Thanks to all the posters. After reviewing them and the 3rd quarter commentary, I decided to reduce my allocation to RPHYX. I now have $2 in ZEOIX for each $1 in RPHYX. However, as I had expected RSIVX to be higher risk and more volatile, I am inclined to leave that investment alone for another year to see how it performs going forward (assuming no more self inflicted wounds come to light during that period).

I mulled over the letter a bit more and had some further thoughts on the three mistakes. As mentioned, I only hold RPHYX, but given the funds share the same manager (and have substantial overlap), it's worth keeping tabs on both.
- Goodman: The problems mentioned in the letter -- IPO withdrawn, largest customer cancelling orders -- seem to me that they should have been equity risks, not credit risks. A company that cannot pay off its bondholders without completing an IPO and selling lots of product hardly strikes me as being "money-good." Was there some kind of convertible upside for these bonds (perhaps in the IPO) to justify this risk? Even then, I would not think it is suitable for the objectives of RPHYX.
- Versa/NewPage: Edmond's perspective is excellent, and I have nothing to add for this one.
- Hunt: I am a little troubled that the manager attributes this to a "mark-to-market" situation. I can understand if there was a fall in price solely due to a large bondholder suddenly liquidating and a shortage of buyers (for reasons unrelated to the company itself). But Mr. Sherman says the price was due to the company decided not to release is credit rating. Again I do not understand the rationale for the company's decision, but as an example, if Apple stops giving iPhone sales figures and the stock price drops because investors think it raises a red flag, I don't think you get to call that a "mark-to-market" problem.
Taking this a little further, I wonder what Mr. Sherman's initial assessments of these companies indicated. As others have pointed out, perhaps the large size of the fund means that Mr. Sherman cannot invest only in truly "money-good" opportunities, and he needs to put some money in in riskier issues than he would have preferred? Might be a point in favor of a smaller fund like ZEOIX.

OJ, 'Tis a problem that gets worse every year. My husband goes RMD next year and then me in 2018 and my mattresses are full to overflowing without any cozy comfort at all. Even the utility room storage cabinets are already full. Where do I put it? Muni and blinders?

Don't know, now that the bloom appears to be off RPHYX. Maybe ZEOIX? See thread here.
Otherwise, I still look to internet banks (1%+ liquid rates), or short-intermediate munis (the blinders don't have to be quite so dark) like VMLTX.

Yes, I am slightly displeased by RPHYX and RSIVX's performance. However, they are still a hold for me.
And also a candidate for some tax loss harvesting. I'll be rolling my investments in Strategic Income into High Yield, waiting the requisite 30 days, and then rolling back.

I'm disappointed to say the least; some of these investments (like Verso) sound particularly troublesome and perhaps not researched as well as they should have been. It's going to take some time for RPHYX and RSIVX (both of which I hold) to recover from this, and I won't lie; I'm tempted to take the tax loss.

I have to agree RPHYX and RSIVX are "hold" for me. I'm not going to add any more money at least for a couple of years, assuming I will still hold until then.

I’ve a different take on the Riverpark commentary. I’ve had an unwanted degree of familiarity for some time, with Verso, Newpage and the now-merged entity, due to my ‘day-job’. (and please excuse me, a lot of this is based on recollection). Riverpark’s explanation of the problems at Verso are incongruous with my perception/experience with them.
(Old-) Verso and the merged Verso have been bleeding cash perpetually. Without the merger, Verso would probably likely have had a “corporate event” already. Newpage itself, had entered, then emerged from BK a few years ago. Its trip through BK, allowed Newpage to de-lever somewhat. So along comes Verso, somewhat like a parasitic organism to extract Newpage’s cash to prolong its own existence.
Riverpark’s commentary states that Verso has “exceeded expectations with respect to achieving synergies (of the merger)”. I can tell you with certainty that is a (Verso-) management talking point they put out when their horrific Q2-2015 results came out. – Trying to seduce investors to have faith in a management team, DESPITE the poor results. Riverpark is just parroting Verso’s earnings release/presentation materials, presumably taking it at face value. I viewed the “exceeding expectations” comment from Verso as an indictment --- if they were ahead of the curve in terms of slashing costs, and STILL their reported results were so poor, then they must REALLY be in trouble – and presumably the low-hanging fruit of the synergies has been done. (So not much more to be done to help them.)
As part of the merger (which, I believe closed in January) they did some type of bond exchange. Seem to recall the effect of it was to cram down a principal haircut on some bondholders. In return, the bondholders got a token lump-sum cash-out payment (further draining the merged entity of needed liquidity!!), and higher interest rates on the “new” bonds, some/much of it PIK, not cash. Possibly also a lightening of covenants. Why would you want to lend to a borrower who is doing a principal haircut of its debt? Isn’t that a major red-flag?
A key problem is ownership – Verso is controlled by private-equity firm Apollo. If memory serves, Apollo had large (likely controlling) stakes in both Newpage and Verso. Apollo has a particularly ugly history of asset-stripping companies which it controls, leaving them debt-hobbled to such a degree that servicing the debts eventually becomes impossible. The (predictable-) outcome occurs frequently enough with Apollo, that I view it as a standard Apollo business model. I’ve seen them play this game time and again. Verso, like Apollo’s prior ‘projects’ need not face bankruptcy – all that needs to happen is for Apollo to a)buy a substantial amount of Verso’s bonds at the steep discount provided by Mr. Market, then b) surrender it to Verso in return for equity. In this way, Verso could de-lever. It’s remaining bonds would no doubt substantially rebound in price, lowering its cost of capital.
But doing so, is not in Apollo’s playbook. They extract cash, they don’t contribute cash. I could readily cite other ‘red flags’ over the past year on Verso, but am running long. Attributing Verso’s problems to the regulators is diverting blame. By the way, why didn’t Riverpark mention Apollo, its control of Verso, and its sordid history with other investments?
I’ve a small ‘stub’ holding in RPHYX, having sold most of it earlier in the year as junk spreads kept widening. At that time, also sold a ‘starter position’ in RSIVX which was doing nothing. I was contemplating adding to my RPHYX position shortly, as I suspect junk may continue to be buoyed. Frankly, I’d no idea Verso was a significant holding of Riverpark’s. That it was (is ?) is troubling to me, given my familiarity with Verso -- Verso was never (in the past 3 years) a credit that a prudent portfolio manager would own – at least not without hedging it (possibly by shorting the equity).
After reading the Riverpark commentary, I am rather dis-inclined to add to my Riverpark position at this time. Their explanation of Verso is absent some critical understanding of what they invested my money in. Verso should have been a VERY EASY problem to keep out of the portfolio.

RE: RSIVX and RPHYX, nothing is working for me this year.

It looks to me like this is a difficult environment for fixed income. I'm losing more on DODIX than I am on RPHYX. Seems like it's necessary to take a view on rates before deciding on an investment strategy. Then you either win or lose depending on whether your view is right.

I asked a question as part of a different thread, but thought it worthy of its own limelight.
Here's part of that thread:
rphyx-rsivx-new-commentary-explains-mistakes-that-resulted-in-credit-losses
@David_Snowball commented on a possible alternative to RPHYX or RSIVX :
"...the best bogey I've got is Osterweis Strategic Income (OSTIX), which Mr. Sherman considers a legitimate peer. In their worst stretch, it took them nine months to recover from a drawdown. Since OSTIX is still below its previous high, the drawdown underway now might last longer. So maybe this is your "in a year or two" money, which implies judging performance over a couple year cycle."
This got me thinking and I commented back to David:
"Just picking up on your thoughts for OSTIX as part of someone's "in a year or two" money. I went a bit further and added other time frames as well as other fund considerations to create kind of a "fund ladder"."
For Less than 1 year money - PSHDX, BSBSX, FOSIX,
For 1 year money - RPHYX or RSIVX...or instead, maybe FIRJX or DLSNX
For 1-2 year money - OSTIX,
For 3-5 year money - PONDX, FAGIX
Anyone have thoughts on what your "fund ladder" might consist of?"

@David_Snowball,
Just picking up on your thoughts for OSTIX as part of someone's "in a year or two" money. I went a bit further and added other time frames as well as other fund considerations to create kind of a "fund ladder".
For less than 1 year money - PSHDX, BSBSX, FOSIX,
For 1 year money - RPHYX / RSIVX...or, maybe FIRJX or DLSNX
For 1-2 year money - OSTIX,
For 3-5 year money - PONDX, FAGIX
Anyone have thoughts on what your "fund ladder" might consist of?

Thanks for posting, @clamui. It's good the manager is honest about his mistakes, but it is disappointing. I think your takeaways are wise. I've still got my retired mother in RSIVX, but it is only one of three bond funds I have her in for income.
RPHYX I hold, and it's outperforming money market with only a tad higher volatility, so I remain satisfied with it and hopeful that it will soon outperform some of its peers.

http://www.riverparkfunds.com/downloads/News/RiverPark-Cohanzick_3Q15_Shareholder_Letter.pdf
- RPHYX was hurt by Goodman Networks, a pre-IPO company that the manager thought would be a "money-good" investment until the company's largest customer cut back on orders, and the company cancelled its IPO plans. RPHYX has since reduced its position in the company.
- RSIVX was hurt by three problems: (i) Goodman Networks, as above, (ii) Verso/NewPage, a bet on a merger between two paper companies that ended up getting dragged out and weakened by regulatory review, and (iii) Hunt Companies, a real estate firm that had promised to get credit ratings for its bonds, but then decided to keep its ratings private. RSIVX has reduced its positions in Goodman and Verso/NewPage, but the manager believes Hunt is still a "money-good" investment and is adding more.
My quick takeaways:
- Those who thought the funds' NAV drop was just due to "mark-to-market" pricing problems are going to be disappointed. It seems the manager has thrown in the towel on Goodman (for both) and Verso/NewPage (for RSIVX); they have already sold off at least some of those bonds, so those losses are locked in. For Hunt, the manager is optimistic, but I don't understand the rationale for the company wanting to keep its ratings private.
- Despite the manager's emphasis on making "money-good" investments, it is pretty clear that there are significant risks involved in the funds' investments. Presumably this is still much less than what a typical high-yield bond fund goes through.
- Although the funds are relatively diversified (compared to say, ZEOIX), it's a good reminder of how even just one mistake can impact the funds' performance.
For what it's worth, I continue to hold RPHYX, but have been considering switching or splitting with ZEOIX.

I hold RPHYX rather than RSVIX, but similarly disappointed at performance versus similar funds such as ZEOIX. I am waiting for their 3rd Quarter commentary to (hopefully) get some clarity as to what has happened to these funds' NAV and what to expect going forward. Should be posted here when available: http://www.riverparkfunds.com/Funds/ShortTermHighYield/Commentary.aspx

Seems to be a couple ongoing threads on the same subject.
ZEOIX has held up better over the last month and year to date. But I do have a concern about this fund's risk. Zeo Strategic Income has 32% invested in its top 5 holdings. There are only 31 holdings across the board. So this fund is very concentrated. Maybe not as concentrated as a Bruce Berkowitz fund, but still doesn't have any diversification. Okay RPHYX has few holdings too, but is a little less focused.

Maybe you have seen it already, but I would check out ZEOIX on MFO as a Great Owl Fund. It has very good numbers for risk, SD, Ulcer Index, etc.

Simple answer - assuming all dividends were reinvested, M*'s pages give you the pre-tax, total return (including dividends and price depreciation) numbers I think you are looking for:3.86% in 2011, 4.20% in 2012, 3.39% in 2013, 2.65% in 2014, and a less impressive 0.91% YTD (through Sept 3, 2015).
Depending on whether this is in a taxable account, what tax rates you apply to ordinary income and capital losses, this may or may not have beaten inflation. Eyeballing the figures (see the first graph in linked paged above), it is pretty clear that even after tax everyone came out ahead except possibly in 2011, where the net gain was 3.86%, while inflation was 3.0%. If you were taxed at 25%, your after tax return was under the 3.0% inflation rate.

This ties in with my question in another thread regarding the calculation of long-term profit or loss.
I "spent" a certain amount of money investing in RPHYX. Over the years there have been lots of distributions, and unhappily, movement downward in the NAV. So how has that investment done? Do I now have more or less than what I put in, and by what percentage? (And is that more or less than keeping up with inflation?) While I do keep track of all of this on a spreadsheet, there's no way that I'm going to take the time to account for each and every distribution of each and every fund as an additional amount invested. I don't really care about that. All I need to know is do I now have more or less than I put in.
I'm grateful for the responses that I received regarding this question.

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

Yahoo hasn't incorporated the August dividend:
http://www.riverparkfunds.com/downloads/Distributions/RiverPark_Short-Term-High-Yield-Retail-Distributions-history.pdf
The fund opened the year at $9.89, and closed yesterday at $9.79. That's a loss of "just" 10c. In the meantime, it has distributed $0.1901/share.
If your total (combined fed/state) tax bracket is under 47%, then your after tax earnings on that 19.01c is greater than a dime, so you made money even if you don't get any writeoff on the 10c capital loss.
How much ahead you come out depends on tax brackets, if/when you sell shares, and so on. But there's virtually no way you've lost money so far this year, after taxes.

And if you have no capital gains at all, you also get full credit against your ordinary income.

I understand your point, but this is not entirely correct. :-)
The ability to apply capital losses against ordinary income is capped at $3K. While you might not have any capital gains, you might have capital losses elsewhere bringing your total losses to over $3K. Or you might recognize losses in RPHYX itself above $3K.
That could happen if you let those losses pile up for several years before recognizing them.
Point taken, though.

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.