FPNIX is IMHO a unique fund, one managed for preservation (using a wide variety of strategies and derivatives defensively), as contrasted with a fairly vanilla (albeit well managed) short term bond fund.
Different paths to the same end. As you note, performance is very similar after expenses. Which suggests that the modest incremental cost of the more wide ranging fund has been paying for itself, even in a pretty constant low interest environment. When the markets shift sooner or later, I expect its defensive strategies to show their mettle.
If one just looks at average figures (which, especially in the case of FPNIX I feel do not tell the whole story), one is getting double the SEC yield and duration that's only 3/4 as long (1/2 year shorter) in exchange for diving into some junk. (Though nearly 70% of the fund's bonds are AAA rated - more than BSBIX's AAA, AA, and A combined.)
I'm a fan of Baird funds, so I'm not knocking BSBIX. Rather, I'm addressing what is different about FPNIX.

I'm another fan of the Baird Funds, but I'd say the main difference between BSBIX and FPNIX is that the disastrous year of 2008 saw BSBIX lose 1.79% while FPNIX managed a gain of 4.31%. That would probably be something of a worst case scenario for BSBIX in a comparison with FPNIX. Otherwise, BSBIX seems to pretty consistently outperform FPNIX by a small margin.
I should think if the original poster is willing to wait 3-5 years that pretty much any solid short term bond fund will provide a small gain (maybe 2% or so). I wouldn't argue against either BSBIX or FPNIX, or even ZEOIX or RSIVX (which are quite different but still pretty safe over 3-5 years, I think).

Gosh, Solarcity 5y bonds, if you can go 5y, and perhaps others similar.
This is assuming BERIX and VWINX are too risky for your taste.

I own BERIX and VWENX in the moderate portion of my portfolio (10-15 years away).

Gosh, Solarcity 5y bonds, if you can go 5y, and perhaps others similar.
This is assuming BERIX and VWINX are too risky for your taste.

If one were going to choose FPNIX, Why not consider BSBIX? The institutional shares are almost half the cost of FPNIX .30% vs. .56%? What would be the advantage over BSBIX? The performance seems very similar as well.

Huh? Article is exceptionally sketchy. I guess Simon's purpose was simply to define a term.
He alludes to "benchmarks." What is not very clear is that one's benchmark for a given asset varies tremendously depending on factors like goals, risk tolerance, age, etc.
At age 85, I'd consider a 50% allocation to equities to be overweight. At age 25, I'd consider the same allocation underweight. An investment or fund manager may set a benchmark for any asset, not just equities. Some managers benchmark gold, Treasuries, real estate, etc.
Most mutual fund Prospectuses lay out some type of benchmark for the various assets it may hold - though the exact terminology differs.

My interpretation of not taking "a big risk with principal", and of "near cash", and of "3-5 years" is that one is willing to live with short term fluctuations and minor dips in principal, but expects to come out positive at the end of 3-5 years.
That puts pretty tight limits on what one can do with the money. Otherwise, I wouldn't consider it part of a "cash" allocation. In other words, I tend to be a bit more cautious with cash. YMMV.
So I like the NTAUX suggestion (I wasn't familiar with this fund). Unfortunately, while it beats your current 0.50% taxable yield (since it's a muni fund), its 0.50% tax-free yield still doesn't beat FDIC-insured internet banks (yielding around 1% taxable now).
I also like FPNIX (and have suggested it before myself). I'm comfortable with its junk bond (BB) rating, but only because I've followed this fund for years (never invested). Otherwise, I'd be leery of delving into junk now, especially with my cash allocation.
Another thought is to use defined maturity bond funds. Here's an AAII paper explaining them, discussing the pros and cons, and listing (most of) the current options. (It omits the older American Century Zero Coupon series, which will be more volatile because with zeros, duration = maturity).
If you're fairly sure you won't need the cash for 4-5 years, you might use an "immunization strategy". You can buy a fund like FMCFX (maturity 2019, muni bond fund, SEC yield 1.13%; it beats iShare's 2019 IBMH's 1.07% SEC yield w/o bid/ask spread); or Guggenheim's BSCJ (2019, corporate inv. grade, SEC yield 1.83%).

FYI: Fees are no friend to fund investors.
Over the long term, fees are among the best predictors performance, according to Morningstar. That means paying up for a stock picker is going to leave you fighting uphill from the get go.
Greg Carlson, Morningstar’s senior analyst covering equity strategies on the manager research team, finds just four — count ‘em — funds that charge above-average fees but still attain the research firm’s highest rating.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/05/04/4-pricier-funds-that-are-worth-their-salt/tab/print/

If Mr Gross was of his stature in years past, this article would be generating a lot of buzz on this board. But now he's just another prophet of pessimism, the likes of many we have seen since 1982 (not sure where it gets 1981) Still, an interesting missive by Mr Gross and let's face it, at some point these talking heads will get it right about the End of the end. On a personal note, albeit still 2 years away from the dreaded 70 of Mr. Gross, I can certainly empathize with his phobia of being 70. Even though I am as active and healthy as I was 50 years ago, unlike turning 40, 50, or 60, I simply am unable to put a positive spin on turning the big 70. Yuck!
Edit: where does he get that " fully invested investors wound up with 20 times as much money as when they began" (since 1981 and the Dow at 900) It's much more than that when you factor in the compounding of reinvested dividends.

I have a 529 account in Utah (with Vanguard index funds) and one in West Virginia (using DFA funds) and it is interesting to compare. Over the past 4 years, the Utah plan has outperformed, but again its not apples to apples. FWIW

"Target-date funds have selected dates at which time the assets will be liquidated"
Once again we find a financial writer who doesn't seem to know what he is talking about.
Target date funds' dates refer to the general date of one's retirement. They tend to come in two varieties: one with a glide path that reaches its terminal allocation at the retirement date (e.g. 70/30 or 80/20), and one where the fund holds a gradually declining amount of equities for 10-15 years into retirement (in anticipation of a 25-35 year need). Either way, these funds are not liquidated.
There are two types of funds I'm aware of that are liquidated on a specified date (excluding UITs that pretty much by definition terminate). One type is target maturity bond funds, like the American Century Zero Coupon Bond Funds, or Fidelity's newer Defined Maturity Funds, or Guggenheim BulletShare ETFs. Here's a good Vanguard paper on defined-maturity bond funds.
Another type includes some managed payout funds. Managed payout funds are funds that are designed to work like annuities (if all goes well - they're not guaranteed). Some, like Vanguard's, are designed to pay out in perpetuity. Others, like Fidelity's Income Replacement Funds, are designed to terminate on a specific date. These funds hold a mix of equity and debt, and are liquidated on the specified date.
That subtype of managed payout fund is the only one I know that match the description of a "target date fund" given in the article here.

Mark makes a very good point. Maybe I'm wrong, but my sense is we have very few "stay-put" type investors posting on this board. There's one notable exception (And I'd rather not go there, thank you.)

Hi hank,
I am a "stay-put" investor. Leaving out bonds in my retirement accounts and internationals where I like to go active, for the most part, my returns are inevitably superior with passive index funds. I have a few exceptions like a Primecap Managed fund, but my exceptions are far and few between.
I have never learned how to time the market, which to me is synonymous to being "active", so the best I have learned is that if I want to gamble with some percentage of my portfolio, and I do, the ER will not be over 50 basis points. The least I can try to do is put some odds on my side.
Best Regards,
Mona

Hi bee,
A nice lower Standard Deviation combination throwing off some nice income, is a combination of VWINX and PONDX

Since 2008 that combination would have improved a stand alone VWINX portfolio:
(click on image to view more clearly)

I know this topic has been tossed around numerous times on this board, but I'm always looking for suggestions on what to do with my cash. I'm 50 years old with more than $100,000 sitting in banks and credit unions earning about 0.50 % in interest. I know it will erode in value over time due to inflation, so I would like to beat that at the very least without taking a big risk with principal. I already have nearly $1M in a conservative portfolio (35% Bonds) (40% equities) (25% cash) so I'm looking to do something with a portion of the cash. Part of it should stay in an emergency fund, but I have about $100,000 that doesn't need to be used for at least 3-5 years. I call it "near cash." I've been looking at a few suggestions on the board, such LALDX, OSTIX and RSIVX. It appears that interest rates will be higher over the next few years so I do have to take that into consideration with any bond funds. Any other suggestions? Thanks in advance.

I guess Mr. Icahn was on vacation on another planet last June, when junk really was high-priced at a spread of 3.4 and yield of 5.2, versus 4.6 and 6.1 now. Is he confusing energy junk with the broader category? Maybe - lower down in the article, it sounds like he's worried about his energy investments.
Not to imply that HY couldn't take a fall anytime, like every other stretched asset in the land ...

I had read that article and while not necessarily disagreeing (Marty Fridson the junk bond guru feels likewise) markets don't usually top amid gloom but ebulience. It's encouraging that junk is outperforming not just everything in bondland in 2015, but many of the major stock indexes also.

Mark makes a very good point. Maybe I'm wrong, but my sense is we have very few "stay-put" type investors posting on this board. There's one notable exception (And I'd rather not go there, thank you.)
Don't mean to suggest we're a bunch of highly active market timers. That I don't know. On the other hand, I doubt many here have held mostly the same funds year-in and year-out for 15 - 25 years or longer without at least varying the allocations to each. I'll confess I haven't.

But then I am biased! Junk bond funds (PHYTX) are notable for their trend persistency and low volatility making them amenable to various trading methodologies using tight stops. Yes, I know 2008 was a disaster but the tight stop methodology would have kept you out of harm's way.

Comparing PHYTX to PONDX since Dec 2007 on a buy and hold basis the graph below shows PONDX produced similar returns with less than half the MAXDD. I would imagine tight stops would achieve greater upside gains while removing MAXDD entirely. Would you review with us the nuts and bolts of this strategy?

Thanks Hank.
So, right, Hussman just has four, but everyone has under-performed its peers over their lifetimes, although HSGFX is pretty much a push.
And Permanent Portfolio has three of four under-performers.
Here's the data...

Each has at least one Three Alarm Fund...

In a NUTSHELL:
For some asset classes, such as large US Stocks, DFA doesn’t seem to make much of a difference. DFA’s large company fund (DFUSX) is very similar to Vanguard’s 500 fund (VFIAX), although it charges a slightly higher expense ratio (10 basis points vs 5 for the Vanguard fund). The performance difference? According to Morningstar, DFUSX has had an average annual return (arithmetic) of 7.96% per year for the last ten years, compared to 7.94% per year for the Vanguard fund. Am I going to pay 0.37%, much less 1% to get DFA access to that fund? No way. For other asset classes, however, the difference is larger.