FYI: (This is a follow-up article)
Brokerages will need to proceed carefully in their plans to shift many of their retirement savers to flat-fee investment accounts.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2016/04/11/wealth-adviser-daily-briefing-brokerages-need-to-tread-carefully-in-fee-push/

FYI: (This is a follow-up article)
Meanwhile, the industry's biggest threat, ETFs, are chugging along offering a single-version product to all investors
Regards,
Ted
http://www.investmentnews.com/article/20160410/FREE/304109996?template=printart

FYI: Bloomberg's Eric Balchunas reports on mutual funds fees versus cheap ETF.
Regards,
Ted
http://www.bloomberg.com/news/videos/2016-04-08/why-is-fee-shaming-such-a-hot-topic

Like others, I was surprised to see the Sequoia prospectus excerpt that David S posted. Not so much because it warned to expect redemption in kind (which is exceedingly unusual), but simply because it gave rules - over $250k in 90 days.
Yet (keeping @ducrow in mind), the first fund I checked was OAKBX, that had somewhat similar language:

Each Fund is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of the Fund’s NAV during any 90-day period for any one shareholder. Redemptions in excess of those amounts will normally be paid in cash, but may be paid wholly or partly by a distribution in kind of securities.

The main difference is highlighted - Oakmark doesn't expect to redeem in kind, even if you exceed the $250K limit.
But pro-rata? I too thought that was almost everywhere. Yet it's not in Oakmark, and it's not in the next family I checked, Vanguard. No pro-rata qualification in the in-kind section, at least in Primecap's prospectus.
Regardless of whether an in-kind redemption is pro-rata or not, the fund comes out a tiny bit better when it redeems in-kind. It gives the shares to the investor at full price (no market movement), and the investor gets less than 100% value as the sales push the price down.
That market movement affects the fund's remaining securities also. If the redemption is pro-rata, the percentage impact on the fund's NAV will be the same as if it had sold the shares itself.
But suppose the fund has a really volatile, poor performing stock that it unloads on all the redeeming shareholders. Now it has eliminated (or reduced) its position in that one stock. So it no longer cares how the market moves as those shares are sold off by the individual investors.
For this reason it seems that funds would be better off dumping their dogs when redeeming in-kind, rather than redeeming pro-rata. Unless the prospectus explicitly requires pro-rata redemptions.

Well, it would help to have a more current print on asset allocation to better understand what is going on. As of 12/31/15, the equity sleeve was rather concentrated in only 46 holdings (and with $17B in AUM suggests big position and a not-so-nimble ability to move on a dime). The fund also showed 20% in cash. With the bonds being so conservative and short in duration, I don't know what kind of yield you'd expect from the fund, beyond what you're getting.
http://www.oakmark.com/Our-Funds/Overview/Equity-Income.htm
Unless this fund changes its long-standing modus operandi, I can't envision anything but underperformance for the foreseeable future. The fund just isn't structured for anything else, IMO.

It is odd to me that Amey Stone would recommend (indirectly, via one of her blog's commenters) CEF munis that are about to be merged into another fund, which after all the fusions will have a different investing mandate. This imminent change is noted not only in the article itself, but also in another article she posted just one day earlier:
http://blogs.barrons.com/incomeinvesting/2016/04/08/nuveens-closed-end-muni-fund-mergers-near-completion/
It is as if she thinks multiple fund mergers/consolidations should be considered by investors as a non-event, amounting to nothing much. That hasn't been my experience. Sometimes they don't, but sometimes they do, in a very significant way. And if they do in this case, and the tide goes out..... well, you could be stuck in a suddenly very illiquid investment.

OAKBX's great returns -- a drop off after Ed left?
I have held OAKBX fund for 10+ years, even after Ed's departure because of my respect for the firm.
At the same time, it's worth noting, their international small cap fund (OAKEX, which I also hold) has been lackluster for much longer than OAKBX. So, maybe I should be paying more attention to that?
PRWCX gets a lot of props here and in the press. But if I recall correctly (my wife owns it, I do not), it's closed. MAPOX -- kind of a flip side of OAKBX, I seem to recall: great recent numbers, but more lackluster longer term. VBINX has never impressed me and had long periods when it was easily beaten by any number of balanced funds.

@hank
You noted: " the investment grade universe today more closely resembles Disneyland than a serious investment option. (Returns on a 10 year Treasury held to maturity should net the owner about 1.5% per year after expenses. Sound attractive?)"
>>>Held to maturity are the key words.....
Yes, 1.6 % or so held to maturity and assuming no changes along the 10 year journey is not much of a return. Tis why folks trade bonds, not unlike equity stuff of all flavors.
Now, not unlike equity(s); the capital appreciation is with the "price", yes?
Much of the IG bond area is running +3% so far this year................that gain such as heck has nothing to do with yield (if it were static). The longer term IG is +10% and greater.
Forget the yield with the bond, except as a reference to where the bond(s) price is parked at the moment.
Bond yield is of value and can have a straight line method of a calculation for the yield only and the money value, in the perfect world of "static". I don't find any static in today's world of money.
Now if bond fund "x" is on the ball with all of this, they are likely buying bonds based more upon pricing versus yield. That is how the capital appreciation will be had, and won't be reflected with whatever a fund states is the "current yield".
I would be more concerned with a fund (holding IG bonds) shows a high average yield. With the proper circumstances, perhaps it is time for the fund to sell away some of the bonds, as the price may be eroding.
Not unlike HY bonds purchased in early 2009 and one stating at a page indicating a yield of 20% or more. Geez, one would like that all day long, eh? But, that yield came from the price being beat to hell in the prior 6 months. I wanted the price appreciation that would evolve from the "bail out" that would help smooth the pain and fear in the markets.
Nuff said by this"WhatsAMatter U" masters program graduate, in theoretical economics.
Take care,
Catch

Thanks Ted
for the link to usnews.com/funds/mutual-funds/rankings/moderate-allocation --
Of Interest, fpacx is # 31 on their List !!

@ducrow & MFO Members:: Here's the problem with OAKBX and it's performance: Very long-term 10-15 years excellent, medium term 3-5 years below par, recent term YTD- 1 year horrible.
Regards,
Ted
Years: Percentile Rank:
15 2
10 12
5 58
3 35
1 89
YTD 91

I can't believe how terribly late to the party Barron is, muni CEFs are trading with a one year z-score of 2-3.... if this article leads to another jump, i'll be a seller.
"As munis have climbed in value, yields have fallen. The average high-rated intermediate term municipal bond yields just 1.6%. After-tax, that’s still way better than a 10-year Treasury, but not a lot of income.
One solution to the income dilemma is to buy a closed-end muni fund. Because many of them use leverage (borrowing short-term to buy longer-term bonds) they average 5% yields. The funds typically trade at discounts to net asset value, but those have narrowed substantially in the past year, boosting returns. The average total return in this niche is 11% over the last 12 months, reports Morningstar."
google search results here

right, 'pro-rata' basis is more common, if such language exists.
there are a couple of fund families without such language.
in kind distribution, similar to creation of a side-pocket, is an admission by the fund sponsor that they had failed. no one forgives this. several hedge funds did survive the side pockets -- very large ones such as Citadel, but Highbridge and others folded. for a mutual fund it is a kiss of death. that is why even having this language in the documents the management companies would do anything possible to avoid the process.
it seems that sequoia is moving to orderly liquidate the fund -- hence an attempt to protect the remaining shareholders.

Fundalarm said: "I am amazed their mutual fund had such language ... i went though many act 40 prospectuses and haven't seen such disclosure ..."
From Full Prospectus for Oppenheimer Capital Appreciation Fund (page 16):
Redemptions “In-Kind.” Shares may be “redeemed in-kind” under certain circumstances (such as a lack of liquidity in the Fund’s portfolio to meet redemptions). That means that the redemption proceeds will be paid in securities from the Fund’s portfolio on a pro-rata basis, possibly including illiquid securities. If the Fund redeems your shares in-kind, you may bear transaction costs and will bear market risks until such securities are converted into cash.
Haven't checked, but I'm pretty sure this is standard boilerplate for all their funds.
https://www.oppenheimerfunds.com/investors/doc/Capital_Appreciation_Fund_Full_Prospectus.pdf?dig_asset_metrics=done

@ducrow,
GM is the fund's largest holding (at just over 4%). GM's down nearly 15% over the past year. They've only recently (past 3 years) acquired GM - sensing deep value. Either the bet pays off or it's a classic value-trap. Oakmark is known to dump companies when they feel they've made a mistake - so I suppose that's a third possibility. Lipper places the fund in its "mixed equity" category and gives it a 5 (highest) for category performance, but only a 3 (average) for consistent performance . So much of this ratings game depends on the category one places a fund in. Looks like the fund averaged about 6% over past 3, 5 and 10-year periods.
Haven't paid much attention to their fixed income holdings lately. The fund has never played much in the junk bond area (where there may still be value). It's just not their game. And (IMHO) the investment grade universe today more closely resembles Disneyland than a serious investment option. (Returns on a 10 year Treasury held to maturity should net the owner about 1.5% per year after expenses. Sound attractive?) So, most likely, the fund has gone very short on its fixed income component (around 35%) which helps explain the low returns for fixed. To them, in the current environment, fixed income is more of a defensive holding than a way to generate return.
I've owned OAKBX for close to 15 years* (currently 9-10% of holdings). No plans to do anything - just not my nature. But can understand others' concerns. Am sure you'll find better performers on the chart Ted linked. As for this fund "getting crushed" anytime soon ... don't hold your breath waiting. :)
*Temporarily moved all of it to their more aggressive OAKGX for 1-2 years starting in early '09.

1.11% yield but calls itself an income fund....never made sense to me.

Fundalarm said: "I am amazed their mutual fund had such language ... i went though many act 40 prospectuses and haven't seen such disclosure ..."
From Full Prospectus for Oppenheimer Capital Appreciation Fund (page 16):
Redemptions “In-Kind.” Shares may be “redeemed in-kind” under certain circumstances (such as a lack of liquidity in the Fund’s portfolio to meet redemptions). That means that the redemption proceeds will be paid in securities from the Fund’s portfolio on a pro-rata basis, possibly including illiquid securities. If the Fund redeems your shares in-kind, you may bear transaction costs and will bear market risks until such securities are converted into cash.
Haven't checked, but I'm pretty sure this is standard boilerplate for all their funds.
https://www.oppenheimerfunds.com/investors/doc/Capital_Appreciation_Fund_Full_Prospectus.pdf?dig_asset_metrics=done

Here are some Muni C E F's with current Premium/
Discounts to nav ( Pricey ?)
NUW + 2.34
NMZ +1.29
OIA -0.26
NBH +1.04
Good spots for further research.
Nuveen Tax-Exempt Municipal Debt - National Municipals
http://www.nuveen.com/CEF/DailyPricingTaxExempt.aspx
Source for C E F reseach
http://www.cefconnect.com
I have OIA on my watch list and own @fundalarm mentioned BGH
From Bill Gross
In a world of barely visible interest rates, it pays to borrow, rather than invest, Bill Gross tells Barron's. One way to do that is are closed-end funds which borrow and lever assets 35-50%, and his fund,:JUCAX, has 8-9% of its money in CEFs trading at a discount to NAV. Two favorites are the Nuveen Preferred Income Opportunities fund (NYSE:JPC) and the Duff & Phelps Global Utility Income fund (NYSE:DPG). (These two are not muni's)
http://seekingalpha.com/news/3172321-bill-gross-let-others-borrow
Mr Gundlach has also mentioned C E F's in recent commentaries as viable income producers in the current investment environment.
Speaking of Mr Gundlach,maybe he'll be clear on his outlook for High Yield and other financial assets in the coming week.Usually fun to listen to in this format.

Asset Allocation Webcast
Please join us for a live webcast titled "Asset Allocation Webcast" hosted by:
Jeffrey Gundlach
Mr. Gundlach will be discussing the economy, the markets and his outlook for what he believes may be the best investment strategies and sector allocations for the DoubleLine Core Fixed Income Fund (DBLFX/DLFNX) and Flexible Income Fund (DFLEX/DLINX).
Tuesday, April 12, 2016
1:15 pm PT/4:15 pm ET /3:15 CT
Register here
https://event.webcasts.com/starthere.jsp?ei=1085514

Wow! I just took a look at NHMAX it has matched its previous all time high of 17.51
http://finance.yahoo.com/echarts?s=NHMAX+Interactive#{"range":"5y","allowChartStacking":true}

Good stuff, but imho, the videos have gotten a little repetitive. Nowadays I'm finding the portfolio reviews more informative; most of the newer material he covers in the videos seems to be also in the reviews, and it doesn't take 15 minutes to read the reviews. Again, just mho - not saying he isn't still doing a great job communicating.

Jerry's correct above. And I won't argue that Sequoia management screwed up royally in managing their fund.
But here's the crux of the WSJ article:
"Sequoia’s repayment approach, called a “redemption in kind,” is part of a longstanding fund policy that allows it to give shareholders mostly stock if they are pulling out $250,000 or more. A person close to the firm said it has done thousands of in-kind transactions over many years and that the majority are done for redemptions in excess of $1 million."
If Sequoia failed to disclose RIK in its Prospectus that's a serious legal matter. In all likelihood it was mentioned. I've seen similar language in many prospectuses for my funds. It's not uncommon. Bottom line: Read and understand your Prospectus before you invest.
Additionally ... How many on this board will ever have occasion to pull a quarter-million dollars from one fund all at once (which is what triggered the RIK in this case)?
WSJ fails to address Mr. Bently's age and circumstance. Sequoia's annual/semi-annual reports should have revealed to him that Sequoia was concentrated in only a dozen or so securities. Ed S. addresses this issue in David's April 1 Commentary. In a nutshell: Potential rewards are high with a concentrated portfolio. So are the risks. If I'm reading Ed correctly, he has serious reservations concerning the suitability of highly concentrated portfolios for retirees.
msf has a good thread running on the topic of disclosure. Personally, I'm often guilty of clicking on "Accept these terms" without due diligence whenever Apple, Amazon or PayPal update their terms of use (not smart I know). But I love reading financial literature and so very much enjoy reading over prospectuses and reports for the funds I own. (And don't like the dumbed-down "summary" prospectuses either.)

FYI: (Click On Article At Top Of Google Search)
Home, they say, is where you make it. For Bill Gross, 71, manager of the Janus Global Unconstrained Bond fund, home these days is a small suite in an office tower in Newport Beach, Calif., down the road from Pacific Investment Management, or Pimco, the asset-management firm he co-founded in 1971 and ran until leaving abruptly in 2014, following a few years of poor investment results and an ugly management spat.
Regards,
Ted
https://www.google.com/#q=Bill+Gross:+Why+Interest+Rates+Must+Rise+Barron's