Everyone ran for cover recently as we saw large weekly outflows in U.S. junk bond funds culminating in the largest on record at 7.1 billion. This amid seemingly every financial columnist, Wall Street strategist, and junk bond guru screaming about the the imminent demise of this wildly overvalued market. So how bad was the recent carnage? Using the Merrill Lynch High Yield Master II Index (the proxy for junk bonds) it was a mere 1.95% correction from closing high to low. Hardly even a garden variety correction compared to some others since the infamous mid-December 2008 bottom in junk bonds. Since the bottom the market has already rebounded 1.49% and sits only around one half of one percent from all time highs. A pretty impressive performance considering all the negative hype and record outflows. Stay tuned for what comes next - all times highs or a decline below the recent bottom.
Edit: I should mention the above refers to junk corporates not junk munis as that market continues to set YTD highs seemingly week after week.

These are horrible options, unfortunately. MetLife and Valic are the worst. TIAA-CREF is passable, but tell your DIL to NEVER put dollars in the TIAA guaranteed option. Once dollars are in that account, they cannot be moved to the CREF side. They can only be withdrawn over a ten-year time period at retirement. CREF has some ok funds, but I would avoid the Lifestyle funds altogether. And their emerging markets, managed allocation, and small cap funds are very weak. Stick with Social Choice Equity, Mid Cap Value, or Equity Index funds. Different institutions have different fund options available to participants. Just keep in mind that TIAA-CREF treats investors' dollars are their own. At retirement, they can make it very difficult to move dollars out of their custodianship. Unfortunately, insurance companies have a stranglehold on 403b options. If the college has a deferred compensation option (457), she might be better served with that, since T. Rowe Price and a handful of other fund companies have staked out claims to that territory. So...best bet is a 457 plan with a decent fund company. If that is not possible, TIAA-CREF is best 403b option, but stay away from TIAA account.

While I agree FLVCX is a great fund (I own both it and SEQUX I don't think a comparison is so sensible. Sequoia is a set it and forget it fund but if you own FLVCX you better pay lots of attention and avoid bear markets.Look at 2008 -54% and 2011 -10% (approximate numbers)Here is a useful link
http://analysisreport.morningstar.com/fund/research?t=FLVCX&region=usa&culture=en-US&productCode=MLE
And a key quote from that link The mammoth gap between its annualized trailing 10-year total return of 11.7% and its Morningstar Investor Return of 4.5% underscores the fund's knack for rewarding the kind of patience not many investors have.

@0445: You bring up a very valid point on the call in 5/16, but I'm will to run the risk of a call.
Regards,
Ted

Are large funds always doomed? I Looked at the resulting performance of the largest Funds from 15 years ago (asset size based on 8/1999) that had the S&P 500 as their prospectus benchmark. Full post here http://www.wallstreetrant.com/2014/08/how-largest-actively-managed-mutual.html

maybe MLPs could be better plays
http://investorinsights.morganstanley.com/content.do?action=displayContent&cid=1780738&oid=1573632&xsl=88/monthly/enewsletter.xsl
http://images.hnw.com/77/201407/OTM_July_2014.pdf

David Winters gives decent interviews, but I have yet to be impressed by his performance at WGRNX, which continues to have underwhelming returns for a fund with an exorbitant expense ratio of 1.85% and AUM of $1.7B. He continues to be a poster child for indexing, such as ACWV. And among actively managed WS funds, I would definitely prefer the lower cost DODWX.
Kevin

Another thing that would concern me is the lack of call protection; specifically, the company can call in all or any portion of this preferred stock at $25.00 starting in 2016:
'
"Ally may redeem all or any portion of the outstanding shares of Series A Preferred on any dividend payment date on or after May 15, 2016."
Compared to the current price of $27.18, this represents close to a 10% capital loss. If you're willing to accept the risk of this capital loss associated with Ally's calling in your stock (and it's likely to be called), you are braver than I am.

FYI: Tomorrow I'm adding Ally-B Preferred to my capital preservation portfolio. At it's present share price of $27.18, par being $25.00 the current yield is 7.82%
Regards,
Ted
http://www.preferredstockchannel.com/symbol/ally.prb/

For your information: SEQUX has 54.47% potential capital gains exposure, which is a lot. So it they sell (which may not happen, or course), one will pay lots of taxes, unless it is in IRA.

@finder, 54.47% is a lot of potential capital gains exposure. But it's not hugely more than the market itself. Look at the Vanguard S&P 500 Index Fund's potential capital gains exposure.

So it's more just a result of a huge bull market since the market low on March 9, 2009 at S&P 500 677.

.

@rjb112: What software are you using to get overlay on M* Fund Snapshot ?
Regards,
Ted

@Ted, I combined two different screens so they could both be seen.
So I'm not seeing the overlay........
First I looked at the "Quote" tab on M*, then took a screenshot.
Then clicked on Tax, per your instructions.
Then took a screenshot of what you see under Tax.
Then combined both screens.
But to answer your question, I'm using Internet Explorer 11 as my browser

For your information: SEQUX has 54.47% potential capital gains exposure, which is a lot. So it they sell (which may not happen, or course), one will pay lots of taxes, unless it is in IRA.

@finder: Click on Tax at top of fund snapshot.
Regards,
Ted
http://performance.morningstar.com/fund/tax-analysis.action?t=SEQUX&region=usa&culture=en-US

Excellent Ted.

For your information: SEQUX has 54.47% potential capital gains exposure, which is a lot. So it they sell (which may not happen, or course), one will pay lots of taxes, unless it is in IRA.

@finder, where do you locate the data about a fund's potential capital gain exposure?
Probably somewhere on Morningstar. Can you reference the exact location?
thanks

I don't think there is a general answer. You have to look at specific age groups.
It has been shown that the first half of baby boomers 1947-55 have done much better financially then the second half and those who came after.
It is the first half of baby boomers that are retiring now.
It is those that come after that will have a difficult time.

FYI: I’ve lost count of the surveys telling us that all Americans will suffer deprivation when they retire. I'm sure you have, too. A recent Harris Poll found that 74 percent of Americans worried about retirement. The National Retirement Risk Index now indicates that 53 percent of Americans are “at risk.”
Regards,
Ted
http://assetbuilder.com/scott_burns/if_retirement_is_so_terrible_where_are_the_riots

For your information: SEQUX has 54.47% potential capital gains exposure, which is a lot. So it they sell (which may not happen, or course), one will pay lots of taxes, unless it is in IRA.

Vintage freak, expatsp and davidmoran, I have been invested in Fidelity Contrafund with Will Danoff, have enjoyed the fund's performance, though the asset size is considerable. Yacktman is closed, but with the AMG affiliation I am going to wait to see how things play out, if they should re-open like Sequoia did. Matthew 25 is also on my watch list but they took a big hit in 2008-09. We may be overdue for a correction, so it will be interesting to see how they hold up. PRBLX is very interesting especially with the dividend focus, I have not seen much on them before so will research further. Thanks for your observations and suggestions, much appreciated, Lukemon

I'm with VintageFreak. I try to buy a fund with a great long term record and a great manager I respect when it's been in a period of underperformance, so long as I still respect the manager. For me FAIRX, with its mediocre 5 year record and great 15 year record, is one I'd rather add to than sell at this point. Berkowitz's investing style -- find a few great ideas, then go all-in -- doesn't go out of style, IMHO, precisely because (unlike, say, quant strategies which others can just imitate or which may not change with the markets) one of its key ingredients is courage and boldness.

That's fair enough Ted. FAIRX had one of the best performances out there, right out of the gate, upon inception. Bruce was Morningstar's manager of the Decade in January 2010.
Ted, I'm guessing that perhaps you used to watch Louis Rukeyser's show, Wall St. Week With Louis Rukeyser.
He used to say, "What have you done for me lately"?
Looking at the past 5 years as of 8/15/2014, a bull market the whole time:
FAIRX: 12.48%
SEQUX: 16.40%
And SEQUX has historically outperformed in down markets and underperformed in bull markets. As you know, the past 5 years has been bull market, so SEQUX was not at its best
Let's look at the $10,000 invested for those 5 years:
FAIRX: $18,004
SEQUX: $21,368
I calculated that using an excel spreadsheet. If someone wants to confirm the data, please do.
Of course, YTD, FAIRX is trouncing SEQUX.
the future returns of each: unpredictable

FYI: David Winters, the investor best known for criticizing the executive pay plan at Coca-Cola Co., has parted ways with another key player in the Coke saga: Warren Buffett‘s Berkshire Hathaway Inc. Now the question is will Wintergreen Fund shareholders dump Winter's by selling their shares.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2014/08/15/winters-who-criticized-coke-sells-berkshire-after-buffett-didnt-criticize-enough/tab/print/