An essay in yesterday's Financial Times argues in favor of radically simplifying one's strategic asset allocation. It argues, at base, that unusual assets produce unusual returns only until they are discovered by the hoi polloi and the industry arbitrages away the exceptional gain. As a result, the real money is made by first movers and the real costs are borne by those of us who try to get in later.
Here's the core:

On average, research shows around 100 per cent of their total returns can be ascribed to their choice of policy benchmark [i.e., their strategic asset allocation], along with around 90 per cent of their return volatility. The outcomes of those judgments are often complex.
Jan Loeys, JPMorgan’s veteran asset allocation guru, says in a recent client note that this complexity is both pointless and counterproductive. Pointless, because investors need only two assets: a global equity one and a local bond one, with the relative amounts driven by their ability to withstand short-term drawdowns and return needs. (Less is more when it comes to strategic asset allocation," FT.com, 10/17/2023)

The FT allows subscribers to share a limited number of articles with non-subscribers, so that link should work for folks who want to look at the argument but don't have an FT account.
David

BTW, the expected yield on the 20-year Treasury bond auction today is 5.156%

Many investors think that the 20-year is a good buy now. 20 years of 5% interest will work for many folks. But once interest rates start declining you will make a nice CG on the bonds you own. Any kind of market timing is difficult. If one doesn't hit the highest yield, 5% is still great and most likely will be great a few years from now.

All of the Primecap Odyssey funds, which are in multi-year outflow mode, are distributing over 5%. (Looks like the Growth fund is doling out almost 12%, which comes on top of bottom quartile 5-yr. relative performance in its category, so no surprise people are exiting.)

@TheShadow has an annual thread on fund distribution links.
This thread is to note mutual funds/OEFs that have outrageously high yearend distributions. Culprits are high outflows and/or recent manager changes (new managers want to start with fresh portfolios for their tenure).
This problem isn't significant for ETFs, but those too can have notable CG distributions when there are heavy outflows (their advantage of "in-kind trading without tax impact" basically runs out). Vanguard's dual OEF and ETF class structure also bites because both VG OEFs and VG ETFs have identical CG distributions (as % of prices).
M* RK has noted 3, https://www.morningstar.com/funds/3-funds-whose-tax-bills-might-tick-up
AKREX, outflow 9.2% of AUM
VPMAX, outflow 6.8% of AUM
DHSCX, outflows and manager change, 03/2023 (from the link at @TheShadow, est 21.65%!)
Too early for the amounts of CG distributions.
Posters should add more as they learn about large ( > 5%) yearend CG distributions.

from the great John Waggoner
The S&P500 quarterly income tax rate for Q2 2023 was 18.81%, down from the Q1 2023 20.20% rate, down from the Q2 2022 20.05%, significantly lower than the pre-Tax Cuts and Jobs Act of 2017's Q2 2013 29.53% (10 years ago), and 48% lower than the Q2 1998 35.84% rate (25 years ago).
Good thing they're passing those savings on to their customers!

@Yogibearbull - Thanks for clarifying. Guess I’ll have to sell it than! For years I’ve been under the false impression it was a bond fund. Actually, not knowing what I’m doing sometimes works better than when I know what I’m doing.
Yes, M* shows CVSIX to have only a small weighting in bonds. Looks like 15-20% on their pie chart. However, Lipper puts the bond holdings somewhat higher at 46%. Bonds & cash combined come out to 65-70%.
ALLOCATION (CVSIX)
Bonds 45.94%
Stocks 34.79%
Cash 21.56%
Other -2.29%
(Figures from MarketWatch / Lipper)

Is CVSIX a bond fund? I think so. It’s up 7.1% YTD, 9.44% for 1 year, and has a 5 year annualized return of 3.38%, which compares favorably to cash over that period. Not all “bond funds” are equal.
(Numbers from M*)

I’m not trying to convince anyone to buy CDs and Treasuries, just trying to wrap my head around investing in them. For most of my investing history, cash investments have yielded next to nothing. Treasuries and short term bonds fared little better.
Many financial planners and experts say you can safely withdraw about 4% a year from a portfolio in retirement. I am unlikely to live 20 or more years, based on my family history, although my wife could. So, if I can buy a 20-year Treasury yielding 5.15%, that will pay more than my income needs for longer than my expected life span, what’s not to like? I have no intention in putting all of my portfolio in Treasuries, just a portion that would make up the long portion of a ladder.
I’m trying to decide whether to convert more of my bond funds into Treasuries. My bond funds are currently yielding close to 6% but continue to lose value. I know that at some point they will start increasing in value again, and selling now will lock in my losses, so I don’t plan to totally abandon them. But I no longer view them as low-risk investments to anchor my portfolio. I also plan to continue holding 40-60% of my portfolio in stock funds.
So, if I buy a 20-year Treasury that pays dividends semiannually, is that income compounded, or simply paid out in cash every 6 months? So far, the Treasuries I’ve bought are all zero-coupons that you buy at a discount and mature at full cash value. I haven’t bought any 5-year or longer Treasuries, so I don’t understand if the interest is compounded or simply paid out at regular intervals.

Asset class returns to 2023/Q3. Twitter LINK
Image Link https://pbs.twimg.com/media/F8uTaYrXoAAPtZB?format=jpg&name=large

2021-23 will go down the history as the WORST period for bonds. Investors and organizations (M*, etc) that have gone exclusively with bond FUNDs only for all times have done poorly. But those who have also used other fixed-income tools have done better - individual Treasuries, CDs, ladders, stable-value (in retirement plans); m-mkt funds too since mid-2022.
The media is NOW saying that these are the best times to get into bonds. But many investors don't trust that.
Here is a chart showing Treasuries, core, core-plus and multisector bond funds (beneficiaries of HY); default is 1-yr, but can change timeframes to 2, 3 or other years.
https://stockcharts.com/h-perf/ui?s=IEF&compare=BND,FBND,PIMIX&id=p36003419830

BTW, the expected yield on the 20-year Treasury bond auction today is 5.156%

I track a number of bond funds on the soon-to-be extinct M* portfolio manager. These are all funds that were highly ranked with good returns in their various categories. Very few of these funds have achieved 5% returns over the past 15 years, and few hit 3% over the past 10 years. The average returns among various short and intermediate bond funds was 1.1% over 5 years, 1.56% over 10 years, and 3.79% over 15 years. Multi-sector bond funds fared slightly better — 1.3% over 5 years, 2.65% over 10 years, and 5.93% over 15 years. The best performing bond funds were high-yield or junk — 2.78% over 5 years, 3.58% over 10 years, and 7.06% over 15 years.
Here is my question: why bother with bond funds when you can currently lock CDs and Treasuries with yields above or approaching 5% over the next 3, 5, 10 and 20 years? I have sold a number of bond funds this year to set up CD and Treasury ladders extending out 5 years. However, I still maintain substantial holdings in several bond funds with good long term returns (but terrible returns over the past 5 years), in hopes that their future returns will rebound when yields finally stabilize or fall. Plus, selling now would just lock in my losses.
I’ll be 70 years old in January. I might not be alive in 10 years, or the time it takes for bond funds to recoup their losses. It’s different with stock funds because it’s not unusual for them to post large gains after bear markets and corrections. But bond funds? Do they ever have big years that make up for the terrible losses they’ve incurred over the past 2-3 years?

What's the connection? Is the cheapest quintile requirement intended to bias the selection toward Vanguard, American Funds, D&C (not one of the three firms totaling 18 funds on the list), and Baird? If so, is it also intended to bias against Fidelity and T. Rowe Price? As Kinnel wrote in his 2019 edition, these families tend to have funds with ERs just outside the lowest quintile.
I do think that requiring an analyst rating is a bit hokey. Especially since this builds in an unnecessary bias toward larger firms (the ones M* covers). And it's prospective which makes it less than objective.
M* is nevertheless rational in covering primarily larger firms: that's where the investor money is. 98% of money invested goes into the 150 largest firms.
Aside from a few analyst rating criteria, the other screens used - like ER, manager longevity (at least five years), and so on - are objective. Are there particular criteria you feel are intentionally biased or have other problems?
For example, comparing a manager's performance with a benchmark sounds good, until one realizes that there are some periods when most funds in a given category beat their benchmark. Wouldn't it make more sense to require a fund to best both its benchmark and its category average performance?
That would knock out one of the few funds on the list from a smaller firm: MERDX. Meade and Schaub had a great record with Triton, but since they took over Meridian Growth in Sept 2013 (almost exactly 10 years ago), the have not set the world on fire. Sure, their 10 year record (as of Sept 30, 2023) of 7.43% annualized beat the M* benchmark of 6.88%, but it underperformed its category (returning 7.78%) and also underperformed the S&P 600 by about 0.05% cumulative over a decade, let alone the S&P 600 growth by about 1%/year on an annualized basis.
Kinnel has fudged the list in the past, e.g. removing PRFDX because the manager (Brian Rogers) was about to retire. So in the future the fund would no longer have a manager meeting the five year requirement.
Certainly he could have fudged his list here to remove MERDX because the fund beat a benchmark but not its category average and not a different category benchmark.
Which funds would you knock off the list of thrilling 30 and why? Or which funds would you add by relaxing which criteria? Independent of advertising dollars.

MOVEit lawsuits are moving very slowly through the MA court.
https://ybbpersonalfinance.proboards.com/post/1213/thread

As a follow up to the MoveIT etc breach, we have been hacked twice more since this summer. Our Utility was hacked with out info and an old employer of mine (2019) was hacked.
Both offered us two years of "IDEX" credit and email address monitoring, but when I called them, they said the only way they can monitor your credit accounts is without a credit freeze. So I am supposed to unfreeze my credit reports ( so I could become an identify theft victim? ) so these turkeys can monitor it and then tell me I was a victim of identity theft?
What a scam

Thrilling 30 has 18 funds from just 3 firms. Wonder how much $$$ Morningstar gets from them in ad dollars?

Link for the Quarterly call: Thursday 2 pm EST. for those who'd like to join.
https://info.crossingbridgefunds.com/fixed-income-market-update-10-23

The prices people actually pay
https://messaging-custom-newsletters.nytimes.com/dynamic/render?campaign_id=116&emc=edit_pk_20231017&first_send=0&instance_id=105431&nl=paul-krugman&paid_regi=1&productCode=PK&regi_id=22268089&segment_id=147573&te=1&user_id=83d45440ead1d14c2a89a1e7221337d1&uri=nyt://newsletter/4e6687ad-ec48-5b2d-9317-d1fb5847a915

+1 @Devo

Good question. I had a nice talk with Carl Kaufman, their CIO and co- CEO today. They're celebrating their 40th year in business and have been thinking a bit about what it will take to have 40 more. Some of the recent moves might be tied to that reflection.
The short version is that Osterweis has internal benchmarks and expectations for their strategies. For Total Return in particular, the expectation was that the strategy would be able to seriously outperform a broad Bar Cap Agg strategy in turbulent markets. 2022 was "eye-opening," since the hope was for much smaller losses than the market and maybe even a gain. As it turns out, the performance was purely mediocre. In addition, investors weren't beating on the doors to get it.
So Osterweis made a painful and principled decision: "I've been reading the book Quit: The Power of Knowing When to Walk Away lately. In 2012, we shut our hedge funds. Like them, this strategy had the promise, not the performance. It was time to react to reality. They're a really great team, but it is what it is and we did what we had to."
He observed that the Zeo case was sort of parallel, which is what led to the same decision there.
It struck me as principled and thoughtful, for what that's worth.