Morn'in hank,
You noted: " But, if you think inflation will run significantly more than 1.73% (compounded annually) than bonds today do not reflect reality very well. Catch has made much of the "capital appreciation" potential of rate sensitive bonds. That's true as long as investors continue to buy - eerily similar to the speculation that drove NASDAQ to 5000 a decade ago or real estate through the roof more recently. Now, much $$ was made from the "capital appreciation" in these sectors even after prices soared into the stratosphere. Nothing wrong with that as long as you're not the last one standing when the music stops."
>>>>> I agree. Don't be the last one standing when the music stops; regardless of the investment type.
Regards,
Catch

Over the very long-term, financial markets tend to reflect reality. In rate sensitive bonds, the most important being inflationary expectations for future years and, to a lesser extent, political & economic stability here and abroad as BobC references. (For lower tier bonds, ability of issuer to repay is crucial - but sounds like discussion's more about higher tier). We came close to a deflationary collapse in '08 - and still may get there - no predictions from this corner. If you think that's where we're headed, buy bonds. You'll be able to purchase food, shelter, cars etc. for less 10 years down the road while growing your nest-egg at a compounded 1.73% as of this morning. But, if you think inflation will run significantly more than 1.73% (compounded annually), than bonds today do not reflect reality very well. Catch has made much of the "capital appreciation" potential of rate sensitive bonds. That's true as long as investors continue to buy - eerily similar to the speculation that drove NASDAQ to 5000 a decade ago or real estate through the roof more recently. Now, much $$ was made from the "capital appreciation" in these sectors even after prices soared into the stratosphere. Nothing wrong with that as long as you're not the last one standing when the music stops.
Don't much follow bonds ... but there have been some "wiffs" of inflation recently which probably spooked some of the bigger players. Housing prices in some U.S. markets have started to rise. Food prices look to be on the rise due to drought conditions across much of the country. Gas is back over $4.00 in many places. Getting back to "reality", if you think 1.73% compounded over 10 years represents a reasonable return of your investment after taking into consideration your inflationary expectations, than snatch up some treasuries this morning. If you believe that's not realistic, than they represent a poor long term investment. As BobC noted, things don't move in a straight line. Treasuries will rally at some point and may do very well again if deflationary signals return or if the speculative fervor resumes. In thinking how financial markets move, Abby Joseph Cohen used to use the supertanker analogy. I like the words of T.S. Eliot who when discussing how the world will end says: "Not with bang, but a whimper." A good analogy I think for how painfully long it might take for bond markets to change direction.

Symbols: MFCFX , HAFLX
Harbor Funds filed for the liquidation of its Flexible Capital Fund.
http://sec.gov/Archives/edgar/data/793769/000119312512351522/d396969d497k.htm
Chautauqua Capital Management Names A. Douglas Rao Partner And Co-Portfolio Manager
http://www.marketwatch.com/story/chautauqua-capital-management-names-a-douglas-rao-partner-and-co-portfolio-manager-2012-08-14

Reply to @msf: Excellent points. When we were very young and beginning to invest it soon became obvious that we were completely unequipped for this discipline. We were fortunate to find an honest adviser, and with American Funds we helped put his kids through college on that 4.5% up-front load. He's also been a great help to us in a number of ways over the years, and I have no regrets regarding his up-front spiff. The funds that he put us into did what he said they would, and did and do in fact have very reasonable ERs.
We had long had a money-market fund, Capital Preservation, with the Benham group. The Benham funds were sold to American Century at some point, and we watched closely and found that the new company did continue to run this fund without significant change, as promised. This led us to explore other American Century funds, and we found some funds similar to those of American Funds, also with low ERs, but with no load. Using the American Funds experience as a template, we gradually extended our investments with American Century, continually comparing the relative performance. For the most part, we used American Funds for IRAs, and AC for non-IRA.
Then we discovered FundAlarm, with it's great ability to compare equity fund performance, both against other funds and against a benchmark. We did this about once a month, and gradually became confident enough to move into and out of different funds based upon their performance.
We have learned many things from experience, and much, much more from the FundAlarm and MFO contributors (that would be you guys). We have been very fortunate, and done quite well overall. But there is no getting around the fact that one decent adviser, putting us into American funds, started us down that long investment road. Stodgy but safe. That original 4.5% load was well worth it for us.
Would I recommend American Funds for someone just starting out today? No.. no need to pay that load. I would instead suggest either Vanguard or Fidelity, and lots of questions here on MFO.

Reply to @perpetual_Bull:
Old news.
"(July 01, 2011) SEC Sides with American Funds Against Finra. It took six years, but, thanks to the SEC, Capital Group just defeated a $5-million attack from the NASD, now called Finra. Last Friday the commission overturned [the] Finra finding."
http://www.mfwire.com/article.asp?storyID=37219&template=article&bhcp=1
Includes links to the ruling, and to M*'s take on it.
I tend to view Vanguard and American Funds as more similar than different. As Desota notes, they are each the low cost leader on their respective sides of the load/noload fence. They both tend to be rather stodgy families that are slow in introducing products (where's that international bond fund?) slow to work with evolving sales channels (Vanguard playing catch up with ETFs, slow to adopt online trading), etc.

Reply to @Mark: A couple of somewhat "Berkshire-like" vehicles (no particular order)
1. Greenlight Re (GLRE). This is a reinsurance company where the float is invested with the same positioning as hedge fund manager David Einhorn's long/short Greenlight Capital. It has not done that great in the last year or two - it really follows peer companies at times - but is somewhat interesting. It is a Cayman company, and there are other hedge funds looking for permanent capital that are planning the same thing - Third Point and SAC. I don't own GLRE.
2. Fairfax Financial (FRFHF.PK) Fairfax's float is invested by Prem Watsa, who has often been called the Canadian Buffett. Fairfax also actually generated a positive return in 2008 betting against subprime. From Morningstar: " In recent years, Fairfax produced stellar investment results as it capitalized on the financial crisis with prescient credit derivative bets. Fairfax's investment record over the long run is very impressive as its common stock portfolio has outperformed the S&P 500 by an average of 8.7 percentage points per year over the past 15 years. Similarly, its bond investments outperformed the Merrill Lynch U.S. Corporate Index by an average of 4.1 percentage points per year over the past 15 years. These outsized investment gains have translated into book value gains averaging nearly 25% per year since 1985." (http://quote.morningstar.com/stock/s.aspx?t=FRFHF&region=USA&culture=en-us) I don't own Fairfax.
3. Leucadia (LUK) There is no insurance component, but Leucadia is otherwise often compared to Berkshire and, despite a poor last year and unpleasant 2008, the conglmerate otherwise has an excellent very long track record. The conglomerate is a mix of holdings in public (financial firm Jefferies) and private (including a joint venture with Berkshire Hathaway and even vineyards. I don't own LUK - it did not do well last year but for believers in the long-term record of the firm, it would be a value play.
Other conglomerates that are less Berkshire-like that I like are Brookfield Asset Management (BAM) and Jardine Matheson (JHMLY.PK) Jardine is an Asian conglomerate that has been around since the 1800's and owns everything from grocery stores to Asian IKEAs to Manadrin Oriental hotels and more. Brookfield is an enormous Canadian conglomerate consisting of renewable energy assets, infrastructure assets and massive real estate assets around the world. The assets are largely in spin-offs (much of the real estate assets will be spun off in another limited partnership later this year - if that happens, shareholders in BAM will get a special dividend) and Brookfield is an asset manager. Both yield +/- 2% otherwise. I own both Jardine and subsidiary Dairy Farm, as well as Brookfield and Brookfield Infrastructure (BIP)
Berkshire is Berkshire, one certainly can't argue with one of the most successful records of all time. I do have some issues with some of the subsidiaries, which I think .I think it will be interesting to see Berkshire's eventual transition.
The issues with Fairfax is that it's nearly $400 a share and it does generate a dividend (about 2.5%)
History of Jardine Matheson from the 1800's: http://en.wikipedia.org/wiki/Jardine_Matheson_Holdings
DEFINITELY DO RESEARCH BEFORE INVESTING IN ANY OF THE ABOVE.

Reply to @scott: Thanks for your follow-up, Scott. I received the following response from Scottrade, so it sounds like ST does not have option for them to auto reinvest ETFs/Stocks..
"We do not currently offer dividend reinvestment for stocks or Exchange-Traded Funds (ETFs). Cash dividends paid to your account are added to your available money balance. The current credit interest rates paid on cash balances is available on our Credit Interest Rates page.
Currently, automatic dividend and capital gain reinvestment is only available for mutual fund positions.
We offer the option to have cash dividends mailed from accounts automatically. Accrued dividend balances are mailed twice monthly, on the second and last Wednesday. In order to request this automatic payment option, please call your local Scottrade team.
If you wish to participate in a dividend reinvestment program (DRIP), you will need to sign up directly through the transfer agent of the company in which you own stock.
If the security in question is eligible for transfer through the Direct Registration System (DRS), you can have your shares transferred to an account with the company's transfer agent at no cost. You will need to complete a Direct Registration System Request - Outgoing form and submit it to your local Scottrade team for processing. This form is available online through our Forms Center."
Re other brokerages... I guess they all have some negatives, so it's just a matter of choosing the one where the negatives are least important to you.
As far as you know, do ANY of these brokerages automatically transfer the history and cost basis of all investments if you transfer investment accounts/portfolios?
Re "Record", "Pay Date", etc. I have only been checking these through M*, so another novice question, if that's ok. How do I access current "record dates", "Pay Dates", etc.? Do I need to try and find the web site for each etf/stock to see if I can locate these there, or do you know of one site that may have these information for most etf/stocks?

Dian, it would seem to me that you have a good background and grip on the situation. If I read your initial post correctly you feel that your financial house is in pretty good order and this gift is icing on the cake, a truly great position to be in.
You have already received a number of useful checkoff items and suggestions (e.g. eliminating bad debt, avoid the banker, spread your assets around, avoid the bankers advice, watch out for the sharks, avoid the banker etc.) and did I mention avoiding the banker. You might also wish to include insurance sales folks in that avoid list when it comes to what you should do with the inheritance. You have also received some fund and annuity suggestions and information. You have not mentioned how the assets (inheritance) are currently allocated and maybe it's not important to this discussion except that your uncle was a saver and apparently did quite well in that regard. You mentioned looking for tax free or at least tax-friendly investments. I'm not sure if you are looking to put things on cruise control or if you might want to dabble in active management.
Assuming I have everything correct so far, and in what might be considered blasphemy on a mutual fund discussion board, might I suggest that you give uncle Warren Buffett (Berkshire Hathaway A or B shares) your gift to invest. Here's why I would do this.
1. Any mutual fund, annuity, rental property and so on is going to come with on-going fees, possibly taxes, maintenance costs, headaches and whatever else I'm forgetting until the day they are exhausted or disposed of. You may or may not wrestle with thoughts of "Gee, did I buy the right fund, plan, property" or wonder if X, Y or Z might be better suited or more appropriate.................. the list is endless.
2. Berkshire Hathaway is notorious for not paying dividends or distributions (read: no taxes) and your gains will just keep accumulating until "you" decide to sell at a time and place convenient and tax-managed by you.
3. If you buy the 'B' shares you will be able to "gift" them at possibly tax-friendly opportunities to family and charitable causes.
You will of course pay stock trading commissions but you can minimize those depending on your choice of brokerage firms. I am also fully aware that the current managers of Berkshire (Warren Buffett and Charlie Munger) are getting up in years but I am not concerned with their succession plans. It is something that you will have to look into and decide for yourself.
Just an alternative thought, quick and dirty. Congratulations and best wishes.

Howdy Dian,
First, I salute your compassion and endurance for your longtime efforts with your family members. Second, you mentioned Will from a few years ago; and I have have wondered how his plan has worked with the monies. Thirdly, your note indicates a very good program in place for teaching the young'ins, that your house has maintained a working and productive budget over the years, which now finds you and yours in a very nice monetary position. Hats off to your house for this effort.
Okay.....you mentioned being able to visit a Fidelity office; and this is my one and only notation regarding an annuity (any annuity), although a tax attorney and one's special circumstances could offer other thoughts regarding other types of annuities, too.
Fidelity has a plain annuity, without any frills, and the primary function is to tax shelter current earnings, but gains will be subject to ordinary tax with withdrawals, as normal. No insurance benefits, etc. with this plan. This annuity could be for a circumstance such as you have encountered; being a spot to grow monies and defer current taxes. I too, as has been mentioned, will agree about possible muni bond funds. Fidelity has a few that have performed well, with multi-state exposure to lessen local impacts from a default; although you would not receive a full tax edge with such funds.
Fido Muni Funds
The goods:
--- Fido Personal Retirement Annuity, Main page
--- 55 Funds, Avg. Annual Returns, Quarterly Numbers
--- Funds, short term performance, 1 year-YTD
Before I forget, there is a limit as to how many times one may transfer (I recall 4) monies among the fund choices with this annuity and this would be a question for the Fido office; although I know the info is plugged somewhere into the web links above.
Briefly, this annuity cost = the expense ratio of the underlying fund and a .25% annual fee on invested monies. My quick and dirty view indicates an average total of about 1% expense.
One has 55 fund choices, including long time well managed funds as Growth Co. and Contra, as well as funds from Blackrock, Franklin-Templeton, Invesco, Lazard, Morgan Stanley and Pimco. There are 12 target date/retirement funds (Freedom and Funds Manager) that I personally would not use, so one has 43 remaining choices. If you chose such an investment, it is possible that some fund style overlap would exist for this measured against your other tax sheltered accts.
The combined YTD return (if one had placed equal monies into all 55) is 10.3%.
If our house came into a large sum of inherited monies, and we needed more time to consider other investment areas (rental house, etc) or a place for some of the money; I would not hesitate to place monies here for parking. Yes, when we developed a plan for some of the money, we would be taxed upon withdrawals; but I/we would rather pay tax on a gain, versus parking the money in CD's at the credit union during this low rate period.
I recall Vanguard, and Jefferson Pilot Ins. Co having a similar annuity type, but I do not have any details.
Lastly, a consideration of 529 accts or state pre-paid tuition programs, if not already in place; or that anyone may add monies to a 529 acct. for the grandchildren. We live in MI, but have our daughters 529 acct. with Utah. 529's may be opened and maintained with very low annual amounts; but the one snag is some lack of control of what funds the monies are invested, as only one transfer/shift of monies per calendar year is allowed from and into any investment style/funds.
I will also agree with other's notations here, based upon most of your monetary bases having been covered; is for you and yours to treat yourself and indulge a bit.
Okay, winding down a vacation and time for the head to hit the pillow.
Take care,
Catch

Hi Diane
sorry to 'bud in'. You may consider having different accounts at different firms [i.e. fidelity, schwab, vanguard], etc... Previous recessions taught me a lesson [although I am very new at this game] to have your eggs in different baskets so they all don't break. I think if you have accounts in schwab the fees are free [at least this is what they did for me]. Also at this stage of your game, capital presrevation maybe your ideal and ultimate goals. You may consider buying couple of funds that have these ideal goals. My mom asked me these questions just right before the crash, I was very new at this game and she was scare at that time; she ultimately got an annuity [only a few hundred thousands] and she is still pleased w/ the results.
maybe you consider getting the best few funds that are posted in this board and put money in those baskets [funds that are owned by catch22 that he post weekly - I would consider these ultimately the safest]
good luck

Greetings, Dian. I want to ask, how large is a "large" inheritance? Anyhow:
1. Yes, pay off debt.
2. PRESERVATION of capital must be a chief concern.
-That means: lots of safe bonds or bond funds with regular dividends AND
-investing is SOME equities to attempt to keep up with inflation.
If you are well-enough-off, look into muni bonds, which would be tax free for you. If not so well-heeled, the no-tax feature will serve little purpose.
3. Decide how much you don't want to touch, in order to leave it for the generation behind you. Segregate that in an IRA, Roth or Trad. (I don't know the fine points well enough to recommend one type of IRA over the other, given your particular situation.)
Samples, to start the decision process:
BONDS: DODIX, MWTRX, maybe a bit of high yield, MWHYX. And a bit of EM debt: PREMX, MAINX.
Equity funds: MAPIX and/or MACSX. MAPOX (balanced fund with both stocks and bonds.) PRSVX, BERIX (the latter is also balanced.)
BREAK A LEG!

I also do a Yahoo portfolio as you have done. In it I have about a dozen ETFs that I use as tracking indicators for my open end funds. Like you, I have made some buy or sell decisions for that day based on the tracking indicator ETFs .
I also have a Yahoo portfolio with the top 10 holdings for each fund so that I can quickly switch to those and see how they are doing as well.
These two methods help me have a good sense of what the NAV is likely to settle at or around that day.
With a fund like PETDX that tracks an index my caution is to be sure that you are comparing apples to apples by choosing an ETF that tracks the same index. In PETDX's case it is the Dow Jones U.S. Select REIT Index (index ticker: DWRTFT). So I also use the DWRTFT ticker as a tracker. In REITS that's important because there is a world of difference between an index like the Dow Jones U.S. Select REIT Index which is comprised
of companies whose charters are the equity ownership and operation of commercial real estate and an index like the FTSE NAREIT All Mortgage Capped Index which could be tracked by the iShares ETF REM.
So, from this I hypothesize that PETDX's interests are (but held as derivates) seen in the DWRTFT's top 10 stocks:
Simon Ppty Group Inc New 11.71%
Public Storage 5.16%
Hcp Inc 4.87%
Ventas Inc 4.67%
Equity Residential 4.61%
Boston Properties Inc 4.19%
Prologis Inc 3.89%
Vornado Rlty Tr 3.75%
Avalonbay Cmntys Inc 3.38%
Health Care Reit Inc 3.25%
REM's holdings are quite different since its index follows the mortgage REITS:
ANNALY CAPITAL MANAGEMENT IN 20.62%
AMERICAN CAPITAL AGENCY CORP 18.53%
TWO HARBORS INVESTMENT CORP 5.56%
CYS INVESTMENTS INC 4.89%
STARWOOD PROPERTY TRUST INC 4.57%
INVESCO MORTGAGE CAPITAL 4.49%
MFA FINANCIAL INC 4.23%
HATTERAS FINANCIAL CORP 4.07%
CHIMERA INVESTMENT CORP 3.98%
ARMOUR RESIDENTIAL REIT INC 3.78%

Shareholder since April Fools 2011. This is getting too good to be true.
Hot hands have been known and shown to grow cold, a Heebner or
Bill Miller for example. Reversion to mean from a long run at the top
requires a similar run at the bottom. More has been lost chasing yield
than probably any and all frauds and scams combined, Madoff for example
or the entire highly rated toxic credit debacle. When LTCM enjoyed a stellar
performance besides attracting assets they attracted attention. Others wished
to know how they were vacuuming up nickels from around the world, what instruments
in which markets employing what strategies then reverse engineering them, crowding
out the profit opportunities.
~~~~~~~~~~
NEW YORK, July 27 (IFR) - The ongoing hunt for yield in a low-rate environment has renewed investor interest in battered non-agency residential mortgage-backed securities (RMBS), with secondary-trading volumes more than doubling in recent weeks.
The distressed bonds have rallied this entire year, but recent suggestions that the US housing market might have reached a bottom sent real money accounts, such as pension funds and insurance companies, into the sector, analysts said, while fast money, or hedge fund accounts, joined in as soon as they saw the positive movements in price.
The distressed bonds have rallied this entire year, but recent suggestions that the US housing market might have reached a bottom sent real money accounts, such as pension funds and insurance companies, into the sector, analysts said, while fast money, or hedge fund accounts, joined in as soon as they saw the positive movements in price.
"There's a lot of action and activity that I'm seeing this week," said a hedge fund money manager on Friday. "I've been in this business over 20 years, so I've seen a lot of trading, but I haven't seen non-agency RMBS trade this well in a long time. This will be a long-term phenomenon."
CHASING YIELD
The bonds offered double-digit yields earlier in the year, but now offer approximately 5% to 9%.
Still, in such a low interest rate environment, such returns are attractive.
"More and more new investors are coming into the market who are now okay with the risks involved to achieve a 5% or 6% yield," said John Sim, the head of MBS research at JP Morgan.
"There's a new batch of investors that are coming in at a new yield target. And on the fast money side, hedge funds sense the price momentum, and figure they will take their price gains now. Many have started selling."
Price returns in weaker-credit RMBS such as subprime are up 15-20% on the year, Sim said.
http://www.reuters.com/article/2012/07/27/markets-credit-idUSL2E8IR9BA20120727
On such fund is Doubleline Total Return Bond (DBLTX). It is one of the best-performing bond funds and one of the fastest growing, according to a recent Wall Street Journal article. Manager Jeff Gundlach is among the foremost fixed-income practitioners. At his prior employer, TCW Group, he also had a stellar record. His success comes from a unique strategy: His savvy purchases of non-agency RMBS, which tend to be more risky than most, are blended with risk-free assets, U.S. government securities. As economic conditions change, he adjusts this mixture between the two classes.
http://news.morningstar.com/articles/perspectives/144355/buying-mortgage-bonds.aspx?CustId=&CLogin=&CType=&CName=&_LPAGE=/FORBIDDEN/CONTENTARCHIVED.HTML&_BPA=N
Long-Term Capital Management, the hedge fund founded by John Meriwether in 1994, used computers to detect very small and fleeting differentials in securities prices to make huge profits in global bond and derivatives markets in the late ’90s. Their profits were fleeting, too, though. Their computer trading algorithms were soon imitated by others, which required LTCM to seek out new methodologies and markets. Soon, such risk taking led to the fund’s downfall. In 1998, the New York Federal Reserve had to orchestrate a bailout.
http://www.bloomberg.com/news/2012-08-08/history-of-algorithmic-trading-shows-promise-and-perils.html
Continuing to hold rnsix, 20% of assets, but I don't expect the outsized contribution of outsized gains from the
run in the private label residential mortgage sector to be repeated.

Reply to @CathyG: Fidelity does not charge a fee for reinvestjng dividends. But there are always but's. First, I believe the default option is for the dividend to be deposited into your cash account (each brokerage account has an associated cash position). While looking at your account press on the 'Select Action' link and slide down to choose 'Update Accounts'. When that page opens select 'Dividends and capital gains.' A page will open with a table allowing you to choose how to handle these deposits for each security that you own that allows reinvestment in more shares. Press the appropriate button to make changes. Be aware that certain equities like a preferred stock don't allow reinvestment so you won't see choices/options for those.
Second, when reinvesting you dividends in additional shares you don't necessarily get the ex-dividend price. For example, if you own a $2 stock and they pay a $1 dividend you may not be buying more shares at a $1. Also, not all equities technically allow reinvestment of dividends in more shares. What Fidelity does is collect (buy) enough shares ahead of the ex-dividend date to parcel out to those shareholders who want additional shares. Whatever those shares cost will be your reinvestment price which may be higher or lower than you expect. Other equities such as certain MLP's and CEF's provide a discount to current shareholders when dividend proceeds are reinvested in additional shares. Bottom line it's like opening up a box of chocolates - you never know what you're going to get ahead of time down to the last $0.001 penny.

I am new to the site, but am a long time (+30 years) mutual fund and stock investor (in the last 10 years). I'm 59 and retired last December. My wife is also retired.
I have been invested in PETDX for nearly three years now. It represents about 5% of my total portfolio and helps fills my REIT slot in my asset allocation strategy along with the stocks RSO and NCT. It exposes me to the Dow Jones U.S. Select Real Estate Investment Trust (REIT) Total Return Index which it tracks. I use RWR are a daily tracking ETF for how PETDX is going to do and it mirrors pretty well. I can also check RWR's holdings easily to see how the individual REIT stocks are doing.
I understand PETDX as much as one can without being in the offices with management day to day, in that I grasp the tools they are using and how the fund works. I answer a ton of questions about it on other investment sites because most people simply look at the top 10 holdings and think it's a bond fund.
Others have explained it well. I would add a couple of things that I don't think have been mentioned about PETDX although I may have missed them in my reading here.
First, sometimes there is concern expressed that the large dividend payouts erode the NAV. I am a strong advocate for giving great weight to total return. PETDX doesn't pay a distribution based on ROC, but an earned dividend and an end of the year capital appreciation and end of the year supplemental dividend when appropriate. That high dividend payout does have some tax consequences which is why I keep my PETDX in IRA and Roth accounts. But I don't worry about NAV erosion. If it was paying ROC, I would be concerned. In my view PETDX simply gives me its earnings.
At the same time dividends are not consistent. So retirees or others who are looking for predictable income might be disappointed. In 2008 and 2009 and most of 2010 it didn't pay a dividend as the NAV fell. But in the past three years I've seen my initial investment more than triple.
I view PETDX as an excellent vehicle for me to be able to "own" the Dow Jones U.S. Select Real Estate Investment Trust (REIT) Total Return Index with higher risk and the opportunity for higher reward (and higher loss).

Hi bee,
You have come up with some good mechanisms that seem to provide you with meaningful information as an aid to reconfigure your portfolio and reposition it from time to time. I think this is important as an investor develops skill.
I have shared over time a few mechanisms that I use myself. Interstingly, my systems, were showing utilities were overbought and materials, energy and commodities were oversold a month or so ago. And, sure enough about a month later utilities are retreating and the others I just mentioned have had some nice upward gains.
For the past running thirty days, utilities are up about 2.0%, materials are up about 3.3%, energy is up about 9.4% and diversified commodities are up about 7.4%. So, it has been beneficial from me, thus far, to have reduced my allocation to utilities and raise them to these other sectors.
I feel investors that are willing to devote a little time and develope some mechanisms that are capable of providing beneficial information that they can govern off of could improve the performance of their portfolio simply by moving around about 10% to 20% of the assets within their portfolio. I call these flux assets that I move around, ballast. I try to keep this ballast in the faster market currents wheather it be cash, fixed income, equities and or other type of assets such as commodities ... or a combination of them.
I have linked one of the sites below that I have often used in the past to provided me with information to help me position this ballast within my portfolio. Now, I still reference Ron Rowland's Leadership strategy site; but, I am now using my own systems more and more as I gain confidence in them.
For those interested here is the link to his site.
http://investwithanedge.com/leadership-strategy
Thanks bee for stopping by and making a comment on my post. It is indeed appreciated. I wish you the very best with your own investing endeavors ... and, thanks again for sharing your mechanisms. Perhaps, some will find favor in them.
Best regards,
Skeeter

Reply to @MaxBialystock: "Mostly, conversations about the economy and money in general are deliberately kept apart from ethical considerations."
Far, far, far to many cases of oil+water don't mix. (see Bain Capital)

Reply to @msf: some of these are traded at unsustainable preimums; at least one going through the rights offering; several return capital to shareholders thus losing over 70% of their NAV during recent years to support the unreasonable distribution yields. I suggest to anyone interested in closed end funds, to move slowly and get educated before any significant investment. for full disclosure, i've been investing into cef's since 2008, moving very slowly and making a mistake or two, but generally successfully. i think it is a very rewarding market due to limited liquidity and various discount opportuities -- but requires much attention and discipline.

Reply to @MaxBialystock:
Why the switch to quarterly distributions, and why have they shrunk?
To take the second question first: the transition to quarterly distributions was this year, and the capital gains are still distributed only annually. So there haven't yet been any capital gains distributions made since the transition to compare with prior distributions. The size of the income distributions seems in line with the older ones (which were just annual), i.e. 16c for half a year, vs. 0-30c per year in the previous three years.
As to the first question, aye, there's the rub. This is a completely different fund than it was last year. Last year (through Sept. 30th), it was Dynamic Infrastructure Fund. You will notice no Canada in its name, and in fact its March 31, 2011 Semiannual statement shows only 25.3% investment in Canada (that's less than it had invested in the US). And despite the fund's fact sheet saying that it was formerly benchmarked against the S&P/TSX Global Infrastructure Index (implying some connection with Canada), the benchmark index has no TSX in it, and the prospectus compared its performance to "Standard and Poor's Global Infrastructure Index" (no TSX).
The fund was changed to an equity income fund, thus the change to quarterly distributions. Why the fund made the change? Who the heck knows? Here's everything the fund wrote about the reasons to the shareholder in the proxy statement

The Dynamic Infrastructure Fund (the "Fund") currently concentrates, that is it invests more than 25% of its assets, in the infrastructure and infrastructure-related industries. The fund wishes to no longer concentrate its investments in this manner. ...
Currently, the Fund invests, under normal market conditions, at least 80% of its assets in infrastructure and infrastructure-related industries. If the proposal is approved by the shareholders, the Fund will not concentrate its investments in any one industry. However, the Fund will focus on Canadian equity securities in the energy, real-estate, and infrastructure sectors. ...
The ... Board of Trustees ... recommend that you vote in favor of the proposal. The reasons for their recommendation are discussed in more detail in the enclosed Proxy Statement under "Board Approval and Recommendation." ...
BOARD APPROVAL AND RECOMMENDATION OF THE PROPOSAL
The changes to the Fund's name, investment objective and investment strategy described in this Proxy Statement, including [the various terms] were approved by the Board of Trustees ... on July 21, 2011. In reaching their decision to change the Fund's fundamental investment limitation on industry concentration, the Trustees reviewed information about the change and its expected impact on the Fund. The Trustees considered, among other things, whether the change would be in the best interests of the Fund and its shareholders.
Based on the foregoing, the Board of Trustees recommends that Fund shareholders vote FOR approval of the proposed change to the Fund's fundamental investment limitation on industry concentration as set forth in the Proposal above.

Emphasis in original. So why did the fund change completely? Because, for some unstated reason, it was in the "best interests of the shareholders."
I would take a much closer look at what's going on here - what the fund held, what it holds, how meaningful any figures are, and the transparency of the management before jumping in to this.
As to the fund's classification - there's a basic problem classifying single country funds when there are only a couple of funds that focus on that single country. Not a specific M* problem. But since this fund was a global/international fund for most of its existence (until under a year ago), the classification would appear to be correct in any case.

This all-cap fund focuses on Canadian businesses. Excellent performance since inception in 2009 with low volatility, high alpha, and high Sharpe. Portfolio focus is real estate and energy. OK expense ratio after waivers through early 2013. A no load, no fee offering at Schwab. The portfolio managers are Oscar Belaiche and Jason Gibbs. Mr. Belaiche is senior member, and he has been with the Fund's subadvisor, GCIC US Ltd., since inception. GCIC is a subsidiary of DundeeWealth Inc., specifically for its Dynamic Funds line-up. DundeeWealth is owned by The Bank of Nova Scotia.

Here is link to Fund's website:

Performance Summary (from Morningstar): DWGIX has outperformed Canadian S&P and Foreign Large Blend indices, with a 19% annualized return, and it has done so with a smooth ride. It is up 8.4% YTD.

Sector Weightings (from Morningstar):

Top Holdings (from Fund fact sheet):

Investment Strategy (from Fund prospectus): The Fund invests, under normal market conditions, at least 80% of its assets in the equity securities of companies located in Canada. The Fund invests primarily in dividend or distribution paying Canadian equity securities and real estate investment trusts (“REITs”), as well as in other types of Canadian equity securities, including limited partnerships. In addition to its Canadian equity investments, the Fund may also invest in other foreign and U.S. companies of any size, including small and mid capitalization companies, as well as in U.S. While the Fund will not concentrate its investments in any one industry, the Fund will focus on equity securities in the energy, real estate and infrastructure sectors.
The Fund evaluates an equity security’s potential for capital appreciation, employing a Quality at a Reasonable Price (QUARPTM) philosophy and uses strict fundamental analysis and due diligence measures to assess potential investments. In conducting fundamental analysis of companies that are being considered for purchase in the Fund, the management team evaluates the financial condition and management of a company, its industry and the overall economy. The team may 1) analyze financial data and other information sources, 2) assess the quality of management, and 3) conduct company interviews, where possible.
The Fund invests in businesses with sustainable cash flow distributions, dominant positions in their respective industry sector, and management that holds a significant equity stake.
Bottom-line: DWGIX currently enjoys a 5-Star Rating at Morningstar. The Fund's size is small compared to most other DundeeWealth Dynamic Funds offerings with only $4.2M in assets. Suspect it will not stay small for long, as it is hard not to be attracted to this fund.