Hi, guys.
I did hear back from the folks at F P A. Their explanation pretty much affirmed my guess. They write, "We needed to align all of our materials and compliance insisted that if we kept using the phrase 'the fund seeks to generate equity-like returns over the long-term, take less risk than the market and avoid permanent impairment of capital' we needed to update the prospectus investment objective accordingly. That was the only motive behind the change." They also affirmed my guess that the other change, allowing the board to change the objective without a shareholder vote, was a matter of trying to hold down administrative costs.
For what it's worth,
David

Reply to @ducrow: Remember. WHEN you buy always important than WHAT you buy :)
I've realized one needs to be patient. It worked for me with FAIRX. With HSGFX not so much. With MXXVX - I keep selling taking gains and buying it back. Hope to sell it again this year, but darn thing has 1 year redemption fee to trying to time it. JORDX also it has worked out for me.
Waiting for SEQUX, GOODX, and few others to tank. That's the way to do it people !!!

catch, you left out the most integral part and that is portfolio size. I have a friend, single, around your age, debt free, no family, lives frugally, has SS and a $1,900,000 portfolio. He says he needs $40,000 a year over his SS to live a comfortable lifestyle. Yet all he does is fret about portfolio allocation/volatility/growing his capital. I say just cash it out, put a portion in individual high quality bonds if you must, and *enjoy life* because you have no worries unless you live well over 100.

Reply to @David_Snowball: I see the omission of "total return" and "income" and insertion of "equity-like". This might reflect his growing reliance on equities versus bonds. This would be similar to comments some time ago of McGregor on his own fund OAKBX, saying that bonds hold it down, and OAKGX is better. If this is a correct guess, I would say yes, I trust the manager to pick up the best asset class under the rapidly changing circumstances. And yes, I agree with MikeM2, that it allows him to go all cash instead of "a combination of income and capital appreciation".

From: "FPA Crescent Fund (FPACX) seeks to provide a total return consistent with reasonable investment risk, through a combination of income and capital appreciation. "
To: "FPA Crescent Fund (FPACX) seeks to generate equity-like returns over the long-term, take less risk than the market and avoid permanent impairment of capital."
No change in strategy. T. Rowe Price just make a comparable tweak on three or four funds. David

First, let's separate the broad based index ETFs from the leveraged, inverse, niche (the late, unlamented HealthShares come to mind). As Investor wrote, all but the first are at best, designed for traders.
I meet John Bogle half way in my view of ETFs. Many are a lot of hype, encourage trading, and are not economical, either from an ER perspective, or from a tax perspective. (I'm largely echoing Investor's comment here).
The broad based index ETFs do mostly live up to their descriptions. They are indeed tax efficient (so long as they are market cap/free float based, or otherwise designed with buffers to reduce turnover). But so are well run, well managed open end index funds tracking the same indexes. (According to its NYTimes snapshot, the last time Vanguard 500 VFINX made a cap gains distribution was December 1999.) And in the case of Vanguard ETFs, there's no tax advantage to the ETF share class, because they are just a class of the same portfolio as the open end fund - so any gains are distributed among all share classes including the ETF share class.
Broad based index ETFs are (generally) low in expenses; but one can often find open end peers with similar ERs. In the case of Vanguard, the Admiral share class (currently) has the same ER as the ETF share class. And both of these tend to be lower than other families' ETFs. EAFE index? EFA (iShares) with its $46B in assets is larger than the rest of the EAFE ETF market. But its 0.34% ER is 70% higher than Fidelity's Spartan International Index (FSIIX's) Fund's 0.20% ER. Even Vanguard's VEA ETF at 0.12% ER costs more than the Advantage share class (FSIVX) of Fidelity's fund. So while ETFs generally cost less than open end equivalents, it's not a given.
The buy/sell mechanism of ETFs, IMHO is more of a detriment than a benefit (except to traders). There are commissions (unless buying at a broker who sells the particular ETF without commission). One of the benefits of ETFs was supposed to be that you could get them pretty cheap anywhere (you just paid a stock trade commission, as opposed to a mutual fund transaction fee which tends to be much higher). If you're relying on getting free ETF trades (because the ETF is on your broker's NTF list), then this benefit of ETFs goes away.
Aside from the possible commission, there's the bid/ask spread. My understanding is that what matters even more than how widely or thinly traded an ETF is, is how widely traded are its underlying securities. If its portfolio is thinly traded, then authorized participants will have a big overhead in buying up the securities necessary to make a creation unit. That means that even if the market price of the ETF rises above its NAV, the authorized participants won't immediately jump in to create more shares, sell the ETF shares, and move the market price back in line with the NAV. All this, because it costs them money to build that basket of thinly traded securities. Not a problem with, say, and S&P 500 ETF, but could be a problem with international ETFs or ETFs of smaller securities.
This gets us to tracking error. There are a couple of sources of tracking error. One is in the portfolio construction/management. All index funds have this problem - whether they are open end funds, ETFs, or any other structure. How well does the management select securities, time their purchases, manage index changes, etc. to track the index? Beyond that, ETFs have a second source of tracking error - the deviation of market price from NAV as just discussed. Not an issue with open end funds. (Open end funds have a different issue though - cash management - how to deal with cash coming in and out of the fund without mistracking due to variable amounts of cash.)
As negative as I must sound about ETFs, I still use them. When there's an index that I want to get and there's no less expensive alternative (taking into consideration the spread, commission, and time I expect to hold the position). When I'm buying a Vanguard index where the open end version has an entry or exit fee. (For example, VGAVX has a purchase fee of 0.75%, while the ETF share class VWOB is purchased on the stock exchange; both have the same ER).
All else being equal, I'll use open end funds; but all else is not always equal and ETFs can serve a role in a low turnover, broadly diversified personal portfolio.

Carne Capital Management's CRNEX. Moneyballing.
Another fund I've posted on MFO, TVFRX, ALSO Moneyballing.
If I hear a third fund Moneyballing, I think it'll be official.

I have always been heavy in EM stocks in my own portfolio, and given this year's bashing of that asset class, I plan to add some more probably next week. For sure will add to WAFMX. Have been running due diligence on EIEMX, which has one of the best long-term risk/reward profiles, and is one of the few EM funds that owns a real position in frontier countries.
For clients, we will likely be re-balancing before long. The benefactors will be EM stocks, and bonds, with OSTIX, LSBRX, and LASYX the likely three bond funds to be increased. Logic would tell us to capture some of the big gains in MFLDX and pump up PAUIX, which is having an uncharacteristically down year for Mr. Arnott. And it may be time to bring our gold holdings back up to our 5% target. We have nibbled around the edges there in recent weeks.

I love to invest in this fund, but it is closed and has been for sometime. Is thee a fund that invest similar to FPA Capital?

Reply to @David_Snowball:
Funny you should mention Van Wagoner. I bought into several of his funds when they first became available, because of his stellar performance with Govett Small Company Fund and made some money. Problem was I held on to them and lost may gains. Got out of his funds before the floor fell out from beneath them.

http://www.sec.gov/Archives/edgar/data/1014913/000089271213000556/ffi497.htm
Frontegra HEXAM Emerging Markets Fund (FHEMX)
http://www.sec.gov/Archives/edgar/data/1545440/000139834413003976/fp0008039_497.htm
VFM Steadfast Fund
http://www.sec.gov/Archives/edgar/data/927972/000119312513339350/d585658d497.htm
MassMutual Capital Appreciation Fund

Actually the only person who can buy right now is me :-) Because I give two
hoots about capital gains distributions since I will have losses to offset it.

Reply to @VintageFreak: Hmmm ... Morningstar lists the potential cap gains exposure as 29.72, but doesn't say 29.72 what. The NAV is about $25, so I'm hoping that the potential tax bill doesn't actually exceed the value of the shares, but with a 2% turnover and a profitable strategy, it's going to have some substantial embedded capital gains.
David

Very important. I guess most should hold off buying till end of year and after capital gains distributions.

Dear friends,
The nice folks at FPA just announced a significant evolution in their five-star F P A Paramount (FPRAX). Effective September 1, it will become a global value fund. Currently it holds 75% domestic stock (mostly midcaps) and 10% cash. Longtime co-managers Eric Ende and Steven Geist will be removed from the management team. Greg Herr and Pierre Py, who became Paramount co-managers in 2011, become the two new lead managers.
Why? FP A's press release doesn't say, but two possibilities stand out.
First. F P A Paramount and F P A Perennial (FPPFX) are functionally indistinguishable. Same lead managers, for about the same amount of time. Comparable expenses, negligible turnover, domestic mid-cap focus. If you chart their performance over the past ten years, the lines are identical. And neither has drawn substantial assets: about $300 million each after 30+ years.
The apparent difference in the funds comes from Morningstar's decision to category Paramount as "world stock," despite the fact that its international exposure is minimal. The different benchmark gives Paramount an apparent edge and a higher star rating.
Second, F P A doesn't have a dedicated global fund but does have the in-house talent to produce one. By creating a clear distinction between its funds and creating a fund whose mission is easier to explain to investors, That nicely complements F P A's recent decision to remove all of their sales loads, which made their funds accessible to more investors.
Here's the red flag, with F P A itself raises: they're going to have to substantially refashion Paramount's portfolio. First, F P A's other funds currently have far higher cash levels (40-60% at last report, as opposed to 10% in Paramount). Second, even if the managers liked current prices, a substantial fraction of the 74% held in domestic stocks would be sold to create a global profile. As a result, investors are almost certain to see high realized capital gains (generally long-term, some quite possibly substantial) during the transition.
For what interest it holds,
David

Sorry Mona :-) I was being sarcastic and people are used to it. I have a lot of losses on the books. This is a way for me to book some against to offset against those losses so I don't have to carry them over for the tax year.
I've been selling funds where I have had substantial gains and not particularly enamored with, while in the case of Bridgeway I will be buying them back.

since I don't have significant gains to harvest

VintageFreak,
Please help me out with this terminology as I do not understand it. I thought the idea was to harvest a loss, not a gain.
Mona

Well, Barry's buying EMs for his clients:
"Barry Ritholtz, CEO of online quantitative research firm Fusion IQ and author of the widely read “The Big Picture" blog, recently trimmed back his clients’ exposure to U.S. equities and used the gains to buy positions in unloved markets: Europe and emerging economies."
The chart is from Barron's, and here's a note he added to the link on his site:
"Source: Barron’s. I am long emerging markets so I look for items like this. None of these issues are unknowns, and should therefore already be reflected in price."

I got the very first question wrong. I figured if the "investment" is paying INTEREST (not cap. gains) then the interest might very well be a FIXED percentage, thus $1,100.00 over 2 years at 5%. So, give me an 80%. FWIW. :)

I have been with Bridgeway through thick and thin. I put in sell orders for BRLGX, BRAGX, BRSGX and BRSVX. I'm keeping my BRBPX since I don't have significant gains to harvest. I also own BRLVX which is now institutional version of BWLIX. I'm contemplating selling it as well while i will not be able to get back in - will have to buy BWLIX.
So I plan to wait a while and start DCAing back in. Maybe I'll time this right. When vs What :-)
Good Luck to Me.