deviation can cast doubt up the greater thesis, rightly or wrongly.
Had you suggested that 80% or so of actively managed allocation funds did not do as well over ten years, I likely wouldn't have even looked at the data. Fidelity's own page on VBINX says that over 10 years, it beat 88% of 500 other (501 total) moderate allocation funds. Which means that over 10 years, there were about 60 moderate allocation funds (let alone other types of allocation funds) that beat VBINX. Four times as many as the fifteen implied by a #16 ranking for VBINX.
Just so we don't confuse funds and share classes, out of those 1195 funds I could coax out of Fidelity's screener, the funds (not share classes) ranking above VBINX include:
(1) Columbia Balanced (CBLAX and CBCLX), (2) John Hancock Balanced (SVBIX),
(3) Wellesley (VWINX), (4) Janus Balanced (JABAX),
(5) AMG Chicago Equity Partners Balanced (MBESX and MBEAX)),
(6) Loomis Sayles Global E&I (LSWWX and LGMAX), (7) Berwyn Income (BERIX),
(8) Boston Trust Asset Mgmt (BTBFX), (9) First Eagle Global (SGIIX and SGENX),
(10) Intrepid Capital (ICMVX and ICMBX), (11) LKCM Balanced (LKBAX), (12) Ivy Balanced (IBNAX),
(13) Wells Fargo Index Asset Allocation (WFAIX and SFAAX), (14) Mairs & Power Balanced (MPAOX),
(15) Transamerica Multi-Managed Balanced (TBLIX and IBALX),
(16) American Funds American Balanced (ABALX), (17) Tributary Balanced (FBOPX & FOBAX),
(18) Hennesy E&I (HEIFX), (19) Westwood Inc. Opp (WHGIX and WWIAX),
(20) Thornburg Investment Inc. (TIBIX), (21) Puritan (FPURX), (22) FPA Crescent (FPACX),
(23) Eaton Vance Balanced (EIIFX), (24) Oakmark E&I (OAKBX), and (25) Ivy Asset Strategy (WASAX).
T. Rowe Price Cap Ap (PRWCX and PACLX) would be at the top of the list, except that it is a closed fund, and I had to exclude closed funds to come close to your 1194 fund count. Likewise, Vanguard's other "vanilla" actively managed allocation fund - Wellington - would have come out ahead of VBINX also, except that Fidelity thinks it is a closed fund. (It's not, but you can't open a new position at Fidelity.)
If we throw out the four world allocation funds (Loomis Sayles Global, First Eagle Global, Thornburg Investment Income, and Ivy Asset Strategy), we're still left with 21 distinct funds, let alone share classes outperforming VBINX over ten years. Well more than 15 funds, and all the remaining funds are conservative, moderate, or aggressive allocation funds - no offbeat stuff like convertibles.
If I had a better idea of how you're getting your figures (or to put it another way, what factors you're looking at), it would be easier to discuss. You started with a Vanguard (marketed) fund, so one could easily ask: at Vanguard, why even look at Vanguard-managed funds (VBINX, VGSTX), when the Wellington-managed funds (Wellesley, Wellington) have done better?

On Marketwatch, when you look up a fund, you are shown what a $10,000 invested in 1997 is worth today. Here are the results of a few popular funds:
GLRBX: $26,488
FPACX: $41,022
OAKBX: $30,927
VBINX: $21,956
BERIX: $30,606

All good stuff.
Umm ... I happened on those 3 balanced funds more or less by chance. PRWCX looked like a more conservative & better diversified offering compared to PRFDX when it opened in the 90s. All my $$ was at Price in an employee sponsored plan at that time. DODBX was appealing about a dozen years ago for its low .52% ER, for being a privately owned firm that often steps to a different drummer, and for very low turnover. Don't know why I like OAKBX and PRPFX, but for some reason they allow me to sleep better at night.
Point was that I wasn't cherry-picking here. Just happened to own these more or less by chance. Two are competitive with VBINX at 10-years and all four outpaced it easily over 15 years. I like longer periods like 15 years. However you could also argue to the contrary that shorter time frames give a better indication of current management's abilities.
Never owned Vanguard so can't comment on the intangibles. But in selecting a fund house they are important. Price is hard to beat for customer service, low minimums and ability to exchange shares. The others I mentioned are handicapped by a smaller stable of investments but like Price also have low minimums.
Beta? Interesting stats. Afraid I rarely track that. With actively managed funds beta can vary greatly from year to year along with management's current outlook. Oakmark was hurt when they decided to de-emphasize long term government bonds couple years ago. Added to volatility, but they felt bonds had had their run.
Welcome aboard. Great handle Shipwreckedalone.