Yes, andy, I am aware that one year (last year) did not adhere to seasonal patterns. Looking back one year and saying "ah hah!" doesn't negate that seasonal patterns do exist over time. US equities 'on average' have earned +100% of their return between 11/1 through 04/30. In no way does that 'average' return mean that stocks are positive every year. -- It means that from a probability perspective, the odds are greatly in your favor.

Daisy Maxey, writing for the online version of the WSJ, announced "Mutual fund's overhaul hits investors with a big tax bill." It's the same "F P A Perennial becomes F P A U.S. Value" story that we warned people about in June. Remember "F.P.A. Perennial: Time to Go"? Remember: "If you are a current Perennial shareholder, you should leave now"?
Highlights of the story:
Morningstar channeled Bernanke. Ben was adamant that there were no clear signs of trouble brewing in the years leading up to the 2007 implosion. Dan Culloton of Morningstar seemed equally surprised by Perennial's $39/share payout: “It’s certainly a big, shocking distribution. It exceeded my expectations."
Why? In the parallel case of F P A's conversion of Paramount from small growth to large value, virtually the entire portfolio was liquidated within a few months. Morningstar's own data back in June suggested a $36/share payout. The only reason you'd be surprised is if you weren't paying attention. How could Morningstar not ... oh, right. The fund only has $280 million in AUM!
Wall Street Journal practiced "safe" journalism. Two tenets of that strategy. Talk to Morningstar. Avoid hard questions.
"F P A declined comment". Yep. You could sort of feel the temperature drop after we complained about raising the management fee at Paramount when it was converted from a clone to Perennial to a global absolute value large cap. Since that change, perhaps coincidentally, assets are down nearly 50% and the fund is underwater.
(sigh)
David

Doesn't fire-proofing funds reduce the potential return? Can I still invest in a very risky fund if I want to - knowing that increased risk often leads to increased return over longer periods? Do you really want your emerging markets bond fund or small cap equity fund to be as safe and secure as bank deposits (now yielding less than 1%)? Something in me doesn't like all these new rules.
However, if investors refuse to read the prospectus and excercise common sense in their fund purchases - perhaps this is the only alternative. I'd like instead some type of uniform "risk" label applied to all funds sold to the public. 4 or 5 different risk levels should be adequate. This would also give fund companies an incentive to structure their funds so as to qualify for a lower risk rating. Novice investors, those near retirement, etc. would know in advance which funds represented the higher risk of principal loss over the near term and would be cautioned to avoid these.
Many companies do exactly that. T Rowe Price does an excellent job displaying risk using bar graphs and than elaborates on that risk in their fund commentary. Even here, however, I suspect many ignore those classifications and invest more aggressively than prudent for their circumstances.
AAA

I own DLFNX since Sept, 2012. $50 BILLION AUM in DBLTX. That fund oughta be closed. With so much in there, he's driving the market, not investing in it. $50B is nuts. This thread caused me to look once again at the portfolio. DLFNX is 47% in AAA-rated stuff. If I was aiming for a not very risky solid, reliable, tame fund, I guess I found it.
Signed,
----The MFO resident Rank Amateur.

I noticed the quality numbers, too. Still, if 47% is AAA rated, then why is the average quality only BB for the fund? He must own some real junk in there.

A section from blog of Steve Blumenthal, CEO of CGM Capital Management Group, Oct 2
On My Radar: Defaults Will Breach the Historical High Next Year – The Fed is the “Wild Card”
http://www.cmgwealth.com/ri/on-my-radar-defaults-will-breach-the-historical-high-next-year-the-fed-is-the-wild-card/
High Yield – Rising Defaults
Edward Altman, the New York University professor who developed the Z-Score method for predicting bankruptcies, says “defaults will breach the historical high next year and the Fed is the “wild card” that has the power to determine how quickly the current credit cycle ends.” (Bloomberg)
“We have blamed the wider Junk Bond spreads on Energy issuers, but last week there was a buyer’s strike. If this continues, you can say goodbye to easy financing for M&A which will remove one large pillar of support from stock prices”. (361 Capital)
* Altice on Friday sold $4.8 billion of junk bonds to fund its $10 billion purchase of Cablevision Systems Corp., according to S&P Capital IQ LCD. When the deal was shopped earlier this month, Altice expected to sell $6.3 billion of debt, investors said. A 10-year bond was priced to yield 10.875%, compared with yields as low as 9.75% that were suggested by bankers initially, according to S&P Capital IQ.
* Olin on Friday sold $1.2 billion of bonds to pay for its pending acquisition of Dow Chemical Co.’s chlorine-products unit. Earlier in the month, Olin was expected to sell $1.5 billion of bonds, fund managers and analysts said. The annual interest rate on Olin’s 10-year bonds sold Friday was 10%, up from 7% expected earlier in the month, according to S&P Capital IQ.
* Companies have announced $3.2 trillion of M&A this year, according to Dealogic, emboldened to merge by cheap debt and the long stock rally that began after the financial crisis. That puts 2015 on pace to rival 2007 as the biggest year ever for takeovers. Issuance of junk bonds backing M&A deals hit a year-to-date record of $77 billion through Friday, according to data from Dealogic.
* A souring of investors on junk bonds could limit the availability of financing for deals that require a lot of borrowing. Banks have been under pressure from federal regulators to reduce their loans to such companies, and a pinch in the bond market could leave those deals struggling for financing. (WSJ)
* After investors snapped up more than $37.5 billion of bonds issued by junk-rated energy companies in the first six months of 2015, just $5.9 billion has been raised since then, according to data compiled by Bloomberg. (Bloomberg)
* Junk-bond investors are bracing for a surge in corporate defaults that would exceed the most pessimistic forecast from credit raters as the Federal Reserve contemplates its first interest-rate increase since 2006.
* A measure of distress in the market is suggesting investors have priced in a default rate of 4.8 percent during the next 12 months, according to Martin Fridson, a money manager at Lehmann Livian Fridson Advisors LLC. That’s almost two percentage points higher than the pace being projected for June next year by Standard & Poor’s, the world’s biggest credit rater, as concern mounts that energy companies that loaded up on cheap debt are going to struggle to refinance. “Unless there is a miraculous turnaround in oil prices there is likely to be a lot of defaults,” Fridson said. “The rating agencies’ approach isn’t capturing the fact that a large part of the economy is far out of step with the overall picture of the mark” (Bloomberg)
* On HY fair valuation from Martin Fridson this week: Now that the sector has sold off sharply, it’s finally at fair value, finds Fridson, chief investment officer at Lehmann Livian Fridson Advisors. He uses a model that includes current economic and market conditions to judge valuations. (Barrons)
* Note that fair value can move to significantly undervalued as happened in 1991, 2002 and 2008. Recessions are a bear (no pun intended).
* The S&P U.S. High-Yield Corporate Bond Index posted a yield to maturity of 7.51% on Tuesday, up from a recent low of 6.21% in late February. Morningstar data shows that the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has lost 3.6% in the past six months.

Remain tactical with your HY exposure. We are seeing liquidity issues in the market. [...] Corrections create the next great opportunity. As prices decline, yields move higher. Defaults are only a bad thing if you sit on the bus as it falls over the ledge. It will be higher defaults and declining prices and higher yields that will bring us returns like those achieved after the prior crisis.
@AndyJ @Edmond
Well, I hope you two get your signals straight this year about who is going to send the memo re. positive "Oct-Dec seasonality." Last year, Q4, Mr. Junk Bond Market didn't get it. :)

FYI: Investors and fund companies should brace themselves for a blizzard of new mutual-fund rules.
Regards,
Ted
http://www.wsj.com/articles/the-new-mutual-fund-rules-what-you-need-to-know-1444010541

FYI: The tremendous volatility in the third quarter—the worst three-month period that stocks have experienced since the same period in 2011—was bad news for many previously highflying mutual funds.
Regards,
Ted
http://www.wsj.com/articles/a-tortoise-wins-the-stock-fund-race-1444012054
M* Snapshot POLRX: http://www.morningstar.com/funds/XNAS/POLRX/quote.html

I own DLFNX since Sept, 2012. $50 BILLION AUM in DBLTX. That fund oughta be closed. With so much in there, he's driving the market, not investing in it. $50B is nuts. This thread caused me to look once again at the portfolio. DLFNX is 47% in AAA-rated stuff. If I was aiming for a not very risky solid, reliable, tame fund, I guess I found it.
Signed,
----The MFO resident Rank Amateur.

This interesting 'survey' might be of interest:
https://www.washingtonpost.com/posteverything/wp/2015/10/02/are-there-any-economic-indicators-pointing-towards-the-need-for-a-fed-rate-hike-some-of-my-econ-pals-weigh-in/

Why no love for HYLD? 10% yield.

At first glance, I was skeptical of the article. --- And I find the writer very self-serving in only interviewing high-yield managers -- what are they gonna say but "great time to buy". The writer COULD have interviewed some go-anywhere bond managers to see if THEY think there is value in junk. But he didn't do that. Very amateurish.
That said, junk has a general seasonal tendency to do well from early Oct through December. Moreover, the sectors of greatest concern in junk, energy & materials/mining, have had their problems well-advertised. If capital markets function in a manner to anticipate and discount future probabilities & outcomes, then presumably, energy and materials/mining obligations have realized the lion's share of their declines. IF the declines in those sectors is largely complete, then the risk of widening spreads for junk may be minimal. -- Keep in mind, while Carl Icahn recently expressed concerns about junk generally, he has a major equity position, recently established in Freeport McMoran. Would he lay on such a position if he felt the commodities decline had a lot further to go...?
Then too, it looks like the lousy commodity pricing (which has harmed the prospects of energy and materials/mining), means no inflation to speak of, and "lower, longer" rates -- which would tend to be supportive of yieldy instruments like junk.
I've virtually nothing in dedicated junk-vehicles here. But I think I will lay on partial positions in the coming week in VWEHX (in IRA) and PHIYX (in 401k). -- Nothing too big at first. But if the seasonal strength begins to assert itself, I would then quickly add to the positions. -- The seasonals tend to pivot rather sharply in junk -- wait too long and you've missed the move.

"Thoughts and input/suggestions?"
Both are good funds, but I prefer DBLTX because it has a superior year-to-date, 1-year, and 3-year returns, while having a lower Standard Deviation.
Mona

Powershares (SPHD)
https://www.invesco.com/portal/site/us/investors/etfs/resources/tax-center
https://www.invesco.com/us/files/1099-workbook.xls
See Lines 693 - 704 of xls, appears to be qualified.
iShares (HDV)
http://www.ishares.com/us/library/tax
http://www.ishares.com/us/literature/tax-information/2014-qdi-summary.pdf
See page 3, ditto.

Thanks Ted,
Scattered among the debris was this..."Emerging-markets funds were hammered, plummeting 16.02%. “The commodity-producing emerging markets are right in the eye of the storm,” says MKM’s Darda. “But even the commodity-importing markets have started to roll over.” Ablin sees a potential long-term opportunity. “Emerging markets, as lousy as they’ve been, are trading at the biggest valuation discount to the U.S. that I’ve seen since 2002—which was a year that ushered in 10 years of outperformance.”

@Old_Skeet, If you examine the portfolio and compare both funds, there is sizable differences. Ms. Gaffney's fund has more risks in terms of credit quality (junk bonds and convertibles) and local currency (EM bonds). Both sub-sectors did not fared well this year.
In contrast, her former co-manager, Dan Fuss's Loomis Sayles bond fund is down this year too, but at half of the loss of EVBAX. In one of the recent interview Dan Fuss started to shorten the duration of bond exposure. Given the size of his funds (NEFZX and LSBRX), it would be difficult to make the changes quickly, especially when the junk bonds are thinly traded without depressing the prices more. Noted that he had similar problem back in 2008 when there was no/few buyers for junk bonds. And they were marked down at closing as if they are in free fall. Nevertheless, the large foreign currency exposure is hurting both funds when USD is strong this year. Most of Loomis Sayles foreign exposures are Canada (13%), UK (2%), and Norway (2%), whereas Eaton Vance's exposure have both developed as well EM markets including Brazil (3%), Mexico (3%), and Columbia (3%). Local EM bond index is down double digits thus far this year.
Going forward I think bond funds will face sizable headwind in rising rate environment, thus it is important to pick skillful managers. I am disappointed with Kathleen Gaffney given that she has worked with Dan Fuss for quite a while.

@Sven
In going head to head Katleen Gaffney (EVBAX) vs. Dan Fuss (NEFZX) here are my findings for total return ... EVBAX ytd -13.79% and for 2014, 4.69% ... NEFZX ytd -7.62% and for 2014, 5.65%. Seems as though the additional risk Ms. Gaffney (EVBAX) has taken on thus far has been a detractor when compared to the results of Dan Fuss (NEFZX). I am going to keep NEFZX and most likely will pass on my repurchase of EVBAX anytime soon. I am thinking about opening a starter position in BAICX now that I have dialed the number of funds owned down to 45 form 52, that I once owned. I did this during my recent process of raising my cash allocation to about 25% and reducing my allocation to equities to about 50% while keeping my allocation to income at 20% and to other assets (as classified by M*) at 5%.
Skeet

Final amount $39.67...ugh!!!!
http://www.fpafunds.com/docs/fund-announcements/2015-09-div-distribution.pdf?sfvrsn=2

FYI: (Click On Article Title At Top Of Google Search)
The third quarter of 2015 started off well, but the volatility that followed was dramatic. Stock and bond funds, almost regardless of type, ended with a loss.
Regards,
Ted
https://www.google.com/#q=A+Bad+Quarter+for+Stock+and+Bond+Funds+barron's

FYI: (Click On Article Title At Top Of Google Search)
The sky is not falling for high-yield bonds. Eight funds and ETFs with yields ranging from 5.7% to 12.8%.
Regards,
Ted
https://www.google.com/#q=High-Yield+Bonds+Look+Attractive+barron's

As someone who (like so many here) studies the Commentary texts intensely, I am trying to fathom the extreme Leuthold valentine.
>> They’re an independent firm that produces financial research for institutional investors.
okay
>> They do unparalleled quantitative work deeply informed by historical studies that other firms simply don’t attempt.
Seriously, unparalleled?? Not just unsurpassed? Did you really mean to write that?
>> They write well and thoughtfully. x 2
Moreso than the best of the others who do so?
>> Quite beyond that, they put their research into practice through the Leuthold Core (LCORX) ...
k, who doesn't?
>> Core was a distinguished “world allocation” fund before the term existed. $10,000 entrusted to Leuthold in 1995 would have grown to $53,000 today (10/01/2015).
Lots of different managers were making decisions during those two decades, per M*, unless you are claiming Leuthold himself really ran the show, regardless of the group dynamics and inputs, until 2011, but also still, albeit mostly retired, that he has major say from jealousy-inducing Bar Harbor.
>> Over that same period, an investment in the Vanguard 500 Index Fund (VFINX) would have growth to $46,000 while the average tactical allocation manager would have managed to grow it to $26,000.
Not sure whether to go there, using many owned oranges. One would not want, over those two decades, to compare Core with FPACX or OAKBX; but are they tactical? One would not want to compare Core with FCNTX or FLPSX or PRBLX (management change here) or even GABEX, listed here since all equities (SP500) was mentioned.
>> All of which is to say, they’re not some ivory tower assemblage of perma-bears peddling esoteric strategies to the rubes.
All righty then.
>> The bottom line is that a cyclical bear began in August and it’s got a ways to go.
Huh. If they say so. Maybe they're right.
Whence this valentine and pitch ?