FYI: This article is part of a regular series of thought leadership pieces from some of the more influential ETF strategists in the money management industry. Today’s article features Jack Gilligan, director of research for ClearRock Capital.
We spent two days this month in Newport Beach, California, at the Inside Fixed Income conference. It was a great opportunity to try to get our finger on the pulse of the active versus passive debate in fixed income, a deeper dive into the intricacies of trading fixed-income ETFs and an attempt to soak up the market outlook of industry sages such as Dennis Gartman, Bob Smith and Jim Grant.
Here are our key takeaways from two jam-packed days
Regards,
Ted
http://www.etf.com/sections/etf-strategist-corner/inside-fixed-income-2017-takeaways

October marked the 10th year of the current full market cycle, which started in November 2007 (top of last cycle) and bottomed in March 2009.
Here are 10 funds that have delivered perfect scores in their categories across multiple risk and performance metrics since the start of the cycle and consistently within it (click image to enlarge):

By name and symbol:

• Matthews Asia Dividend Fund Inv (MAPIX)

• Artisan International Value Fund Inv (ARTKX)

• MFS International Value Fund A (MGIAX)

• GMO Quality Fund IV (GQEFX)

• Jensen Quality Growth Fund J (JENSX)

• Eaton Vance Atlanta Capital SMID-Cap Fund I (EISMX)

• American Century NT Mid Cap Value Fund G (ACLMX)

• Janus Henderson Small Cap Value Fund L (JSIVX)

• Vanguard Tax-Managed Balanced Fund Admiral (VTMFX)

• Eaton Vance and Diversified Currency Income Fund A (EAIIX)

Eight are MFO Great Owls (five 10-year, three 20-year).

Whew. This started out as a simple exercise and will try and provide commentary on my portfolio in addition to allocations and percentages. I have three portfolios. First one , is a taxable account which has a majority of the bond allocation at 80%, which includes 2 munis I am holding til maturity, also have two stocks in that portfolio, one of which I am getting ready to sell for its gains. That portfolio is 27% of my total. The other two are a traditional ira and a roth, and the roth is the larger of the two. You will notice some duplications in fund characteristics, the result of my moving from Merrill Lynch last year to Fidelity. Some positions I could not add to since they are institutional funds, so had to add similar funds from another fund company. I take a barbell approach to the total, balancing aggressive funds with conservative ones. More people seem to use balanced funds, I chose this method. That said, I am 68% equities, 32% bonds and cash, and 66 and retired. SS provides me about 1/3 of my expenses, rest comes from taxable account, which will be the first to be depleted, but I do have to start taking from the ira in four years. I am trying to follow the basic set up that Pudd used, adding my own tweaks. This reflects iras only. I threw in etfs into the mix. Here goes:
Large and multi cap:
MSEGX 1.5%
POGRX 2.6%
RSP 1.0%
SMGIX 6.4%
TWEIX 2.5%
VIG 3.0%
VDIGX 6.5%
VOO 5.6%
VPCCX 2.9%
VWINX 2.7%
Sector funds
CMTFX 3.1%
PHSZX 1.4%
FRUAX 1.5%
FSPHX 1.3%
IHI 2.0%
JRBFX 1.3%
PRGTX 6.2%
RHS 3.7%
SHSAX 1.4%
VPU 2.0%
FRIFX 2.9%
Small-midcap
CCASX 1%
SMDV 1%
UBVSX 1.3%
Global non sector funds (with a minimum of 30% foreign)
APDGX 3.0%
IWIRX 2.6%
Foreign
FMIJX 4.5%
SIGIX 4.9%
GSIHX 1.8%
OSMYX 2.8%
MINDX 2.5%
Stocks
MMM 2.1%
TRV 1.2%
Bonds and cash are 9.6% of total iras, since taxable portfolio has the high bond allocation. I use PONDX, PYACX, CPXAX, GIBIX.
According to Fidelity, in the iras, I am 76% large cap, 17% mid cap, 7% small. The above small cap funds I have do not reflect total small cap exposure since I have small cap stocks in a number of funds that are multi cap. I usually have more stocks, and use them more for trading than investment.
Im sure I have many more funds and etfs than most, but this is cut down from earlier this year :) All comments welcome, good and bad.

Retail only makes up 2% of the $1T of HY debt maturing over the next 5 years, but as an prior owner of FAIRX (large holding of SHLD) and an investor in FSRPX I've been paying close attention to Retail.
Why is Retail Struggling?

The root cause is that many of these long-standing chains are overloaded with debt—often from leveraged buyouts led by private equity firms. There are billions in borrowings on the balance sheets of troubled retailers, and sustaining that load is only going to become harder—even for healthy chains.
The debt coming due, along with America’s over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster. The spillover will likely flow far and wide across the U.S. economy. There will be displaced low-income workers, shrinking local tax bases and investor losses on stocks, bonds and real estate. If today is considered a retail apocalypse, then what’s coming next could truly be scary.

Article (Bloomberg):
America’s ‘Retail Apocalypse’ Is Really Just Beginning

I'll go with American Funds ... Global Balanced Fund (GBLAX). There are many ticker symbols for this fund including a no load F-1 ticker of GBLEX. This is a team managed fund with global exposure to both domestic and foregin securities. Although, I don't own this fund I do own Capital Income Builder (CAIBX) which is also considered a world allocation fund and one I have owned for a good number of years. From my perspective either one would be a good choice. Capital Income Builder focus more on income generation while Global Balance takes a more balanced approach towards income and growth. Both funds can be opened with only $250.00. So, they are well suited for a starting investor as I was at the age of 12.
http://www.morningstar.com/funds/XNAS/GBLAX/quote.html
____________________________________________________________________________________________________
Trailing comment after reading a few comments below. Folks, remember Old_Skeet's first investment (at age 12) was FKINX a hybrid type fund because it gave me exposure to both the bond and stock markets. Like wise, GBLAX does the same thing but from a global perspective. In addition, it has according to Xray about a 23% weighting in growth along with having about a 25% weighting (combined) in the technology and health care sectors. Being team and sleeved managed reduces manager risk.
Again, I staying with my pick.

@hank, I love the logic about PRWCX and I try to do something similar, mostly related to asset allocation decisions but also each fund to some degree. For example, I've owned PRNHX for a long time and at $21BN of assets its way beyond, and has been for quite a few years, what I think is reasonable even for a mid cap fund and certainly for the small cap fund its supposed to be. But it keeps putting up the returns and I keep holding, although I've taken all of my original investment and more out.
It has had the same manager since 2010 and the expense ratio is fine, but the conclusion I've drawn is they have a better process than most others and I'd guess the same for PRWCX, which I don't own. Capital appreciation has done well even with manager changes and I probably wouldn't keep more than a small amount of New Horizons if Ellenbogen left or retired, but T Rowe Price seems to have a good number of funds that seem to have very good processes in order to overcome the logical obstacles they face and I also think they manage succession planning very well.

@ MikeM: What year Target would you take? As for me 2025 or possible 2020.
Derf

Thanks @msf for sharing of your similar story and your link to such bad news. I guess the only way around the IRS's assertion is to let these shares ride until I pass allowing my heirs to receive these shares with a "stepped up basis upon death".
fairmark.com/investment-taxation/capital-gain/stocks-and-other-securities/inherited-stock/
BTW, I also did get cash for the fractional share value as well.

BNY Mellon - https://www.bnymellon.com/_global-assets/pdf/bny-mellon-funds/2017-estimated-capital-gain-information.pdf
Guggenheim - https://www.guggenheiminvestments.com/etf/distributions
Pimco - https://www.pimco.com/handlers/displaydocument.ashx?wd=Portfolio Statistics Previous Month End&fn=2017 PIMCO Funds Capital Gain Estimates.pdf&id=zE6WqsNEZWDsMx51NM3gOJfszAc2O4VrWGwALYJwnNKhYEvqaedxJLzNi4M0hSUcDqBBbln2ZUlI4w00R2nuJDJkrBSyZLyu3TiOvW32buOwaulEdGjizDsfTa3caF+lPem43X9igYH2J/RlxqJcjW/CYm2sMaVkopD6E39f19VQcyl6x4iNeLMLgD4tAS2w3xOqBT2k1TiOl5mbO9Dc4UsbIYPzZHywBl1O4KVj6mcyv6MSRPqOMTV7WO/LTMvGKUgag6ZPguAPoog8f8SfvfYiYpdUwTswQY9hNxBr3bGv60wqL+dbbCmsKyCH8i0j

FYI: It's wrong for people to think that they have to be wealthy to get rich investing in the stock market, famed buy-and-hold investor Ron Baron told CNBC in a Friday interview.
Regards,
Ted
https://www.cnbc.com/2017/11/10/billionaire-ron-baron-says-any-patient-investor-can-turn-5000-dollars-a-year-into-nearly-1-million-dollars.html
M*: Baron Family Of Funds:
http://quicktake.morningstar.com/fundfamily/baron-capital-group/0C00001YPS/fund-list.aspx

FYI: (I will link episode as soon as it becomes available, early Saturday morning.)
Regards,
Ted
November 9, 2017
Dear WEALTHTRACK Subscriber,
Question: what have been two of the most distinctive features of the recovery from the financial crisis of ‘08-‘09? Answer: historically low levels of inflation and interest rates. Despite years of numerous predictions to the contrary inflation has stayed stubbornly subdued and, with some help from central banks around the globe, so have interest rates. But is this nearly decade long pattern finally being broken? This week’s guest says yes and there is evidence to back her claim.
As a recent headline in The Wall Street Journal reads: “Inflation the slumbering giant begins to stir.” To illustrate the point the Journal showed a chart of year over year changes in consumer prices in the U.K., U.S. and Eurozone. They bottomed in 2015 and have slowly risen, with fits and starts ever since… Japan has shown a similar pattern.
Meanwhile interest rates on benchmark 10-year government bonds are rising. U.S. rates ticked higher recently and yields in Germany and Japan are off their mid-2016 lows.
There have been other episodes of rising inflation and interest rates before this which didn’t last. This week’s guest is betting this one is for real.
She is Kathleen Gaffney, Director of Diversified Fixed Income at Eaton Vance where she is also the lead portfolio manager of the Eaton Vance Multisector Income Fund which she launched as the Eaton Vance Bond Fund when she joined the firm in early 2013.
The fund is known for its flexibility to seek higher total return opportunities anywhere globally and throughout the capital structure of the companies chosen. As a result it can buy common and preferred stocks, convertible securities and bonds. It also invests in currencies. That approach however has also meant “significantly more volatility” than its peers in Morningstar’s Multisector Bond category. Case in point: the fund declined 17% in 2015 and rocketed up 22% in 2016.
Gaffney is also lead portfolio manager of the somewhat more traditional Eaton Vance Core Plus Bond Fund. It carries a 5-Star rating and has ranked in the top performance percentiles in its category for the last 1, 3 and 5 year periods, both under her leadership and that of former managers.
If you miss the show on television you can always watch it on our website at your convenience. If you’d like to see the show before it airs, it is available to our PREMIUM subscribers right now. We also have an EXTRA interview with Gaffney about how she finds "think time" in the midst of information overload. It will be available exclusively on our website.
If you would like to take WEALTHTRACK with you on your commute or travels, you can now find the WEALTHTRACK podcast on TuneIn, Stitcher, and SoundCloud, as well as iTunes. Find out more on the WEALTHTRACK Podcast page.
Saturday, November 11th is Veteran’s Day. Please take a moment to remember all of those past and present, who have sacrificed so much to give us the freedoms we enjoy today. I personally salute my Dad, Husband and Son. I am so grateful for their service.
Have a great weekend and make the week ahead a profitable and a productive one.
Best Regards,
Consuelo
Video Clip:

M* Snapshot EBABX:
http://www.morningstar.com/funds/XNAS/EBABX/quote.htmlutm_term=0_bf662fd9c0-2b02004c36-71656893
Lipper Snapshot: EBABX:
https://www.marketwatch.com/investing/fund/ebabx
EBABX Is Unranked In The (IB) Fund Category By U.S. News & World Report

(Double-dipping here)
Along a similar vein to the card’s professed wisdom ... the simplistic slogan I credit with turning my financial life around more than 25 years ago is: “Pay yourself first.”
I first heard it voiced by an (ironically) unlikely mutual fund promoter of the time, Richard Strong. His Strong Capital Management used the slogan prominently in its advertising. Up to that point I’d thought of saving only as depriving oneself of something. The slogan turns that idea upside-down and makes saving sound much more like a reward. Sure helped me get turned around.

More thoughts...If you had no income and had no assets and inherited $1M today tax free..... would you invest it all in the market today at a 4% withdrawal rate (many people are 4-5.5%)?

This article sheds some light on the topic and one fund (VWINX) succeeded at providing a 4% withdrawal and capital appreciation.
long-term-growing-income-open-end-mutual-fund-possible

More thoughts...If you had no income and had no assets and inherited $1M today tax free..... would you invest it all in the market today at a 4% withdrawal rate (many people are 4-5.5%)? This Bull market is up 3.5 times since 3/9/2009 low. Or for that matter DCA into the market?
The above Portfolio Visualizer success rate analysis thru 2017 assumes equal odds of markets moving higher vs markets moving lower from this huge bull run as of today. I personally do not like those odds.
Cost basis is critical. These withdrawal rate calculators/simulations often focus on did the investor run out of money altogether (success rate analysis)? I would argue that permanent impairment of capital can occur without going to zero. An investors quality of life can be affected if annual income is reduced by a significant amount due to decreases in portfolio value (with static 4% withdrawal program).
I am not against buy and hold but I am a proponent of establishing a cost basis with some degree of caution.

Fairport-based Manning & Napier acquired 75% of Rainier more than a year ago after a period of heavy outflows from Seattle-based Rainier. While the three Rainier Funds still don't formally carry the Manning & Napier name (eg., Rainier Large Cap Equity Instl), we've updated the MFO ScoreCard (and our master names list) to reflect it (click image to enlarge).

The MFO 5-Year Great Owl Manning & Napier Rainier International Discovery Series I RAIIX is contractually sub-advised by Rainier. Its portfolio manager is Henrik Strabo.
On the whole, however, the Manning & Napier fund family has not rated well on the absolute-return driven MFO Scorecard (OSC means Oldest Share Class, ASC means All Share Classes), click on image to enlarge:

Similarly, it has no funds on the MFO Honor Roll and 7 on the MFO Three Alarm list (click image to enlarge):

All that said, Manning & Napier's overall numbers suggests a firm that focuses more on risk adjusted returns and capital preservation than absolute returns, which drive the ScoreCard, Honor Roll and Three Alarm designations.
The irony is that their philosophy states: "A Focus on Absolute Returns - A focus on price can help investors avoid permanent loss of capital and is aimed at maximizing absolute returns over the long-term."
David profiled positively Manning & Napier Pro-Blend Conservative Term Series S EXDAX in 2015 and Manning & Napier Disciplined Value Series I MNDFX in 2011.
Since inception, they both hold an MFO Rating of 5, or top quintile in their categories, as do 8 other funds in Manning & Napier's line-up (click image to enlarge):

Hi @expatsp
As I noted, the fund isn't high on the category list at M* against equity style RE funds; and just kinda chugs along with a decent yield and cap. gains. The fund did take about a -32% hit during the market melt.
I suppose the fund for our house, is our toe in real estate (about 10% of our portfolio) that many would consider the "chicken" side of investing in this area. :) I have not checked, but presume our "real estate" equity among other broad based funds adds another few percentage points of exposure to this sector.
Composition:
https://fundresearch.fidelity.com/mutual-funds/composition/316389865?type=sq-NavBar
Chart from Sept. 2004 to date:
http://stockcharts.com/freecharts/perf.php?FRIFX,IYR,RWR,VNQ,PETDX&n=3296&O=011000

Hi, Ben.
I had the same concern but spoke with the adviser about it. The turnover is a one-time event linked to the move from being an Allianz fund to being independent. Two factors: Allianz wanted large cap and they pulled all of their clients' assets out at the point of transition. F&T then made a special cap gains distribution so that the tax burden fell on the departing shareholders rather than the new ones. They now estimate 0% distribution this year with a small tax loss carryforward.
Based on the management of their small cap separate accounts, they anticipate turnover closer to 24%.
For what that's worth,
David

@Sven - I guess I disagree about Roth taxation. I think they will figure a way to make all investments after-tax with tax-free dividends and capital gains.

@Anna, At present Roth IRAs are funded by after-tax dollars and thus are tax-free upon withdrawal. What I am saying that there was discussion that would tax Roth IRA at later days and that is called double taxation. Obama administration floated that idea but back down quickly when it was released to the press.

Dear friends,
I'm delighted that a number of folks joined us this month who we haven't heard from in a while.

• Sam Lee reflected on the tiff involving Morningstar and the Wall Street Journal.
  
• Mark Wilson shared some brief and welcome reflections on the capital gains season
  
• Dennis Baran wrote a Launch Alert for American Beacon Shapiro Equity Opportunities Fund (SHXPX), which has a phenomenal track record as a private strategy
  
• Likewise, I wrote one for Northern Trust Quality US E.S.G. (NUESX), a really low-cost, low minimum way to target two useful attributes at once: a high quality corporation and a record of avoiding problematic behavior.
  
• Sean Stannard-Stockton participated in an Elevator Talk about his Ensemble Fund (ENSBX)
  
• We profiled Fuller & Thaler Behavioral Small Cap Equity (FTHNX) and, in the process, get to play with Charles's rolling three year average metric to see how consistent the fund has been compared to its neighbors.
  
• Charles debuted a new Premium correlation tool which allows you to identify category outliers; it's an interesting way to find out whether you need to discount a fund's ratings since there's a pretty good chance that a fund with no correlation to its peers or benchmark is probably miscategorized. It is, at the very least, driven by forces unrelated to those driving the category.
  
• Ed vents, just a bit, about the cultural elements that permit sexual harassment in the financial services industry; he's not sure that we've seen the end of this one.

Hope you find some useful nuggets in their somewhere.
David

I'm thinking that sometime in the future Roth withdrawals will be taxed once contribution principal has been removed. So, if you invested 100k in the form of contributions in your Roth, through the years, the first 100k taken will not be taxed; but the investment gains after contributions will be taxed when removed or some form of this. This one of the reasons I never opened a Roth account in the first place.
If and when the government needs money ... Hello, taxation.
My "Crystal Cube" when polled gave the "yes" answer ten out of ten times.