FYI:
Regards,
Ted
http://www.bloomberg.com/news/articles/2016-08-23/the-absurd-fight-over-fund-documents-you-probably-don-t-read

The story is a little more complex, as there are also the rapidly growing number of actively managed (by methodology) funds/ETFs, such as those offered by DFA, WisdomTree, PowerShares and others, as well as the assortment of quality factor and volatility factor ETFs.
The common investor has come to the conclusion that investment expenses matter, and after-expense performance matters more. If an actively managed fund is not consistently outperforming (after expenses) its reference index, then it should experience a net outflow of assets. And if its assets decline sufficiently, it should cease to operate. It is in fact a jungle out there, and there is no safe space or concern for hurt feelings in the investment jungle.
I agree with MJG that there will always be folks who think that they can beat the market -- such as hedge funds, self-proclaimed "smarter than the average" investors, and poorly informed investors who "trust" financial advisors who state that they can beat the market.
In general, objective data indicates that the default investment should be passive rather than active. That being stated, one must always respect the data, specifically SPIVA (S&P Indices vs. Active):
SPIVA 7/21/16
As this document illustrates, investors should favor actively managed funds only in Real Estate (Domestic Equities), International Small Cap (International Equities), and a small number of sectors within Fixed Income (Munis, Loan Participation, MBS, and Short/Intermediate IG bonds). The data indicates that investors should go passive for all other asset classes.
Kevin

I received a capital gains distribution of of $17.24 per share on June 6. I wonder what the end of year distribution will look like?

I remember that we had this discussion some years ago... might even have been on FundAlarm. But I still don't fully understand the mechanism: Is it accurate to say that if 40% of the equity market is now indexed (passive), then the remaining 60% is active?
And if that's true, what happens when we get to 51% indexed vs 49% active? Would that mean that a "minority" of active investors would then be determining the market?
And if that's true, what is the ongoing situation as the active share decreases further? More and more "influence" from fewer and fewer investors?

Hi Guys,
I don't worry this issue. Yes, in the recent past Indexing has attracted investor attention and money. According to Morningstar, equity Index products are 40% and bond Index products are 25% of the marketplace. Those numbers have grown substantially in the last decade.
But there will always be folks who believe they can better the Index benchmark. That's the nature of most investors; average is just not good enough.
The statistics tell the real story. Over any 10-year period, only about 25% of actively managed funds outdistance their benchmark, and the inhabitants of that select group change often. It's hard to pick individual active fund winners. Those stats decrease even more when a portfolio is assembled. Studies suggest that a passive portfolio outperforms an active equivalent portfolio over the long haul roughly 80% to 90% of the time. It's statistically easier to pick 1 winning active fund manager than picking a group of 4 or 5 such managers.
Active fund managers need to upgrade their game performance by a significant amount if they want to survive. Private investors are becoming more familiar with the disappointing active fund manager output. These guys are smart enough, but there are too many currently competing to neutralize each other, and they can't overcome their cost burden. It's a heavy load.
Active fund managers will survive, and so will we as we get smarter. Costs matter greatly.
Best Wishes.

The key is the reference to taxable investors. The fact that they are reopening suggests a lot of people getting out of the fund. At the minimum don't buy before 2017 as a taxable investor and i think 2018 would be better

FYI: The rise of passive asset management threatens to fundamentally undermine the entire system of capitalism and market mechanisms that facilitate an increase in the general welfare, according to analysts at research and brokerage firm Sanford C. Bernstein & Co., LLC.
In a note titled "The Silent Road to Serfdom: Why Passive Investing is Worse Than Marxism," a team led by Head of Global Quantitative and European Equity Strategy Inigo Fraser-Jenkins, says that politicians and regulators need to be cognizant of the social case for active management in the investment industry
Regards,
Ted
http://www.bloomberg.com//news/articles/2016-08-23/bernstein-passive-investing-is-worse-for-society-than-marxism

You know this about perma-inflation Singer, right?

Ah, so he was the one; I was telling someone about the terrible Hamptons r/e inflation the other day and couldn't remember what caricature of a clueless zillionaire had said it.

Yes, but that article was two years ago. These days the Hamptons are so déclassé that Starbucks even has a mug for them:

The Hamptons Housing Market Is Getting Clobbered by Wall Street Jitters:
http://www.vanityfair.com/news/2016/04/hamptons-housing-market-wall-street

REXX is a play, solvent and productive but extremely cheap, 61 cents or so, but it may take awhile, esp if NG pricing goes even lower. I am thinking the downside is nearly nonexistent.

@johnN
Have you a suggestion for such an investment? What oil vehicles?
Already bottomed probably already arrived more than 6 months ago, eh?

http://www.marketwatch.com/story/not-even-opec-can-save-the-struggling-oil-market-now-goldman-says-2016-08-23
Libya, Iraq and Nigeria — which all have suffered from severe supply disruptions — last week started to show the first signs of ramping up production, seen as halting oil’s nascent recovery, according to the bank.

FYI: Demand for exposure to emerging markets has been on the rise in recent months, and one fund that has captured a lot of that interest is a fixed-income ETF, the iShares JP Morgan USD Emerging Markets Bond ETF (EMB).
So far in 2016, EMB has raked in $4.35 billion in net assets—huge inflows for a fund that has $9.7 billion in total assets today. EMB was the fifth-most-popular ETF in July based on creations, and is ranked among the 10 biggest creations we’ve seen year-to-date.
Regards,
Ted
http://www.etf.com/sections/features-and-news/emb-years-hot-emerging-market-bond-etf

Bloomberg should tell the truth. Retail prime funds are indeed affected by the new rules, as has been extensively discussed here - gating and fees on redemptions. Nor were institutional investors under any delusion about the possibility of losses in MMFs.
That said, MMFs have been deceiving people, but not in the way Bloomberg describes. Rather, many would have broken a buck, but for hidden intervention by the fund sponsors (fund families). They made cash infusions to prop up the funds. Reserve Fund failed because its sponsor was a relatively small company without the deep pockets of a Fidelity or a Vanguard to bail it out.
The Fed calls this "non-contactual support". It observes that "Such support, which has served to obscure the credit risk taken by these funds, has been a common occurrence over the history of MMMFs."
So common that Moodys identified 146 funds that were propped up prior to 2007 when all hell broke loose.
Aside from Reserve Fund, the only other fund to have broken a buck was The Community Bankers US Government Fund in 1994. What I find interesting is that this was an institutional government fund - the type of fund that the new SEC rules don't alter. Government funds are allowed to hold a constant NAV and not impose any gating or fees on redemptions.

The embedded article by Scott Opsal is a good read that spans several financial cycles from 1991.

FYI: The legal jargon about past performance not being indicative of future returns might need to be tweaked to suggest that past performance could be indicative of future underperformance.
New research from S&P Global Market Intelligence and S&P Dow Jones Indices shows that outperformance of an actively managed fund could lead to underperformance because of what it takes to beat a benchmark
Regards,
Ted
http://www.investmentnews.com/article/20160822/FREE/160829992?template=printart

FYI: New rules aimed at strengthening one of America’s most popular savings products -- the money-market mutual fund -- are causing a minor tempest in financial markets, drawing complaints about unintended consequences.
Actually, where they’ve been applied, the rules are working as they should. To avoid the unintended consequences, they need to be applied more comprehensively.
Regards,
Ted
https://www.bloomberg.com/view/articles/2016-08-22/money-market-mutual-funds-should-tell-the-truth

Graphed against FLPSX it certainly has hit its stride the last 3/2/1y and shorter.

https://www.sec.gov/Archives/edgar/data/89043/000091957416015083/d7240544_497.htm
497 1 d7240544_497.htm
SEQUOIA FUND, INC.
Supplement dated August 22, 2016
to the Prospectus dated April 29, 2016
At a recent meeting, the Board of Directors of Sequoia Fund, Inc. (the "Fund") considered and approved offering the Fund's shares to all new investors, including those seeking to purchase shares of the Fund through financial intermediaries with which the Fund has agreements. Effective August 23, 2016, the Fund will begin accepting orders for the purchase of Fund shares from all new investors. At that time, Fund shares will be available for purchase as described in the section of the prospectus titled "Purchase and Sale of Shares" as amended by this supplement.
Accordingly, the first paragraph under the heading "Purchase and Sale of Fund Shares" on page 4 of the Prospectus is deleted in its entirety, and the first paragraph under the heading "How to Buy Shares" on page 7 of the Prospectus is deleted in its entirety.
In addition, the fourth paragraph under the heading "How to Buy Shares" on page 7 of the Prospectus is deleted in its entirety and replaced with the following:
Important Note to New Taxable Investors: As of August 16, 2016, the net unrealized appreciation of the Fund's portfolio was approximately 50.4% of the Fund's net assets. If the Fund sells appreciated securities and distributes the profit, the distributed appreciation will be taxable to you either as capital gains or as ordinary income, depending upon how long the Fund held the appreciated securities. You should carefully consider the potential tax effects prior to making an investment in the Fund.
* * * *
YOU SHOULD RETAIN THIS SUPPLEMENT WITH YOUR PROSPECTUS
FOR FUTURE REFERENCE.

BlackRock Upgrades Outlook for Emerging Market Stocks
http://www.reuters.com/article/us-blackrock-outlook-emerging-idUSKCN10X1JX

Just sad.
http://www.reuters.com/article/us-doublelinecapital-baha-idUSKCN10X0AE

FYI: Emerging market has been on a comeback of sorts this year, but advisers urge caution and remind clients to think long term.
Regards,
Ted
http://www.investmentnews.com/article/20160821/FREE/160819915?template=printart