@sfnative Elaborate. State the manifold reasons in your view. They're worthy of discussion. If it's falling interest rates, that's done. If it's attractive valuations, gone too. If it's America's economic dominance, that is up for grabs. Maybe, maybe not. There is one reason, though, I can think of that is very important and still valid--the constant need to make the rich and powerful grow even more rich and powerful, provide them whatever they need to keep the stock market rising--tax breaks, Fed bailouts, interest rate cuts, anti-competitive monopolies that would never have existed in the trust buster era, union busting, gutting environmental regulations and pretending climate change doesn't exist, minimum wage supressed, 17-year patents on me-too drugs that have one molecule of difference with the last me too drug.
Our government has tilted in that direction since the 1980s and I don't see any real difference in the current administration. In fact, I think the phrase "income inequality" is baked into the "in the long run stocks go up" thesis. So you may be right. In fact, in the other discussion on Grantham's bearish predictions being wrong one thing not discussed is a rather famous mea culpa he made a few years ago about not realizing how corporate power has grown in recent years so that monopolistic dominance that wouldn't have been tolerated in earlier eras is now permitted. That dominance is baked into the returns of bellwether tech stocks and the benchmarks themselves. In other words, there aren't too many search engines people use besides Google's. The fact that market-cap weighted index funds keep buying those bellwether tech stocks creates a kind of feedback loop, making them more powerful and driving their stocks even higher.

Also, @FD1000 might better explain SVARX (ER around 3%).

This is mainly a fund of funds. In their top 5 holdings they have IOFIX+BDKNX both expense ratio about 1.5%. Then they use leverage, and they still want to make money.
The only explanation that I care about is performance which is after expenses + risk attributes(SD, Max Draw, Sharpe, Sortino, others).
I never invested in SVARX because I do my own trading + going to cash and my performance + SD in the last 3 years is better. My portfolio max loss from any last top was lower than 1%.

Few fund managers have been more successful than Cathie Wood, the chief executive of ARK Invest and fund manager of the ARK Innovation ETF ARKK, 2.32% and ARK Genomic Revolution ETF ARKG, 1.51%, which according to FactSet have drawn in more inflows than any other actively managed stock exchange-traded fund over the last 12 months. In a monthly webinar, Wood made the argument against stocks being in a bubble.
“If there is a bubble anywhere, it is not in the equity market, it is in the fixed-income market,” she said.

stocks-arent-in-a-bubble-but-heres-what-is-according-to-fund-manager-ark-invests-cathie-wood

Yes, and this is generally true for most CEF's but with caveats...most significantly some CEFs can trade at premiums or discounts for a very long time. I look at the history on MS, and you have to really get a feel for a fund before making significant purchases. One recent example is MPV, a CEF that historically has traded at a premium but since the pandemic at a discount. Its price over the past year is down 25% but its NAV is down under 1% (based on the most recent valuation, this one is not valued daily). I've been buyer here. Another caveat, some CEFs can be thinly traded so if you're patient you can place "stink bids" (limit orders well below the current price) that will randomly execute.

PIMIX still has the highest Sharpe ratio, lowest drawdown and no down years
The following performance graph is from PIMIX's 2009 statutory prospectus. You can take it on faith that this is for the institutional class shares for calendar year 2008 or you can find it yourself on p. 58 of the 21MB prospectus.

MSF, I think you may have misread my comment. I said "Go ahead and compare PIMIX to many of the funds mentioned here back to January 2016. PIMIX still has the highest Sharpe ratio, lowest drawdown and no down years."
After that I said "The same holds mostly true back to 2009 (except PIMIX was down a modest 5.47% in 2008)." I should have said back to 2008 but the point is the same.

Here is what David Giroux, the wunderkind manager of one of the best asset allocation funds, PRWCX, said in a recent M* interview about rising interest rates and duration:
"So, now, everybody's convinced the yields are going to go up 1% to 2%, but not above 2%. We'll see. What I would tell you about rates today is that the risk/reward on Treasuries or IG [investment grade] is so poor, it gets a situation where if rates stay static, you make very, very low returns. If rates revert back to more normalized levels, you lose a lot of money. And if rates go down, you don't have a lot of room for rates to go down. So, it's really hard to get a really great return. [...] even if rates rose 100 bps over two years, you made zero return. [...] So, as a result of that, we have a very short duration in our fixed-income portfolio, probably the shortest duration we've had since I've been running this strategy.
Our duration today is 1.5 years, just because that skew is so negative on a lot of traditional fixed income. [...] So, this is a time to be short duration in your fixed-income portfolio. [...]"

Since I basically agree with Giroux's current outlook, I will not invest in "reliable" intermediate core/core plus bond OEFs at this time. Rather, I am using multi-sector OEFs like RCTIX, TSIIX, or even PIMIX, which have excellent risk/reward profiles but durations of less than 3.0.
This may be off-topic, but I have also been investing in alternative funds like ARBIX, a "market neutral" fund according to M*, that has exhibited a bond-like low risk profile with a SD of 2.97% and a Sortino Ratio of 2.38. Its YTD total return is 1.43% and its 3-year return is a pleasing 6.23%. During the recent market crash, the fund lost 3.1% during the month of March, and over its 3.5 year history its largest monthly loss was 0.38% in November 2018. So far, so good.
These are very uncertain times and, as another poster said, "with rising interest rates in 2021, it seems that [...] Investment Grade Intermediate bond oefs are struggling". Hence, I have decided to look at other low risk opportunities outside the conventional bond OEF box.
Good luck,
Fred

@MrRuffles Yes agreed on PFSLX... I will read up on it over next few days. Also, you should take a look at Davenport Small cap focus fund. Just had a write-up in Barrons over the weekend by our own @LewisBraham. If we're lucky, Lewis might comment on this. Definitely beats to its own drummer with strong performance. https://www.barrons.com/articles/small-cap-mutual-fund-tech-stocks-51612307908

PIMIX still has the highest Sharpe ratio, lowest drawdown and no down years
The following performance graph is from PIMIX's 2009 statutory prospectus. You can take it on faith that this is for the institutional class shares for calendar year 2008 or you can find it yourself on p. 58 of the 21MB prospectus.

It's interesting but not news. People have known for decades now how difficult it is for active funds to beat the benchmark with any consistency--and the consistency part is perhaps not dicussed enough. My problem is with the basic assumption, i.e., forecast, that stocks themselves will always be a good investment and this assumption is implicit in the decision to index the benchmark, and in investing in many active funds that rigidly adhere to a particular stock-driven investment style. The indexing decision assumes that the benchmark itself isn't really dynamic, that the S&P 500 today or better yet the Russell 3000 is really the same as it was yesterday, last year, ten or fifty years ago and plunking one's money into it at any point in time in the future will always be a good choice. What we know is historically it has been a good choice in the past most of the time. But there are a periods of time--periods of extreme over- and under-valuation--where it's been a terrible or terrific choice. One could argue that now is one of those times. Moreover, no one knows what the future will bring and the data-set for stocks overall is extremely limited versus human history, and a grain of sand in biological, or worse, geologic history. There is nothing particularly scientific in other words in assuming that in the long run stocks go up. All we know is in the past stocks have gone up.

@gk3105gklm. Thanks much for sharing this. Will take a look. Paradigm Select comes up also on my screen

Coincidentally, I was just coming on to see what people’s thoughts were on PFSLX. It’s a long-term Great Owl, good Martin/Sortino ratios, MFO rating of 5, and tax efficient with two female advisors with a decent amount of skin in the game. I’m surprised it’s never been discussed here.

@observant1 thanks for sharing the spiva pdf. Page 4 is interesting - the table shows that over a 15 year period, 92.35% of all Large Cap Growth equity funds failed to beat their benchmarks. I guess that is what you and others are trying to say. I understand that data and agree it’s not easy and there’s a strong compelling case to just index.
If you choose some active LC growth funds and set and forget them for 15 years, 92.35% of the time you will be disappointed as they won’t beat their benchmarks. Since you and I own active funds, aren’t we saying that by using our tools, we think that we can maneuver in and out of these funds before we are disappointed and thereby beat the benchmarks? Not often - just when performance “consistently” underperforms.
I don’t mean to be simplistic, it’s just that I was an index only investor for a number of years and I’m constantly second guessing myself since owning active-despite positive results. This discussion and the feedback is helpful to me.

PIMIX had a sizable drawdown in 2020, -11.3% and finally recovered for the year. So the risk aspect is higher than expected. Performance-wise the fund is way way too big and trailed other bond funds for last several years.
PRSNX had a smaller drawdown and recovered quicker. 2020 was a unusual year where the boring total bond index fund performed quite well. Will see how bonds will do this year with higher inflation, but Fed will keep rate flat for another year.

Pretty much disagree with your take on PIMIX (though I know most share it). The bond market is enormous. While funds having billions in assets can't take advantage of niche opportunities like a very small fund can, most of the funds discussed here are in that same boat. That's OK if what you're looking for in bonds is mostly stability with some decent distributions. Go ahead and compare PIMIX to many of the funds mentioned here back to January 2016. PIMIX still has the highest Sharpe ratio, lowest drawdown and no down years. The same holds mostly true back to 2009 (except PIMIX was down a modest 5.47% in 2008). Hartford strategic may look great now but it suffered a hair-raising 21% drawdown and was also down 17% in 2008. There are no free lunches here. If you want to take on more risk it's simple, a no-brainer really, DHHIX.

@gk3105gklm. Thanks much for sharing this. Will take a look. Paradigm Select comes up also on my screen

I own both active and passive funds.
Investors should be mentally prepared for active funds to periodically underperform their relevant benchmarks.
I agree with @LewisBraham that it is difficult to find active funds which will outperform their benchmarks over the long-term (10 yr, 15 yr, etc.). PDF
Many intelligent, highly-educated portfolio managers compete against each other.
Company* and stock market information is now readily available to all.
This makes it extremely challenging for anyone to gain an edge.
The higher costs of active funds are also an important factor since they detract from returns.
*Regulation FD was enacted in October 2000 to prevent selective disclosure of material nonpublic information. Link

M* currently places FSMAX in the Mid Blend category but in the Mid Growth style box.
Category placements are based on three years of style box data.
This article discusses recent fund style box moves at M*. Link
It appears that Fidelity, Lipper, and M* all use different criteria for determining fund categories.
Sometimes certain funds won't fit neatly within the available categories.
For example, M* classifies NWFFX as a Diversified Emerging Markets fund but developed markets comprised 48.7% of its assets as of September 2020.
These type of anomolies can make fund category comparisons challenging.

This is a good discussion. If we ignore bonds for the moment. Buffett and the Index proponents say don’t try and beat the market. Just own the market. Most say an S&P 500 or Total Market Index.
Ok, so if we ignore bonds (for diversification or income etc) and we just consider equity funds.
Is it not possible to find equity funds that consistently best the S&P 500 or TSMI on a long term basis? Not sometimes but consistently? Over 10-20 year periods. Maybe they miss 1 or 2 years but over the life... they beat the S&P. The BFGFX did for 14 years. I don’t own this fund.
That’s my goal. Identify and invest in mutual funds that outperform the S&P 500. Yes I look at APR vs peers BUT... if the smartest investors in the world like Buffet and Bogle... advise to just index... that’s my real benchmark. So, even though some funds may handily outperform their peers, if they don’t consistently beat the S&P and I’m not using it for diversification purposes (like a bond fund or allocation), then I look elsewhere. Thoughts on this strategy for equity funds?

I have PVIVX since 11/10/20 (this cycle). It was one of small cap funds I had when small cap was running 5-6 yrs ago.

Hi Guys,
The historical data suggests that outperformance on the plus side persists in the short term but ultimately it regresses to the average. Underperformance is far more persistent.
Here is a useful Link:
https://www.jstor.org/stable/2329556?seq=1
Here is a good summary quote from that article:
“The only significant persistence not explained is concentrated in strong underperformance by the worst-return mutual funds. The results do not support the existence of skilled or informed mutual fund portfolio managers.”
Luck happens but doesn’t persist. Poor invest decision making does seem to persist unfortunately. It seems like the negative outcome always seems more robust. I wish good luck to all, even for the short term.

Another sign of the times:

The measure for the Bloomberg Barclays U.S. Corporate High-Yield index dipped to 3.96% on Monday evening, making it four straight sessions of declines.
Issuance conditions have been so conducive that some of the riskiest types of transactions come to market, such as bonds that are used to fund dividends to a company’s owners and so-called pay-in-kind bonds that allow a borrower to pay interest with more debt.

Junk Bonds

PRBLX's poor years against its large-blend benchmark were 2017 especially, but also 2015 and 2016. Yet another strong fund overall.