Hello,
I enjoyed reading Charles Boccadoro's blurb he wrote about "A Low Cost Alternative to One USAA Managed Portfolio."
I decided I'd carry the analysis work a little fauther on the 50/25/25 portfolio consisting of FFNOX, FTBFX & BBALX and inputed the funds along with the necessary data into Morningstar's Portfolio Manager. The things that stood out in this analysis was that the portfolio as a whole had a yield of 2.54%, with an average bond duration of 5.26 years along with an average maturity of 7.4 years. The funds within the portfolio combined were trading back of their 52 week high by 2.1%. The portfolo's year-to-date return was reflected at 6.2%, 1 year return at 4.4%, 3 year return at 4.1%, 5 year return at 7.5% and the 10 year return was shown at 4.8%. Year-to-date the porfolio's performance was pretty much in line with my bogey, the Lipper Balanced Index.
All in all, this is not a bad three fund portfolio ... and, if I were a new investor starting out today it is one that I'd most likely find favor in. But, to reconfigure my own portfolio would necesitiate tax payments for the large amounts of capital gains I'd face if I began to liquidate funds within my own portfolio and move towards something similar. Plus, I'd be taking a pay cut. My trading activity alone within the growth area of my portfolio has generated capital gains amounting to about 10% of my gross income this year. And, if I am not careful I'll be getting dinged for higher medicare premiums. So for me, I plan to continue my sleeve investment system which has also offered good returns. From review of your suggested portfolio's performance compared to my more complex one justifies running my more complex portfolio.
Thanks Charles for writting about your low cost three fund portfolio. I enjoyed reading about it very much as it provided something, crafted by an expert, for me to compare my own against.
Old_Skeet

Seems that some MFO members are trying to find bond funds that fit where the economy "appears for the moment" to be headed judging by recent posts. I have about 50% of my bond portfolio (38% of total assets)geared more toward decent but not best yielding and capital preservation first, return second. Yes I have done some changes, like dumping DBLTX for GIBIX, rebuying some OSTIX recently and adding some interim corporate bond funds in 2016, but don't feel the need to try and find "whats working now" for everything, Im not that smart to know when to get in and out :) Fortunately 50% of my bond portfolio is still in 2 individual munis that Im holding til maturity, so just glad to get their 4.25% yield.
I can live vicariously through some of your choices and be glad for you when it works, and not say anything if it doesn't.
Curious as to whether your bond allocations are more for income and balancing total portfolios or for return. Would love to hear some feedback on this.
Thanks!

Munis suffer worst month since 2008
S&P's index of municipal bonds fell 3.46% in November, writes Amey Stone in Barron's. That's the worst month since September 2008, when it fell 4.83%.
That interest rates rose sharply in November isn''t news, but S&P Dow Jones' J.R. Rieger says potential tax reform in which the highest marginal tax rate could be cut lowers the attractiveness of municipals.
http://seekingalpha.com/news/3228362-munis-suffer-worst-month-since-2008
PTIAX
Performance Trust Strategic Bond Fund
POST ELECTION 2016 COMMENTARY
Key Themes
Continued Strong Exposure to Seasoned Non-Agency Residential Mortgage Backed Securities and Commercial Mortgage Backed Securities
We believe both sectors still provide the best relative defense in a rising rate environment as well as strong cash flows from coupons..
Further Decreases to Taxable Municipals
From first quarter to second quarter, the team decreased the Fund’s allocation to taxable municipals by nearly 7%...
Increased Exposure to Tax-Exempt Municipals, With an Emphasis On 5% Coupon Bonds For Potential Rates Down Offense
We continue to believe that the overall municipal sector offers strong potential cash flows
and total returns, as well as being a more credit worthy substitute to investment grade
corporates.
http://ptiafunds.com/documents/ptiax_commentary.pdf
PTIMX
Performance Trust Municipal Bond Fund
POST ELECTION 2016 COMMENTARY
Why has the bond market reacted negatively to the election of Donald Trump?
Many investors have been confused by the municipal bond markets’ negative reaction to the election results. After markets took time to digest the potential effects of a Trump Administration, they made the speculative determination that many of President-elect Trump’s policies are pro-growth, and thus inflationary, which could lead to higher rates. ...our investment approach,..is that market “experts” cannot
consistently predict the direction of markets or interest rates. At this point, bond markets are merely speculating on potential government policy and its possible impact on rates. Policy actions should speak louder than words, and substantive direction may take weeks or months to materialize. The recent spike up in rates may or may not be short-lived, and we believe --based on experience-- that
chasing predictions does not lead to outperformance over time..
http://ptiafunds.com/documents/ptimx_commentary.pdf
And High Yield Investors
Oil Gains 14% On OPEC Deal – Analysts See Further Gains
Banks are also happy with OPEC. Another constituency pleased with higher oil prices is the banking sector, which will benefit from improved prospects of loan repayment to energy companies. Banks have had to set aside cash reserves to cover from expected defaults on their loans. Earlier this year, 15 of the largest U.S. banks stockpiled $6 billion in cash to cover energy losses, however, as the WSJ reports, defaults have not been as bad as expected. Higher oil prices will likely mean that most banks will emerge in decent shape from the two year oil bust.
http://us2.campaign-archive1.com/?u=ed58b19f2b88e4a743b950765&id=90f27389ac&e=41e04eb3d1
The top performer for the year so far among the major asset classes: US high-yield bonds (iBoxx High Yield Index), which is ahead by a strong 14.2% in total-return terms.

http://www.capitalspectator.com/major-asset-classes-november-2016-performance-review/

Goal: "... long-term capital appreciation, with added emphasis on the protection of capital during unfavorable market conditions."
Inception: July, 2000
No-load
Manager Tenure: 16 years
(From Lipper):
ER: 1.13%
AUM: $528.5M
Current Holdings: 52% Stock, 49% Cash
Annualized Performance (mostly negative)
YTD: -9.54%
4-Weeks: -5.24%
1-Year: -7.90%
3-Years: -9.13%
5-Years: -9.60%
10-Years: -4.94%
From Inception (16 years): +1.49%

Hi guys,
I like what both Edmond and kevindow have written above and, for me, it makes sense. My portfolio has been valuation flat since election time mostly due to my sector orientation. And, I agree that by historical standards the S&P 500 Index is more expensive today over it's historical standard.
Below is my SWAG (Scientific Wild Ass Guess) Forecast ... and, what I am doing.
One of the things I have done to help me find value is to use a blended approach to valuation. I combine the TTM P/E Ratio and the Forward Estimate P/E Ratio and divide by two and then apply the Rule of Twenty as being plenty. This takes into account what stocks have done over the past twelve months plus allows for their outlook.
With this, I have determined, by my measuring stick, that the Index is presently, as of Friday's market close, overvalued by about six percent. In review of some S&P earnings data, earnings are project to grow by about 13% for the Index over the next six months. Fundamentally this is indeed bullish.
By applying my forecast in earnings against todays valuation, the Index is currently selling at somewhat its fair value looking out six months ... I plan no major allocation adjustments based upon this outlook.
Still, with the favorable comments from Edmond & kevindow, I am not backing the truck up either and loading equities as my Portfolio Equity Weighting Matrix Barometer calls for a weighting of 50% in stocks in today's market spectrum. My November Instant Xray analysis reflects a 50% position in stocks and this is about where I should be positioned based upon my risk tolerance and need analysis.
With anticipated yearend capital gains distributions usualy paid in December, I estimate I'll need to do a little equity buying come January to restore the current 50% bubble. Since, I am positioned about where I need to be I plan no changes within my portfolio until January arrives.
I wish all ... "Good Investing."
Skeet

I read somewhere that AF are planning to come out with F shares without the 12B fee in January. We'll see. I would be interested in investing in these shares of Income Fund of America and/or Capital Income Builder since I am near retirement, and would like to develop an income stream. The ERs are pretty low for being actively managed. I already own a good chunk of Wellesley, and am looking at other funds for income.

Over the past 4 weeks FAIRX is up nearly 29%! Morningstar rates FAIRX a one star for every time period (could be some kind of record for a fund that's been around more than 10 years).
Looks like FAAFX has made it YTD gains in the past 4 weeks also.

Dear friends,
The season of darkness and light is upon us, which is a pretty good signal that the December issue of the Mutual Fund Observer has launched. You can find it at http://www.mutualfundobserver.com/issue/december-2016/
If you prefer the long scrolling read, that's available at http://www.mutualfundobserver.com/2016/12/
Highlights of our December issue include:
Snowball’s reflections on how to react to the fact that five major U.S. equity indices reached all-time highs at the end of November (short version: the last such occurrence was 12/31/1999, which implies a degree of circumspection is in order) and to the fact that Donald Trump is president-elect (short version: don’t).
Leigh Walzer, president of Trapezoid LLC, starts with the premise that investment risks are now tilted strongly toward inflation but that traditional inflation hedges (e.g. TIPs) are unattractively value. As he models superior alternatives, he offers up the surprising possibility that modest doses of small cap funds might well make a major difference.
Ed Studzinski has far more extensive investment experience than the rest of us and often pursues matters into the thickets. This month he looks at not-quite criminal misstatements of qualifications in a case surrounding a royalty trust to raise the prospect that we need to be a bit less credulous when our managers are introduced to us, then recommends James Cloonan’s new Investing at Level 3 for its cautions on conflicts faced by mutual fund directors. He ends by encouraging folks to learn from Yale’s David Swensen’s advice, don’t hire managers who seem bewildered by their own portfolios.
Many of us have portfolios that have sprouted funds like a garden sprouts weeds; Charles Boccadoro offers another tutorial on how to systematically assess and simplify a portfolio, using a friend’s USAA collection as a guide.
One of the great virtues of scholarly writing is that it’s valued for its care and precision, not for its ability to generate clicks or get the author invited onto some Fox Business show. That sometimes masks the fact that really important insights are available, if only you’ll look for them. This month Snowball highlight’s three of the most interesting bits of research from 2016: (1) the largest sample of funds ever assembled offers evidence that small funds consistently outperform large ones, (2) a study of over 3000 fund management teams finds that intellectual diversity on the team is a major predictor of performance and (3) an examination of the behavior of 7000 German individual investors shows that introducing ETFs into a portfolio drives performance down. We offer summaries of what each scholar did and found, and how it might affect you plus there’s a link directly back to the original.
Mark Wilson, the Cap Gains Valet, offers a short Thanksgiving reflection on the cap gains season: less pain, more time with family.
Snowball profiles the best small cap fund you’ve never heard of. Really. 20 year record. Same manager. Asymmetrical risk-return profile over the last 3 years. And the last 5. And 10. And 20. It’s never made it to the top of the hot, hot, hot list but continues offering what you need: reasonable gain, minimal pain. (And it’s from Nebraska.)
Like Leigh Walzer, T. Rowe Price is worried about instability in the world economy and in the fixed-income market, which led them to launch a new fund at the beginning of November. We offer a first look in our Launch Alert for T. Rowe Price Total Return.
One development that’s not important to you yet, but might soon be, is the decision of former Wasatch manager Laura Geritz to launch her own advisory firm in partnership with her former Wasatch colleagues who launched Grandeur Peak. We spoke with Eric Huefner of Grandeur Peak to give you a clue of where that partnership is going.
But wait, there’s more! We detail 36 fund liquidations that make sense, and three or four that don’t. Chip tracked down 50 manager changes, one of which might be portentous. We found only a few funds (and one really irksome ETF) in registration. And, well, stuff. There’s other stuff, too.
We hope you enjoy it all in the December Mutual Fund Observer at www.mutualfundobserver.com!

@Alban - I don't know why AF created fully owned subsidiaries. Maybe it gives them more legal protection? What I can offer is their 2012 SEC filing where they requested exemption from some rules so that they could run their funds this way:
https://www.sec.gov/rules/ic/2012/ic-30150.pdf
In that filing, they say (item #6) that from the investor perspective, "the roles of the Adviser and Wholly Owned Sub-Adviser(s) with respect to the Fund will be substantially equivalent to the roles of an investment adviser and its portfolio-manager employees under a more traditional structure". Exactly what you described. So from the perspective of running the funds, I don't think this structure has any effect whatsoever.
However, one of the exemptions they sought was to avoid reporting how much these subadvisors were paid (under the rationale that, hey, it's all one big Capital Group business, and investors don't care about the internal workings); that's in #5.
Likewise, they don't need to get shareholder approval if a fund switches from one internal subadvisor to another. That's #4.
Finally, here's the SEC response, approving these exemptions:
https://www.sec.gov/rules/ic/2012/ic-30173.pdf

FYI: Financial markets could reverse the solid momentum in equities at the latest by U.S. President-elect Donald Trump’s Jan. 20, 2017, inauguration, Jeffrey Gundlach, chief executive of DoubleLine Capital, said on Thursday.
Regards,
Ted
http://www.reuters.com/article/us-funds-doubleline-gundlach-idUSKBN13Q5FL

It appears that this fund didn't pay cap gains last year either.
https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/77956H872
I didn't know this fund was so exposed to South America. Venezuela's troubles may have something to do with this.

Crash: I stand corrected. What I saw , paid in 2015 adjusted 2016. short-term cap. gains to qualified dividends. Sorry I couldn't help.
Derf

@JohnChisum: Yes, the 10% and 15% bracket don't pay cap gains tax. And this is in a Trad. IRA, anyhow. My question, though, is about the "why." and whether this is a danger signal, a red flag, with regard to PREMX?

Are you sure about not paying cap gains tax? As far as I know, if you have divies or cap gains, you pay tax.

http://www.investinganswers.com/financial-dictionary/investing/return-capital-roc-914
PREMX pays monthly, anyhow. And in my tax bracket, I don't pay tax on div or cap gains. But the footnoted notation at the TRP year-end estimated pay-out page (footnote number 5 for PREMX) leaves me wondering.
https://individual.troweprice.com/public/Retail/Planning-&-Research/Tax-Planning/Dividend-Distributions/2016-Preliminary-Year-End-Distributions

Hello!
What on earth does this MEAN?
"Based on current estimates, all or a significant portion of dividends paid in 2016 may be reclassified from income to return of capital or long-term capital gain. The tax character of dividends will be determined at year end and will be reported in January on your Form 1099-DIV."
OK, I found THIS: "With mutual funds, Return Of Capital is usually done because their underlying investments have not generated the annual income necessary to make the expected dividend payments to investors in a year. This essentially forces the manager to dip into the fund/trust/partnership's principal to come up with the money."
...That can't be good. Does this change the nature, the character, of this investment for me? I've been in PREMX since July, 2010.

I don't think this article helps too much, but here's a 2013 article describing Capital Group's reorganization into multiple groups:
http://www.fa-mag.com/news/capital-group-will-restructure-based-on-investment-objectives-13699.html
Ignoring for the moment that little of the verbiage in the article or prospectus is particularly clear, what I would have guessed is: many mutual fund companies have multiple equity teams where each team manages multiple funds. Those teams tend to be theme based, e.g. large cap, small cap, international, etc. While the names of Capital's equity groups don't suggest that, it is at least consistent with the FA article, that talks about organizing these groups around particular investing objectives.
Regarding AF having "now" introduced no-load shares. They've had no-load shares for many years. What changed is that you're now finding a way to purchase them. But no-load R4 and R5 shares for retirement plans have been around for what seems like forever, with R6 and R5E being added more recently. The F share class (renamed F-1 in 2008) has been around for a couple of decades.
You can get F-2, and sometimes even cheaper R5 or R6 shares through HSA accounts. For example, the HSA Authority offers RERFX.

We've had substantial fund investments with American for over thirty years, and have generally been quite satisfied. I knew that Capital Research and Management was their advisory arm, but didn't realize that CR&M had multiple "subadvisors". Like you, I haven't gotten very far finding any detail on that, but "International", "Global", and "World" sure seems a little redundant, to say the least. Maybe they should have "Universal" and "Intergalactic" too.
Why not try a question directly to American Funds and ask them? If nothing else that will give you an idea of how they communicate with customers. While I do all of the account management myself directly using their website, the few times that I've needed to communicate with them I did it through our sales rep. If you get any more info, please let us know.

update:
https://www.sec.gov/Archives/edgar/data/890540/000113542816001881/frost-497.txt
497
1
frost-497.txt
THE ADVISORS' INNER CIRCLE FUND II (THE "TRUST")
FROST KEMPNER TREASURY AND INCOME FUND (THE "FUND")
SUPPLEMENT DATED NOVEMBER 29, 2016
TO THE INSTITUTIONAL CLASS SHARES PROSPECTUS AND THE INVESTOR CLASS SHARES
PROSPECTUS, EACH DATED NOVEMBER 28, 2016 (THE "PROSPECTUSES") AND THE STATEMENT
OF ADDITIONAL INFORMATION, DATED NOVEMBER 28, 2016 (THE "SAI")
THIS SUPPLEMENT PROVIDES NEW AND ADDITIONAL INFORMATION BEYOND THAT CONTAINED
IN THE PROSPECTUSES AND SAI, AND SHOULD BE READ IN CONJUNCTION WITH THE
PROSPECTUSES AND SAI.
The Board of Trustees of the Trust, at the recommendation of Frost Investment
Advisors, LLC (the "Adviser"), the investment adviser of the Fund, has approved
a plan of liquidation providing for the liquidation of the Fund's assets and the
distribution of the net proceeds PRO RATA to the Fund's shareholders. In
connection therewith, the Fund is closed to new investments. The Fund is
expected to cease operations and liquidate on or about December 30, 2016 (the
"Liquidation Date").
Prior to the Liquidation Date, shareholders may redeem (sell) their shares in
the manner described in the "How to Redeem Fund Shares" section of the
Prospectuses. For those Fund shareholders that do not redeem (sell) their shares
prior to the Liquidation Date, the Fund will distribute to each such
shareholder, on or promptly after the Liquidation Date, a liquidating cash
distribution equal in value to the shareholder's interest in the net assets of
the Fund as of the Liquidation Date.
The liquidation distribution amount will include any accrued income and capital
gains, will be treated as a payment in exchange for shares and will generally be
a taxable event. You should consult your personal tax advisor concerning your
particular tax situation. Shareholders remaining in the Fund on the Liquidation
Date will not be charged any transaction fees by the Fund. However, the net
asset value of the Fund on the Liquidation Date will reflect the costs of
liquidating the Fund.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
FIA-SK-040-0100

Folks,
I am exploring the possibility of investing in American Funds now that they have introduced no-load shares. As am I trying to do my due diligence, I came across the following statement from the website of Capital Group "The Capital Group companies manage equity assets through three investment groups. These groups make investment and proxy voting decisions independently...."
After doing some digging in the fund prospectuses, I found out that the name of the adviser company is Capital Research and Management and the names of the three investment groups are 1) Capital World Investors, 2) Capital Research Global Investors, and 3) Capital International Investors. I think that these three investment groups are separate legal entities, but I am not sure. There does not appear much information on them, other than that they appear to file 13F reports separately.
My question is: why is the adviser structured into three equity investment groups? And why are these groups structured to make independent decisions? I have not seen a structure like this before, but could be wrong. Perhaps other mutual fund companies are using similar structures.
I would appreciate any insights that any of you might have. I find this very confusing.
Thanks,
Alban