We're retired and are holding more cash than we want due to market uncertainties both here (will the super committee punt) and in Europe.
Cash 26%
US Equity 36%
Foreign Equity 10%
Bonds 25.4%
Other 2.5
Top ten:
VTSMX Vanguard Total Stock Mkt Index
PRPFX Permanent Portfolio
VWINX Vanguard Wellesley Inc
VFIIX Vanguard GNMA
FVALX Forester Value
WEFIX Weitz Short-Int
VIG Vanguard Dividend APP
YACKX Yacktman
DOGFX Dodge & Cox International
SNGVX Sit US Gov't
Perhaps in early December we'll be moving stuff around again. Until then, we'll just keep hiding in the weeds.

Part 2, continued from above, Fundmentals portfolio offering
FVALX, INTLX: These Forester funds have demonstrated the ability to limit losses by going to cash when conditions so indicate and they do so without worrying about whether they will fully participate in the recovery. Hence they fit the goals of this portfolio well. Forester was so successful with this simple strategy that FVALX became the only equity fund to have positive (albeit close to zero) returns in 2008.
Unfortunately, this brings in people who look at the rankings, see this fund at the top in 2008 and invest and get disappointed when the fund lags in a bull market.
This fund is chosen for the very strategy (that was incidentally vindicated in 2008) with the full knowledge that it will not necessarily be anywhere near the top in bull markets or even beat the index.
Alternative to FVALX is Amana Income AMANX which does not provide as much downside protection but has done well using a very conservative approach in value investing and keeping the volatility low but it will be slightly more volatile than FVALX. Another slightly higher volatile alternative is Yacktman fund (YACKX)
Alternative to INTLX is Sextant International SSIFX (coincidentally managed by the manager of AMANX) for similar reasons.
AMAGX: A very well managed Large Cap growth fund with a long history of good performance. The downside protection is also reasonable within its class even though there does not appear to be any capital protection strategies in place.
QRSVX: Not a well known fund but is one of the very few funds that is widely available without a transaction fee, has at least a 5 year history and has managed to limit downside in the bear market in the small cap category. The volatility is also kept low.
A better known substitute is Royce Special Equity (RYSEX) if available without a transaction fee. Newer Intrepid Small Cap (ICMAX) has done very well although its short history may be a concern as well as Pinnacle Value (PVFIX) if available without a transaction fee. Both ICMAX and PVFIX are low volatility funds and have capital protection as a goal of the fund to fit the goals of this portfolio well.
MAPIX: The only selection without a 5 year history but comes with a very strong pedigree from Matthews Asia that specializes in Asian funds. This fund has extremely low volatility, even lower than most domestic equities and has managed to deliver very good total returns with a combination of stocks, convertibles and preferred shares.
Alternatives would be either Matthews Asia Pacific (MPACX) at higher volatility with good downside protection or Matthews Asian Growth and Income (MACSX) at lower volatility but can potentially lose more money in bear markets.
BPLEX: An alternative investment fund that tries to get good returns in both bull and bear markets. A long-short fund that can be mistaken for another performance chasing choice because of its recent performance. But this would be a good choice even if its performance in 2009 was just average or even below average.
Looking under the hood shows this fund to be quite different from other long-short funds that try to use both long and short depending on the stock valuations. This fund seems to switch between a primarily long fund (but with short positions to hedge) with good stock selection or a primarily short fund (with long positions to hedge) depending on the macro market conditions thus minimizing individual stock market timing risks.
This is not different in strategy from Forester's philosophy except that its uses shorting rather than just go to cash and uses small caps rather than large caps.
So it does very well in longer bear or bull market years and lags during transitions but without losing much money. Unfortunately, none of the alternatives for this fund come anywhere close to it in performance as they primarily seem to depend on picking the right stocks to go long or short across all conditions rather than acting like a good long fund or a good hedged fund depending on macro conditions. It is a unique standout.
ARBFX: Another alternative investment fund which depends on arbitraging mergers and acquisitions by buying a company that is being acquired and often shorting the company acquiring. The risks for such funds come only if the M&A does not go through. The earlier you get on as soon as an M&A is announced, the riskier. This fund takes very little risks by waiting to get on and arbitraging just the last few months before an M&A. This keeps the volatility very low and the gains low as well.
An alternative is the similar Merger fund (MERFX) which has a disadvantage because of its size and so may not be able to move quickly in and out.
HSTRX: Hussman's conservative allocation fund is managed in a risk-managed fashion where the portfolio is continually and pro-actively positioned to address the current risk evaluation of the market. Unlike his strategic growth fund, this fund does not take any significant bets on equities and so any incorrect decisions in his strategy does not have as much of a downside impact unlike the other fund. This has allowed HSTRX to show very consistent and impressive performance over a long period of time with very little volatility.
MGIDX: Intermediate duration mortgage securities fund that manages to keep volatility low with good performance and uses shorting/options to achieve this. The ability to short or use options will make this fund able to provide downside protection and manage credit and interest risks, a good idea when mortgage rates are likely to rise in the future.
Alternative is PTMDX - PIMCO Mortgage-Backed Securities D which shorts even more aggressively.
PGNDX: A GNMA fund that manages risk via shorting while preserving the upside of a GNMA fund. Good due to the same reasons as MGIDX above.
Alternatives are non-shorting GNMA funds such as USGNX from USAA, VFIIX from Vanguard or BGNMX from American Century which may have more losses if the mortgage rates were to rise rapidly.
PTTDX: An intermediate investment grade fund that also manages risk via shorting and useful in an expected interest rate rising environment in the future. Low volatility.
Alternatives are non-shorting funds with low volatility THOPX Thompson Plumb Bond or CPTNX American Century Government Bond Inv WEFIX: A fund with the ability to move between short and intermediate durations based on market conditions and hence able to take advantage of the conditions better than a strictly short term fund. Does not use shorting.
Alternatives are USSBX from USAA, WEFIX Weitz Short-Intermediate Income, VFISX Vanguard Short-Term Treasury, PLDDX PIMCO Low Duration D. The last one from PIMCO does use shorting

Hi Accipiter,
Thanks for ringing my bell. I recalled and found the FA archives link I had in the pc favorites list.
>>>>>matt, is this the portfolio mix you have on paper ???Posted by: Fundmentals
Date: November/December 2009
Subject line: Model portfolio design
Body of post:
I am sure many of you have come across the situation of a friend or a family member clueless about investing ask you to help them with a stash of money. The real-life requirements are usually "simple":
1. "Want your help to make some money. I can lose money all by myself"
2. "I can put it in the market for 5 years. Can leave it there longer if it is making money but not if it is losing money"
3. "Don't ask me to do anything more than once a year"
The following portfolio is designed specifically for people that are not
(a)expecting to beat the market
(b)don't want the portfolio to go down much (likely to panic and sell at the bottom if they went down 10% or more)
(c) would like some decent gains - more than what they can get with money market funds, CDs or even just bond funds without which they will not take the risk of investing at all and
(d) don't want to fiddle with it more than once a year.
The Portfolio
Domestic Equity:
5% Forester Value (FVALX) - Large Value
5% Amana Trust Growth (AMAGX) - Large Growth
5% Queens Road Small Cap Value (QRSVX) - Small Value
International/Global equity:
10% Forester Discovery (INTLX) - World Allocation
10% Matthews Asia Dividend (MAPIX) - Diversified Asia/Pacific
Alternate investments:
10% Robeco Long/Short Eq Inv (BPLEX) - Long/short equity
10% Arbitrage Fund (ARBFX) - Merger/arbitrage
15% Hussman Total Return (HSTRX) - Conservative allocation
Bonds
7.5% Managers Intermediate Govt (MGIDX) - Mortgage securities/Govt
7.5% PIMCO Total Return D (PTTDX) - Intermediate Investment Grade Bond
7.5% Weitz Short-Interm Income (WEFIX) - Short-Intermediate Term Investment Grade Bond
7.5% PIMCO GNMA D (PGNDX) - GNMA
Backtested performance
If portfolio invested on 1/1/2008, results as of 11/13/2009:
Total return: +15.05%;
2008 Performance: -4.79%
2009 YTD: 20.84%
Portfolio X-Ray:
Stocks 52.3%; Bonds 38.1%; Cash 9.6%
Stocks US 56.00%; International 44.00%
US equities
Large cap 27.4%; Mid cap 22.8%; Small Cap 49.8%
US equities
Value 36.9%; Blend 53.0%; Growth 10.1%
International equities
Europe 24.1%; Pacific 38.5%; Canada 18.9%; Emerging Markets 18.5%
Bonds
Taxable 78.70%; Uncategorized 21.30%
Credit quality High 78.7%; Uncategorized 21.30%
Duration Medium 20.2% Low 58.5% Uncategorized 21.3%
Costs: Portfolio average 1.72%
Portfolio construction notes:
The portfolio is constructed to solve a basic flaw in traditional portfolio construction. Diversification using high volatility equity funds (even index funds with market volatility) results in deep losses during bear markets as most such equities become correlated and go down together.
Just depending on bond allocation to reduce losses requires primarily allocation to Treasuries as it is the only type of asset that can be depended on to show negative correlation with equities in bear markets. But unlike in the past, Treasuries starting with the current situation of low interest rates cannot be expected to provide much gains going forward so the portfolio may turn out to be too conservative or too aggressive based on what happens in the market regardless of how much is allocated to Treasuries.
As a solution, portfolio picks only funds designed with a strategy to reduce/minimize losses during long bear markets and has some capital protection goals in place. The overall volatility is reduced by depending on each fund to reduce its own volatility rather than depend on lack of correlation to reduce the volatility.
Note that this is not the same thing as picking funds with the highest returns in either bear or bull markets or both. Nor are the returns attributable to some fantastic market timing in picking which stocks to buy and when to sell.
In fact, most of these funds will likely not consistently appear in the top 10% of their class except occasionally. But all of them will have shown the ability to limit losses by reacting to long-drawn down market conditions and make decent gains in long-drawn up market conditions.
In other words, the only market timing they will show will be in recognizing long bear markets as in recognizing the difference between 2008 and 2009, not what happens month to month. None of them try to time tops and bottoms.
Methodology
Portfolio Requirements:
1. Capital protection and lack of volatility extremely important. No long periods of losses. No "wait for 10-20 years or more" excuse for losses.
2. Asymmetric behavior - as much of the upside as possible, as little of the downside as possible
3. Simple portfolio with high quality no-load funds widely available in the main brokerages
4. Only annual tune-ups
5. Total return more important than income
6. No assumption of bull/bear markets for the portfolio as a whole, no forecasted assumptions of economy or any other indicators, doom/gloom predictions, etc.
Concrete requirements:
1. Not more than 12 funds.
2. No single fund with less than 5% allocation or more than 15% allocation
3. Portfolio must be diversified but not necessary to cover all asset/fund classes. Only asset classes that have shown consistent returns without long loss periods and small drawdowns. Riskier assets only within risk-managed funds.
4. No assumptions of correlation or lack of correlation between asset classes going forward but no gross overlaps between funds. Some overlap is fine.
Screening criterion for funds:
1. No-load, ER less than or equal to category average, been in existence for at least 5 years.
2. No losses in 3, 5 or 10 yr (if available) rolling periods (amazing how many asset classes or funds drop out here)
3. Manager has been around for at least the category average
4. Minimum initial purchase not more than $3000 (i.e., minimum not more than $60k portfolio)
5. Best 3 month performance must be better than worst 3 month performance over its lifetime (amazing how many funds you lose with this criterion)
6. Best volatility-adjusted performance (3-yr and 5-yr) in class, not necessarily the best returns.
7. Volatility of each fund on its own must not exceed 10% of total stock market index, total bond index or balanced index as appropriate.
8. Lowest volatility to break a tie all else remaining the same.
9. No bias towards active or passive funds as long as the above criterion are satisfied
10. Allocation percentages based entirely on relative volatility-adjusted returns (3-yr and 5-yr), no ad hoc allocation decisions. Individual fund notes:
end of Part 1

I am proposing the following 2 column format in the mutual fund popup. This is for WEFIX
Each column is 220px wide. So, this popup should fit in a popup 480px wide. I would say 360px height would be sufficient. In the following example, the light yellow area is 480x360 size.
I am willing to make the necessary adjustment to the code that generates the html markup so contents of popup would look like this. I can also adjust the fonts used to render to look like the rest of the site (which is more pleasing to the eye)
Note also that, I've pushed header text down a bit so that the close X icon on upper right does not overlap any text.

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The Weitz Funds, Short-Intermediate Income Fund Insti Class(wefix) Look up this fund on: MFO Community Morningstar Yahoo! Google SmartMoney Bloomberg USA Today USNews Barrons Marketwatch Big Charts General links: Google Search

I always have a bottom line number and when it gets approached I have to bail even though I own mostly conservative, balanced and flexible portfolio funds. The day of the first 5% rebound following the first 5% drop I sold about 50% of my fund investments. I did not sell any shares of PRPFX, RNDLX, DBLTX, VWINX, GLRBX, WEFIX. Totally agree with Louise Yamada "would rather be out of the market wishing I was in that in the market wishing I was out" (thanks Catch).
Holding a lot of cash in Vanguard MM but have moved some into RPHYX which I'm watching carefully and increased positions in RNDLX, DBLTX and added HSTRX for now.

To clarify, the fund buys short term "special situation" bonds. I recently spoke with the fund, in an attempt to get them onto our platform at LPL. These bonds include as David highlighted, high yield bonds that have been called, high yield bonds of companies which have been acquired by higher quality owners, or where management has placed a significant portion of the cash due to bondholders in escrow or walled off in some other fashion. The fund does what i call 'working in the corners of the market', issues that are less interesting to high yield managers but cannot be purchased by investment grade managers.
To BR Bond: They do not have a partnership that mirrored this strategy. The biggest issue, as with many funds that invest in shallow markets, the capacity for the fund cannot be huge (although not a problem yet at $30mm or so). Just look at Driehaus Active Income . . . invest in limited arbitrage opportunities in the international fixed income markets, i believe it closed with just over $1.5 billion.
To 00BY: WEFIX is a great fund, i use it extensively on conservative accounts, but the riverpark fund hasn't been around long enough to say it provides worse downside protection. It only opened in October of 2010, and has been in the words of dennis gartman "moving from the lower left to the upper right".
As to elmer's comment, this is not a floating rate fund. Although it is high yield, there are mitigating factors other than the credit quality of the other business (special situations). The hedge fund industry was stuck forced selling mostly thinly traded sovereign credits as opposed to the corporate issues that riverpark invests in. Also, please note that FFRHX did perform poorly, but the numbers you presented don't take into account the few percent that were distributed as dividend income on a monthly basis.
As soon as this is available thru LPL, it will be inserted as a instant addition to our income models (and some use as a cash alternative).

WEFIX is more conservative --- lower risk and lower return (in up markets), but better downside protection.

How would you compare all the above named funds with the Weitz Short Term Bond fund WEFIX with regard to risk and return ? I am looking for a fund with a higher return than a M M to park money for the end of the year for an IRA required annual distribution.

Thanks for your comments, fundalarm, it's so great that you are now able (and willing) to participate so we can hear your opinions!
If I may ask, what styles/sectors and/or specific mutual funds do you feel will be the most protective considering these economic conditions during next 1-3 years to help offset market downslides? I am looking to add a little more to a portion of our investments where my minimal goal with this portion is 4% (i.e., better than zilch returns on cash/cd's right now but I don't expect more). I have, and like, WEFIX (5%) and am thinking about adding 3% more.

I have about 1/3 of my assets in cash. 1/6 is invested in a mix of moderate and conservative allocation funds. The rest, in individual stocks. I'd like to invest the cash portion in bonds. I'm not interested in anything racy. I'd like to start earning a little more money than I am presently earning by having my cash sit in the bank.
I've thought of the following plan:
TGCFX TCW core fixed income: 33%
WEFIX Weitz Short-Intermediate income:33%
BGNMX American Century GNMA:33%
Is this too narrow a portfolio?

Thanks for your input, Ooby. It will be interesting to see how these do in upcoming economy. But I try to stay away from load funds and I use WEFIX (Weitz Short-Intermediate) as my lowest volatility fund that I've never worried about. Also don't count on it for big returns, but it has 5.65% 3 year annualized and gained 2.29% in 2008 - also has lowish tax cost ratio. I would hope that this will still perform ok even in interest rate/inflation increases... but I'll find out soon enough.

Thank you, John. I really miss Fundmental and am especially saddened as I think the only reason he would not at least give a "goodbye-off to do other things" comment would be because he became very ill.
I put all of Fundmentals portfolios in M*. Hadn't checked them lately, but just rechecked. For those interested,
His "safe" one shows 2.34%-YTD, 8.44%-12 mo, 7.94%-3 yr
His "Make More, Lose Less" one shows 2.48%-YTD, 12.53%-12 mo, 8.11%-3 yr, as opposed to VTHRH with 5.40%-YTD, 16.51%-12 mo, 1.66%-3 yr.
You have a much higher risk tolerance than I do - a 58% loss would definitely keep me up at nights. I watched one of my Mom's trust portfolios managed by USB (with 90% U.S. stocks) lose similar huge sums. It took them 3 years to get back into the black, with only now a 2.58%-3yr gain, with a 5.47%-10 yr return. My "safest" fund WEFIX shows 2.68%-3 yr and 4.83%-10 years without any sleepless nights. On the other hand, the USB portfolio is up 8.31%-YTD and 22.5%-12 mo, so that (as well as yours I'm sure) will do a lot better than mine in good markets.
I think it all boils down to "how much risk do you HAVE to take" - if you think you will need to withdraw a significant amount of income from your investments after a certain number of years, then you would have to take the extra risk. So I am very fortunate not to be in that position.