That's because the interest dividends are taxed at, say, 25%, while you only get tax credit for 15% of the capital loss.

I understand your point, but this is not entirely correct. If you have long term capital gains that are taxed at 15%, and your losses on RPHYX offset those long capital gains, then yes you are only getting 15% credit for those losses. But if your losses on RPHYX offset short term capital gains that are taxed at ordinary income, then you get full credit. And if you have no capital gains at all, you also get full credit against your ordinary income.

@msf: As of 9/3 rphyx adjusted close up 6 cents from the new year. I'm ahead of the game, or not ?
Derf

This is a few days old, but it's now a bit more relevant with the market drop. The plus side is that we're seeing somewhat of a "perfect storm" (for RPHYX at least.) It seems to be weathering the storm better than most high-yield bond funds.

I agree with BobC's endorsement of OSTIX. The Zeo and RPHYX folks often point to Osterweis as both their "real" peer group and the area's most distinguished performer.
Here's a point that seems worth stressing: across a number of time periods, OSTIX has repeatedly taken eight or nine months to recover from a drawdown. That's not a criticism of the fund. It's a simple reminder that no one who invests in risk-bearing assets is immune from losses and no one bounces back from turbulence in mere days or weeks. Even in quite conservative funds, you need to anticipate being underwater for two, three or four quarters. If you're irked after one month or six, you might need to consider a strategy using CDs whereby you raise your savings rate and reduce your expectations of returns.
As ever,
David

RPHYX should be just fine as long as junk bonds don't crater any more than they have. With energy rallying so much today and junk bonds too, the bulls are hoping a bottom is in for both.
Andy, nice find on PMZIX/PMZDX.

I've always said RPHYX is not a good cash substitute primarily because it has never been tested during a bear market in junk bonds. ... Still, YTD it is outperforming cash and has done well as a cash substitute since its inception.

It's done adequately, but I wouldn't say it's done better than cash. It's not hard to find an online account paying around 1%. In comparison, 0.46% YTD is around 3/4% annualized (we're 2/3 through the year).
It's even worse in a taxable account. So far this year RPHYX has spun off around 2% in dividends, and declined about 1.5%, for a net of about 0.5%. But you pay a higher rate of taxes on the dividends (ordinary income) than you get to write off on the capital loss (assuming you've held the shares for over a year).
If you've got $1000 in the fund, and a 25% tax rate, you'll owe taxes YTD of 25% on $20 dividends ($5), but might subtract taxes of 15% of the $15 cap loss ($2.25) if you sell. Your net tax would be $2.75 on net income of $5. Your after tax income YTD would be about 0.22%.
If it loses a bit more, so that it pays 2% in dividends but loses that 2% in value, then your gross income would be $0, but you would still owe net taxes of 0.20%. Not pretty.

The most recent shareholder commentary for RPHYX said that the average maturity of the entire portfolio was 5.8 months, with 48% having an "Expected Effective Maturity" of 30 days or less (perhaps this is due to call options). So my expectation is that while drops in NAV can and do occur due to mark-to-market pricing, the NAV should recover quickly given the short time to maturity. I suppose we'll find out.

I've always said RPHYX is not a good cash substitute primarily because it has never been tested during a bear market in junk bonds. I don't care what the fund manger may say, this fund will get hurt in a junk bear market and we have seen how it has over the past month where it has lost almost 1%. Much better than the average junk bond fund but not exactly what many investors have been lead to believe. Still, YTD it is outperforming cash and has done well as a cash substitute since its inception. However, a continued decline in junk bonds will turn this fund negative for the year. So goes energy, so goes junk bonds the rest of the year.

I am still in RPHYX. I noticed that the NAV has dipped over the past year (it used to be consistently above $9.95, and now it's below $9.85). Also, total return now seems around 2.5% instead of 3+%, so they are below their original goal of 300-400 basis points above money market.
However, it is still relatively stable and giving positive return in excess of other cash alternatives, so my basis for holding this fund has not changed.
I passed on RSIVX since the additional risk/reward makes it more like other corporate bond funds -- of which there are many. Their stated goal was total returns in the range of 7-8%. The latest commentary linked above reports that RSIVX has a 7.7% yield to maturity, so maybe they will yet meet that goal. Personally I'm okay with the 2.5% at RPHYX and taking my risks elsewhere.

I found his shareholder's letters convincing: http://www.riverparkfunds.com/Funds/ShortTermHighYield/Commentary.aspx and http://www.riverparkfunds.com/Funds/StrategicIncome/Commentary.aspx.
They're both performing as advertised: RPHYX has been quite stable, RSIVX less so, but the yield is good and I see no reason why the principal won't recover. None of the holdings have gone bankrupt. RSIVX was advertised as a fund that would produce 6-8% yearly income and, despite fluctuations, end up with at least the same principal over a five year period.
I have my retired mother in RSIVX. It pays almost as much than an annuity despite her advanced age, and unless it goes to zero, it will end up a better long term investment.

I reduced RSIVX and put some of the proceeds into RPHYX.

I've held RPHYX and RSIVX for some time. Is anyone backing away from these two and if so, why?

MJG and Lewis have pretty much hit the factors I use (along with several I don't place as much weight in). Of the factors given, the ones I consider most important (not in any particular order):
1. Cost - I'll pay transaction fees for institutional shares, because over the long term that's going to save me money. I also have (soft) cost limits in mind for bond funds, domestic equity, etc. I'll stretch 10, maybe 20 basis points if a fund is otherwise very attractive.
2. Funds that are more flexible, but also disciplined (don't use techniques just because they are allowed to). Examples might be FPNIX and funds managed by Michael Hasenstab. Or funds that have a distinctive approach that seems to have more substance than a fad (e.g. RPHYX). "Unconstrained" doesn't impress me - that's saying what's allowed, not what to expect.
3. Does it fit well into my portfolio - in an area that is underrepresented, or as a potential replacement for a long term disappointment?
4. Is the long term performance (with the current management team) solid? A fund needn't do well year by year - different management will do better in different markets - but it should not gyrate all over the place, and management should show some degree of adaptability. (Don't ride Enron down to zero because it looks like a better and better bargain.)
5. Management diversification. I'm disinclined to buy a fund managed by the same team as a fund I already own, or a second fund from a small shop (assuming the funds share analyst research and have similar styles).
6. A fund company that has a record of good management transitions. That could mean team managed funds, or just a family with good practices like T. Rowe Price.
7. Low to moderate turnover.
8. Low to moderate size (but see, e.g. FLPSX).
I'm less inclined than some to look at metrics like alpha. Since I'm seeking funds that are more distinctive, they may not correlate well with the "typical" fund. Lower correlation can severely distorts some of these metrics. Related to that, a fund may be grouped together with the "wrong" funds.
Metrics like Sharpe ratio avoid the benchmark selection question. (But you have to pick the right funds to compare. Otherwise, the Sharpe ratio may suffer the same problem of bad grouping.)

If you look back at David's profile, RSIVX aims for a 5 year investing period, during which it will aim to provide high income and at the end of the period at least break even on principle. So it accepts somewhat higher volatility. RPHYX is meant to be less volatile and lower return.
I'd give it a little more time.

Bonds currently make up 32% within the portfolio:
ABNDX ... 0.2% ... -0.5%
AIBAX ... 0.5% ... 0.6%
AHITX ... 1.1% ... 1.9%
TAFTX ... 5.7% ... 0.1%
AMHIX ... 5.7% ... 0.5%
ABHIX ... 0.3% ... 1.4%
RPHYX ... 17.4% ... 1.2%
LSBRX ... 1.4% ... -2.6%
The whole mess is up 0.6%, same as Skeet.

A couple of American Funds bond funds up fractionally. Also WAFMX! Glory be!!
RSIVX, RPHYX & TAFTX all flat.

rphyx = down .101
rsivx = down .3
tginx = down .876
mwcrx = down .167
Have a great weekend, Derf

I hold a fair amount of "near cash" in RPHYX and RSIVX. Each one has returned a tad over two percent in the last year, the former is closed, but the latter is open. There has been a fair amount of discussion on the board about using this type of fund in lieu of MM or CDs. They throw off frequent distributions, so there's a tax consideration.

I sold this fund about four years ago due to concerns about rising interest rates. Silly me! This retiree could fashion a fairly simple "all weather, total return retirement portfolio" I would be comfortable with by combining VWIAX with BERIX, FPACX, SGENX, and RPHYX (those 4 are in my present portfolio). RPHYX would hold enough to see me through about 15 months of planned withdrawals. My brokerage account always also has at least enough cash to take care of my next planned quarterly withdrawal.

David shared a copy of his quarterly shareholder letter with me earlier this week. It's posted on the RiverPark site now and it's worth reading.
I came away from it with two strong impressions:
there may be emerging structural problems in the investment-grade fixed-income market. At base, the unintended consequences of well-intended reforms may be draining liquidity from the market (the market makers have dramatically less cash and less skin in the game than they once did) and making it hard to market large fixed-income sales. An immediate manifestation is the problem in getting large bond issuances sold, a potential problem might be the emergence of a roach motel issue if things get rocky. That is, it might be easy to get in but impossible to get out of some safe issues.
Mr. Sherman is very cognizant of the need to have portfolios that could ride out a storm without the need to liquidate holdings; better than half of RPHYX will roll off to cash with 60 days and a quarter of RSIVX is invested in the same securities as RPHYX is. His argument is that given the challenges facing large bond issues, you really want a fund that can benefit from small bond issues. That means a small fund with commitments to looking beyond the investment-grade universe and to closing before size becomes a hindrance.
Some of his concerns are echoed on a news site tailored for portfolio managers, ninetwentynine.com. An article entitled "Have managers lost sight of liquidity risk?" argues:

A liquidity drought in the bond space is a real concern if the Fed starts raising rates, but as the Fed pushes off the expected date of its first hike, some managers may be losing sight of that danger. That’s according to Fed officials, who argue that if a rate hike catches too many managers off their feet, the least they can expect is a taper tantrum similar to 2013, reports Reuters. The worst-case-scenario is a full-blown liquidity crisis.

The article goes on to express concern that holding elevated cash levels is a poor response since panicked withdrawals could quickly exhaust even an elevated cash stash (see 'Total Return Fund, PIMCO" for details), leaving managers "out of both cash and choices." The better solution, they argue, is building "organic liquidity" into the portfolio. Which, I believe, is what Mr. Sherman has done.
Hope your weekend has started well. It's cold and rainy here, which is keeping me out of the garden and close to the keyboard.
David