Mediocre active managers should be worried. Perhaps this is why American Funds currently lists the total assets of its Capital World Growth & Income Fund (CWGIX) as 68.2 billion (referenced as “Fiscal Year 2011”), while Lipper gives the total assets for CWGIX as of 12/31/2011 as 44.5 billion.

Hi Max,
Per the prospectus: " PRINCIPAL INVESTMENT STRATEGIES
The Fund invests in a diversified portfolio of high-quality bonds and other fixed income securities. At least 65% of the Fund’s total assets will be invested in U.S. government obligations, mortgage and asset-backed securities, corporate and municipal bonds, collateralized mortgage obligations (CMOs), and other fixed income securities rated A or better by either Standard & Poor’s Ratings Group (S&P), Fitch Ratings (Fitch), or Moody’s Investors Service (Moody’s), or equivalently rated by any other nationally recognized statistical rating organization (NRSRO). Up to 20% of the Fund’s total assets may be invested in below investment-grade fixed income securities, commonly referred to as high-yield or “junk” bonds, if they have a minimum rating of B by Moody’s, Fitch, or S&P, are equivalently rated by any NRSRO, or, if unrated, are deemed to be of similar quality by Dodge & Cox.
The proportions held in the various fixed income securities will be revised in light of Dodge & Cox’s appraisal of the economy, the relative yields of securities in the various market sectors, the investment prospects for issuers, and other factors. In selecting securities, Dodge & Cox considers many factors, including yield-to-maturity, quality, liquidity, call risk, current yield, and capital appreciation potential."
Also indicated is up to 20% may be invested in high yield bonds.
As to bloat, well; I guess that is all relative. PTTRX is at $244 billion.
DODIX returns are not out of line from what I peeked, and is similar to PTTRX. Also, if I recall properly, the fund held up well in 2008.
So, what do you think about this fund, and what drew your attention?
Gotta run.....
Catch

I pulled out of my small and mid cap US funds in the summer of '11 and put the money into one fund, ARIVX. Very happy with the fund. Definitely a "sleep good at night" fund.
I've decided my buy and hold funds will be funds managed by managers with capital preservation at the forefront. ARIVX and YAFFX on the large cap side fit that bill for me.

Not to put too fine a point on it, but all returns in a retirement account - except for a Roth - are taxed as ordinary income. That rate's often higher than the current capital gains rate, in which case your tax would be higher in an IRA than out. It's particularly pressing if you put a tax-free bond fund in a retirement account, and accrue tax liabilities as a result.
David

Part 2:
Individual fund notes:
FVALX, INTLX: These Forester funds have demonstrated the ability to limit losses by going to cash when conditions so indicate and they do so without worrying about whether they will fully participate in the recovery. Hence they fit the goals of this portfolio well.
Forester was so successful with this simple strategy that FVALX became the only equity fund to have positive (albeit close to zero) returns in 2008.
Unfortunately, this brings in people who look at the rankings, see this fund at the top in 2008 and invest and get disappointed when the fund lags in a bull market.
This fund is chosen for the very strategy (that was incidentally vindicated in 2008) with the full knowledge that it will not necessarily be anywhere near the top in bull markets or even beat the index.
Alternative to FVALX is Amana Income AMANX which does not provide as much downside protection but has done well using a very conservative approach in value investing and keeping the volatility low but it will be slightly more volatile than FVALX. Another slightly higher volatile alternative is Yacktman fund (YACKX)
Alternative to INTLX is Sextant International SSIFX (coincidentally managed by the manager of AMANX) for similar reasons.
AMAGX: A very well managed Large Cap growth fund with a long history of good performance. The downside protection is also reasonable within its class even though there does not appear to be any capital protection strategies in place.
QRSVX: Not a well known fund but is one of the very few funds that is widely available without a transaction fee, has at least a 5 year history and has managed to limit downside in the bear market in the small cap category. The volatility is also kept low.
A better known substitute is Royce Special Equity (RYSEX) if available without a transaction fee. Newer Intrepid Small Cap (ICMAX) has done very well although its short history may be a concern as well as Pinnacle Value (PVFIX) if available without a transaction fee. Both ICMAX and PVFIX are low volatility funds and have capital protection as a goal of the fund to fit the goals of this portfolio well.
MAPIX: The only selection without a 5 year history but comes with a very strong pedigree from Matthews Asia that specializes in Asian funds. This fund has extremely low volatility, even lower than most domestic equities and has managed to deliver very good total returns with a combination of stocks, convertibles and preferred shares.
Alternatives would be either Matthews Asia Pacific (MPACX) at higher volatility with good downside protection or Matthews Asian Growth and Income (MACSX) at lower volatility but can potentially lose more money in bear markets.
BPLEX: An alternative investment fund that tries to get good returns in both bull and bear markets. A long-short fund that can be mistaken for another performance chasing choice because of its recent performance. But this would be a good choice even if its performance in 2009 was just average or even below average.
Looking under the hood shows this fund to be quite different from other long-short funds that try to use both long and short depending on the stock valuations. This fund seems to switch between a primarily long fund (but with short positions to hedge) with good stock selection or a primarily short fund (with long positions to hedge) depending on the macro market conditions thus minimizing individual stock market timing risks.
This is not different in strategy from Forester's philosophy except that its uses shorting rather than just go to cash and uses small caps rather than large caps.
So it does very well in longer bear or bull market years and lags during transitions but without losing much money.
Unfortunately, none of the alternatives for this fund come anywhere close to it in performance as they primarily seem to depend on picking the right stocks to go long or short across all conditions rather than acting like a good long fund or a good hedged fund depending on macro conditions. It is a unique standout.
ARBFX: Another alternative investment fund which depends on arbitraging mergers and acquisitions by buying a company that is being acquired and often shorting the company acquiring. The risks for such funds come only if the M&A does not go through. The earlier you get on as soon as an M&A is announced, the riskier. This fund takes very little risks by waiting to get on and arbitraging just the last few months before an M&A. This keeps the volatility very low and the gains low as well.
An alternative is the similar Merger fund (MERFX) which has a disadvantage because of its size and so may not be able to move quickly in and out.
HSTRX: Hussman's conservative allocation fund is managed in a risk-managed fashion where the portfolio is continually and pro-actively positioned to address the current risk evaluation of the market. Unlike his strategic growth fund, this fund does not take any significant bets on equities and so any incorrect decisions in his strategy does not have as much of a downside impact unlike the other fund. This has allowed HSTRX to show very consistent and impressive performance over a long period of time with very little volatility.
MGIDX: Intermediate duration mortgage securities fund that manages to keep volatility low with good performance and uses shorting/options to achieve this. The ability to short or use options will make this fund able to provide downside protection and manage credit and interest risks, a good idea when mortgage rates are likely to rise in the future.
Alternative is PTMDX - PIMCO Mortgage-Backed Securities D which shorts even more aggressively.
PGNDX: A GNMA fund that manages risk via shorting while preserving the upside of a GNMA fund. Good due to the same reasons as MGIDX above.
Alternatives are non-shorting GNMA funds such as USGNX from USAA, VFIIX from Vanguard or BGNMX from American Century which may have more losses if the mortgage rates were to rise rapidly.
PTTDX: An intermediate investment grade fund that also manages risk via shorting and useful in an expected interest rate rising environment in the future. Low volatility.
Alternatives are non-shorting funds with low volatility THOPX Thompson Plumb Bond or CPTNX American Century Government Bond Inv
WEFIX: A fund with the ability to move between short and intermediate durations based on market conditions and hence able to take advantage of the conditions better than a strictly short term fund. Does not use shorting.
Alternatives are USSBX from USAA, WEFIX Weitz Short-Intermediate Income, VFISX Vanguard Short-Term Treasury, PLDDX PIMCO Low Duration D. The last one from PIMCO does use shorting.

Hello DAK- Like Catch, I haven't followed the portfolio, but here is Fundmental's entire post. I "archived the archive" shortly before FA went away, "just in case".
Because it's length exceeds the allowed maximum here, I've divided it into two parts for you.
Regards- Old Joe
"Make More, Lose Less" Portfolio
Posted by Fundmentals on December 09, 2009
I am sure many of you have come across the situation of a friend or a family member clueless about investing ask you to help them with a stash of money.
The real-life requirements are usually "simple":
1. "Want your help to make some money. I can lose money all by myself"
2. "I can put it in the market for 5 years. Can leave it there longer if it is making money but not if it is losing money"
3. "Don't ask me to do anything more than once a year"
The following portfolio is designed specifically for people that are not:
(a) expecting to beat the market
(b) don't want the portfolio to go down much (likely to panic and sell at the bottom if they went down 10% or more)
(c) would like some decent gains - more than what they can get with money market funds, CDs or even just bond funds without which they will not take the risk of investing at all and
(d) don't want to fiddle with it more than once a year.
The Portfolio-
Domestic Equity:
5% Forester Value (FVALX) - Large Value
5% Amana Trust Growth (AMAGX) - Large Growth
5% Queens Road Small Cap Value (QRSVX) - Small Value
International/Global equity:
10% Forester Discovery (INTLX) - World Allocation
10% Matthews Asia Dividend (MAPIX) - Diversified Asia/Pacific
Alternate investments:
10% Robeco Long/Short Eq Inv (BPLEX) - Long/short equity
10% Arbitrage Fund (ARBFX) - Merger/arbitrage
15% Hussman Total Return (HSTRX) - Conservative allocation
Bonds
7.5% Managers Intermediate Govt (MGIDX) - Mortgage securities/Govt
7.5% PIMCO Total Return D (PTTDX) - Intermediate Investment Grade Bond
7.5% Weitz Short-Interm Income (WEFIX) - Short-Intermediate Term Investment Grade Bond
7.5% PIMCO GNMA D (PGNDX) - GNMA
Backtested performance:
If portfolio invested on 1/1/2008, results as of 11/13/2009:
Total return: +15.05%;
2008 Performance: -4.79%
2009 YTD: 20.84%
Portfolio X-Ray:
Stocks 52.3%; Bonds 38.1%; Cash 9.6%
Stocks: US 56.00%; International 44.00%
US equities:
Large cap 27.4%;
Mid cap 22.8%; Small Cap 49.8%
Value 36.9%;
Blend 53.0%;
Growth 10.1%
International equities:
Europe 24.1%;
Pacific 38.5%;
Canada 18.9%;
Emerging Markets 18.5%
Bonds
Taxable 78.70%;
Uncategorized 21.30%
Credit quality High 78.7%;
Uncategorized 21.30%
Duration: Medium 20.2%
Low 58.5%
Uncategorized 21.3%
Costs
Portfolio average 1.72%
Portfolio construction notes:
The portfolio is constructed to solve a basic flaw in traditional portfolio construction. Diversification using high volatility equity funds (even index funds with market volatility) results in deep losses during bear markets as most such equities become correlated and go down together.
Just depending on bond allocation to reduce losses requires primarily allocation to Treasuries as it is the only type of asset that can be depended on to show negative correlation with equities in bear markets. But unlike in the past, Treasuries starting with the current situation of low interest rates cannot be expected to provide much gains going forward so the portfolio may turn out to be too conservative or too aggressive based on what happens in the market regardless of how much is allocated to Treasuries.
As a solution, portfolio picks only funds designed with a strategy to reduce/minimize losses during long bear markets and has some capital protection goals in place. The overall volatility is reduced by depending on each fund to reduce its own volatility rather than depend on lack of correlation to reduce the volatility.
Note that this is not the same thing as picking funds with the highest returns in either bear or bull markets or both. Nor are the returns attributable to some fantastic market timing in picking which stocks to buy and when to sell.
In fact, most of these funds will likely not consistently appear in the top 10% of their class except occasionally. But all of them will have shown the ability to limit losses by reacting to long-drawn down market conditions and make decent gains in long-drawn up market conditions.
In other words, the only market timing they will show will be in recognizing long bear markets as in recognizing the difference between 2008 and 2009, not what happens month to month. None of them try to time tops and bottoms.
Methodology:
Portfolio Requirements:
1. Capital protection and lack of volatility extremely important. No long periods of losses. No "wait for 10-20 years or more" excuse for losses.
2. Asymmetric behavior - as much of the upside as possible, as little of the downside as possible
3. Simple portfolio with high quality no-load funds widely available in the main brokerages
4. Only annual tune-ups
5. Total return more important than income
6. No assumption of bull/bear markets for the portfolio as a whole, no forecasted assumptions of economy or any other indicators, doom/gloom predictions, etc.
Concrete requirements:
1. Not more than 12 funds.
2. No single fund with less than 5% allocation or more than 15% allocation
3. Portfolio must be diversified but not necessary to cover all asset/fund classes. Only asset classes that have shown consistent returns without long loss periods and small drawdowns. Riskier assets only within risk-managed funds.
4. No assumptions of correlation or lack of correlation between asset classes going forward but no gross overlaps between funds. Some overlap is fine.
Screening criterion for funds:
1. No-load, ER less than or equal to category average, been in existence for at least 5 years.
2. No losses in 3, 5 or 10 yr (if available) rolling periods (amazing how many asset classes or funds drop out here)
3. Manager has been around for at least the category average
4. Minimum initial purchase not more than $3000 (i.e., minimum not more than $60k portfolio)
5. Best 3 month performance must be better than worst 3 month performance over its lifetime (amazing how many funds you lose with this criterion)
6. Best volatility-adjusted performance (3-yr and 5-yr) in class, not necessarily the best returns.
7. Volatility of each fund on its own must not exceed 10% of total stock market index, total bond index or balanced index as appropriate.
8. Lowest volatility to break a tie all else remaining the same.
9. No bias towards active or passive funds as long as the above criterion are satisfied
10. Allocation percentages based entirely on relative volatility-adjusted returns (3-yr and 5-yr), no ad hoc allocation decisions.

Reply to @fundalarm:
Thanks for the reply FA.
USAA does offer a short term muni fund, USSTX, which might be a way of transitioning onto a lower rung on the muni ladder...kinda like a CD ladder.
My thoughts for both (favorable tax status and rising rate appreciation) got me to thinking there might be mutual funds / ETFs that are managed with both a growth and tax strategy. USAA offers,
USBLX, Growth and Tax Strategy:
"The investment seeks a conservative balance for the investor between income, the majority of which is exempt from federal income tax, and the potential for long-term growth of capital to preserve purchasing power. The fund typically invests a majority of assets in tax-exempt bonds and money market instruments and the remainder in blue chip stocks. It is managed with the goal of minimizing the impact of federal income taxes to shareholders"
It holds 55% bonds, mostly munis and 45% blue chip stocks such as Apple, Exxon Mobile. It has a low turn over rate (19%) so most of its dividends are tax exempt.
Finally Fundmojo gives this fund an A+ rating:
http://www.fundmojo.com/mutualfund/fund_report/mutualfund/USBLX
Other funds thoughts:
HBLIX
GLRBX
BERIX
HSTRX
PRPFX
JMSCX
BRUFX
VILLX
ICMBX
OAKBX

For sure there have been a few managers we fired that have come back to put up great numbers. But there are some that we should have fired sooner than we did. There were signals that were pretty evident (at least in hindsight) that indicated the manager(s) had lost touch, or had changed their process, or had tweaked the fund when it didn't need tweaking.
On the other hand, we fired Longleaf many years ago after a manager told us he did not know of any pending distribution. The next day or so, there was a huge capital gain distribution (this in a year when the fund was down quite a bit, too). Within a week, we sold every position and moved on. I can overlook a couple of years of underperformance, if the underlying philosophy, buy-sell strategy, and management remains consistent. But something like the Longleaf issue, means we could no longer trust what management told us. I know they have a good record, but, like Janus and a few others, we will look elsewhere. There are a lot of great managers from which to choose.

Reply to @scott:
Hi Scott,
Thanks for your reference to AQR Capital Management’s interpretation and implementation of the Risk Parity concept. Although I am generally familiar with the concept, my understanding of its details, especially its execution aspects, is extremely shallow. Your reference has somewhat deepened my knowledge base.
I downloaded the AQR document and spent an hour reviewing it. In the spirit of the Internet, here is my WikiView of the paper.
I am favorably impressed by the directness, the honesty, and the technical characteristics of the report. Its content clearly identifies the prospects and the limitations of the risk parity strategy. It helps to establish a trust in the author’s firm.
I applaud the AQR philosophy that management costs, particularly in the Hedge Fund universe, are far too high. The current cost structure seems appropriate, but the huge initial investment hurdle is an unassailable entry mountain for most private investors. I hope some group alternatives exist as is often the case.
A major AQR position is for ultra diversification across products, markets, and globally. It is ubiquitous in their document. I completely agree, but that is not a novel investment idea.
AQR talks about the complexity of risk, about its multidimensional nature. Yet when reporting their methodology, they revert to the conventional standard deviation measure of the risk parameter. This defection to the conventional representation has implications further down the road in my review. For now, the AQR document failed to walk the talk.
I was pleased with the ADQ presentation of investment category outcomes from the past 40 years, particularly with the segmentation of their discussions into decades and into different crisis periods. History does matter and informs our decision making.
I applaud ADQ for properly crediting the academic work completed by Harry Markowitz and James Tobin in the 1950s. These are the cornerstones of efficient portfolio construction and the investment separation concepts. Again, these are well established risk control concepts that are taught in every financial college course today. Nothing new here.
Let’s get back to the definition of risk once again. The ADQ team acknowledges standard deviation shortcomings, but uses it throughout the paper. That’s okay, except when displaying the potential benefits of leveraging in the Efficient Frontier curve given as Figure 6. Markowitz and Tobin used standard deviation as the full measure of risk because that was likely their simplified understanding five decades ago. By resorting to that same definition, ADQ understates the risk of Leverage when investing.
Note that the Leveraged portfolio in Figure 6 is still a linear function of Risk. ADQ knows better. See the warnings in their disclaimer section. At one point, they say: “It is also possible to lose more than the initial deposit when trading derivatives or using leverage.” That’s honest, but it is not properly reflected in the linear extrapolation relationship depicted in Figure 6. For the leverage notional depiction, the curve should bend, convex downward. As expected rewards increase, at some point, the risk price tag is likely to become exorbitant. The leveraged risk/reward tradeoff is definitely not linear.
Without leveraging, the standard Risk Parity portfolio is likely to deliver muted returns (perhaps similar to the Permanent Portfolio genre). The commonsense risk/reward investment tradeoff axiom remains intact; higher expected reward means higher risk adventures.
ADQ offers to sweeten the deal by engaging in very active Hedge Fund leveraging techniques, many of which are fairly presented in the paper. These techniques include special forecasting skills, preferential market assessments, and very active, and accurate money management tools. Hedge funds typically operate in this space. ADQ has considerable expertise and experience functioning in this specialized environment. But those operations increase risk; success can never be guaranteed, and risk is not fully represented in the Figure 6 plots.
ADQ has the experienced talent to execute this investment approach. They have been doing it for years. Just recognize, that is a risk mitigation method that degrades in risk control as leverage stretches for higher returns.
Market watchers have long recognized the realities of “fat-tailed” return distributions. About 15 years ago I did personal Monte Carlo computer simulations to inform my retirement decision. I did my own computer programming. Initially, I postulated Bell curve return’s distributions.
To enhance my simulation fidelity, I modified my code to do Bell curve returns when the randomly selected volatility was within a stipulated standard deviation factor, and then defaulted to a power-curve distribution when that standard deviation criteria was violated. The power-curve distribution better models the real world fat=tail return’s distribution.
Of course, my portfolio survival rate declined with the wilder ride that the fat-tails modeling projected. I still retired as planned, but my wife and I decided on a smaller portfolio drawdown rate as a result of those simulations.
We were never happy with the robustness of those simulations because the point of departure from the Bell curve, and the decay exponent in the postulated power-curve distribution were arbitrary. There is a paucity of data in the fat-tail regime. Inputing an exponential decay rate is pure guesswork. Assumptions must always be made in the borderline zone between orderly and unpredictable future market behavior. Luck is important.
I’m sure you made a wise decision in your ADQ investment. I know you do not expect miracles. It’s a nonlinear world.
Best Wishes.

FROM EJONES COMMENTARY
I thought you would be interested in the commentary below from Investment Strategist Kate Warne on the December jobs report.
Strengthening Job Market Improves Investor Moods
The economy added 200,000 jobs in December as the job market strengthened more than expected at the end of 2011 (based on a gain of 178,000 expected, according to Bloomberg). In addition, the unemployment rate dropped to 8.5% from a revised 8.7% in November, continuing to trend lower and also better than the 8.7% expected. The private sector added 212,000 jobs, while government employment fell slightly.
Investors anticipate that improving job conditions could help create a circle of stronger consumer spending, better economic growth and, in turn, more jobs.
Signs That the Job Market Is Healing
December's job gains and drop in the unemployment rate are reinforced by many other sources reporting improving job conditions, including the following:
ADP survey showing record job growth -- Private-sector jobs rose 325,000, according to ADP. That was the biggest monthly job increase since this survey started in 2001.
Falling first-time unemployment claims -- The average number of initial unemployment claims over the past four weeks has fallen to the lowest level since June 2008, as fewer people are losing their jobs.
Rising hours and wages -- Hours and wages both rose slightly in December, another positive sign. Wages rose 2.1% in 2011, an improvement from last year.
What's the Big Picture?
While it may be tough to sift through the month-to-month figures when assessing the overall picture, we believe the longer-term perspective shows a trend of solid improvement in the job market. Over the past year:
The private sector created 1.92 million jobs, up more than 60% from 1.17 million in 2010.
Factoring in a loss of about 280,000 government jobs, total jobs increased 1.64 million in 2011. That was an increase of 74% compared to 2010, the first year of job growth after the Great Recession.
The economy dug itself into a deep hole in the recession, with almost 9 million jobs lost, but the recovery is gaining strength, and about 30% of those jobs have been recovered over the past two years.
Overall output is now greater than before the recession. And as is usually the case, job growth lagged but followed along doggedly and accelerated over the past year. While job growth is still not as strong as most would hope, and there's a long way to go, the considerable progress shouldn't be ignored.
Investors who worried that this recovery would falter may be reassured to realize that while it may be slow, its path doesn't seem much different from past recoveries. It takes time and patience. And we think the same perspective is true for your investments. Stocks can benefit from the growth in the economy and earnings over time, and have played an important role in helping investors achieve their long-term goals.* An improving job market suggests this could be a good time to review your investments and make changes if needed.

Howdy,
Again, a thank you to all who post the links and also start and participate in the many fine commentaries woven into the message threads.
For those who don't know; I ramble away about this and that, at least once each week.
NOTE: For those who visit MFO, this portfolio is designed for retirement, capital preservation and to stay ahead of inflation creep; if and when it returns. This is not a buy and hold portfolio, and is subject to change on any given day; based upon perceptions of market directions. All assets in this portfolio are in tax-sheltered accounts; and any fund distributions are reinvested in the funds. Gains or losses are computed from actual account values.
While looking around.....It is settled.....MFO is a most grand internet station in life for individual investors; and I will add, professionals could learn and thing or three here, too. There were several topical areas in the threads last week, receiving lively postings. At least one critical subject area of investing was settled, once and for all time: the buy and hold scenario vs market/trend timing over long time frames and which performs best.....okay, I wrote a small lie, eh? The discussion, none the less; is worthy for all to consider for their own purpose. Historical and societal aspects were also discussed; and my main take away on this is how all of us are affected by the who, what, when and where of our lives to this date. We all have modifiers of events in our lives that become part of who we are today; and may affect our investment behaviors; although our DNA's are almost pure mirrors of one another, a few small variables here and there, keep all of us different. Be it further settled, that the overwhelming conclusion is that; Homo sapiens are a most complex creature. Our house is glad and pleased that you are here.
I have noted a few things below, in the Buy/Sell/Portfolio section.
I have retained the following links for those who may choose to do their own holdings comparison against the fund types noted.
This 1st link to Bloomberg is for their list of balanced funds; although I don't always agree with the placement of fund styles in their categories.
http://www.bloomberg.com/apps/data?Sector=888&pid=invest_mutualfunds&ListBy=YTD&Term=1
These next two links are for conservative and moderate fund leaders YTD, per MSN.
http://moneycentral.msn.com/investor/partsub/funds/topfundresults.asp?Symbol=$HF&Category=CA
http://moneycentral.msn.com/investor/partsub/funds/topfundresults.asp?Category=MA&Type=&symbol=$HF
Such are the numerous battles with investments attempting to capture a decent return and minimize the risk.
We live and invest in interesting times, eh?
Hey, I probably forgot something; and hopefully the words make some sense.
Comments and questions always welcomed.
Good fortune to you, yours and the investments.
Take care,
Catch
SELLs/BUYs THIS PAST WEEK:
NONE
A reflection upon the links above; we attempt to establish a "benchmark" for our portfolio to help us "see" how our funds are performing. Aside from viewing many funds within the balanced/flexible funds rankings (the above links), a quick and dirty group of 4 funds we watch for benchmarking are the following:
***Note: these YTD's per M*
VWINX ....YTD = + .13%
PRPFX ....YTD = + 1.2%
SIRRX .....YTD = + .13%
HSTRX ....YTD = + .16%
None of these 4 are twins to our holdings, but we do watch these as a type of rough guage.
Portfolio Thoughts:
Our holdings had a +.87 % move this past week. Well, we may give the markets another week or two; but as the markets don't really care much about calendar dates and what year it may be, one finds many circumstances to be in place today as they were two weeks ago, as expected. Our house, for 2012 investments; is attempting to discover evidence that this year will not be unlike 2011, with the exception of a post election period. All evidence you may be able to provide to the contrary is greatly appreciated. This leads to the next thought of a small rework of our holdings with selling the majority of our positions in LSBDX and TEGBX. Selling is not the hardest part for this house, but what to do with the new monies. For 2012, if equities do "ok", LSBDX may have a so-so return, based upon what one witnessed for 2011. Not quite sure about TEGBX, but this fund reacted similar to LSBDX in 2011. So, let the studies begin and watch the first few weeks of this new year.
The immediate below % of holdings are only determined by a "fund" name, NO M* profile this week
CASH = 0%
Mixed bond funds = 91.9%
Equity funds = 8.1%
-Investment grade bond funds 26.8%
-Diversified bond funds 19.8%
-HY/HI bond funds 23.2%
-Total bond funds 17.8%
-Foreign EM/debt bond funds 4.3%
-U.S./Int'l equity/speciality funds 8.1%
This is our current list: (NOTE: I have added a speciality grouping below for a few of fund types)
---High Yield/High Income Bond funds
FAGIX Fid Capital & Income
SPHIX Fid High Income
FHIIX Fed High Income
DIHYX TransAmerica HY
---Total Bond funds
FTBFX Fid Total
PTTRX Pimco Total
---Investment Grade Bonds
APOIX Amer. Cent. TIPS Bond
DGCIX Delaware Corp. Bd
FBNDX Fid Invest Grade
FINPX Fidelity TIPS Bond
OPBYX Oppenheimer Core Bond
---Global/Diversified Bonds
FSICX Fid Strategic Income
FNMIX Fid New Markets
DPFFX Delaware Diversified
TEGBX Templeton Global (load waived)
LSBDX Loomis Sayles
---Speciality Funds (sectors or mixed allocation)
FCVSX Fidelity Convertible Securities (bond/equity mix)
FRIFX Fidelity Real Estate Income (bond/equity mix)
FFGCX Fidelity Global Commodity
FDLSX Fidelity Select Leisure
FSAGX Fidelity Select Precious Metals
RNCOX RiverNorth Core Opportunity (bond/equity)
---Equity-Domestic/Foreign
FDVLX Fidelity Value
FSLVX Fidelity Lg. Cap Value
FLPSX Fidelity Low Price Stock
MACSX Matthews Asia Growth-Income

I also like MAPTX (Pacific Tiger) as well in combination with MAPIX or MACSX because MAPTX has a deeper "emerging" flavor to it especially because it leaves out Japan and Australia.
http://news.morningstar.com/articlenet/article.aspx?id=530169
Fund Manager Q&A
Asia Is Front-Runner in Global-Growth Race
===========================
"Sharat Shroff is a portfolio manager at Matthews International Capital Management. He manages the firm's Pacific Tiger and India strategies and comanages the firm's Asia Growth strategy. Specific to Matthews Pacific Tiger (MAPTX), he recently answered our questions on how to navigate the market in times of volatility while at the same time minimizing risk potential. He also offered a constructive outlook for China in 2012 and how investing in smaller markets such as Thailand and Indonesia can provide a boost to overall investment opportunities. Lastly, Shroff mentioned that focusing on household-income-driven industries, such as the consumer, health-care, and financials sectors, is prudent."

Gambling......flip a coin...no market timing here....each new flip has the same probability....50/50
Speculating....timing here works, maybe....weigh the probabilities....fundamentals and technicals against historical outcomes.....return on treasuries a high probability, close to actual Investing....while the return of XLF to previous glory is not an investment(speculation) I would like to make, but is an example of market timing...current choice to withhold funds....
Investing.....?....not sure in today's climate what I would classify as an investment.....home ownership...no.....stocks....that's worked out super for the last decade.....treasuries....yeh, right...at 0 percent....how about something that will return capital whole....I keep hoping....

Reply to @MaxBialystock: The difference with Marketfield is that the fund isn't quite as strict with the "short" part of long/short and attempts to be more flexible, dialing up/down long and short exposure as it sees fit. The fund also makes sizable macro calls. It's a pretty unique fund in the long/short space.
Definitely do your own research, but if you want to consider including alternative strategies, it is worth a look.
_______________________________________________________
From a Marketwatch article on the fund:
http://www.marketwatch.com/story/flexibility-is-key-for-marketfield-fund-2011-10-25
"Michael Aronstein's Marketfield fund has one big advantage many other mutual funds don't: flexibility.
Aronstein's $764-million fund has a broad mandate, allowing it to go long and short stocks, invest across different sectors and countries, even buy and sell futures and commodities.
"It's basically a hedge fund in a mutual-fund package," Aronstein said. "We have the flexibility to go pretty much to any asset category, either long or short."
_______________________________________________________
The strategy portion of the fund's prospectus:
"To achieve the Fund's investment objective, the Adviser will allocate the Fund's
assets among investments in equity securities,fixed-income securities and other
investment companies, including exchange-traded funds ("ETFs"), in proportions
consistent with the Adviser's evaluation of their expected risks and returns.
In making these allocations, the Adviser considers various factors, including
macroeconomic conditions, corporate earnings at a macroeconomic level, anticipated
inflation and interest rates, consumer risk and its perception of the outlook of
the capital markets as a whole. A macroeconomic strategy focuses on broad trends
and is generally distinguished from a strategy that focuses on the prospects of
particular companies or issuers. The Adviser may allocate the Fund's investments
between equity and fixed-income securities at its discretion, without limitation.
The Fund's investments in fixed-income securities normally consist of investment
grade corporate bonds and debentures, mortgage-backed and asset-backed
securities, United States Treasury obligations, municipal securities,
obligations issued by the U.S. Government and its agencies or instrumentalities
and convertible securities. The Fund may also invest in zero-coupon bonds,
without limitation. In addition, the Fund may invest up to 30% of its net assets
in high-yield fixed-income securities commonly referred to as "junk bonds." The
fixed-income securities in which the Fund invests may have maturities of any
length and may have variable and floating interest rates.
The Fund's equity securities investments may include common and preferred stocks
of U.S. companies of any size. In addition, the Fund may invest up to 50% of its
net assets in equity or fixed-income options, futures contracts and convertible
securities and may invest up to 30% of its net assets in swap agreements.
Additionally, with respect to 50% of the Fund's net assets, the Fund may engage
in short sales of index-related and other equity securities to reduce its equity
exposure or to profit from an anticipated decline in the price of the securities
sold short.
The Fund may invest up to 50% of its net assets in equity securities of foreign
companies of any size, including up to 35% of its net assets in securities
issued by corporations or governments located in developing or emerging
markets. The Fund's investments in foreign securities may include, but are not
limited to, American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs") and Global Depositary Receipts ("GDRs"), including up to 35% of its net
assets in securities issued by corporations or governments located in developing
or emerging markets.
The Fund may borrow money from banks or other financial institutions to purchase
securities, which is commonly known as "leveraging," in an amount not to exceed
one-third of its total assets, as permitted by the Investment Company Act of
1940, as amended (the "1940 Act"), and may also engage in securities lending to
earn income.
Security selection for the Fund is driven by the Adviser's top-down analysis of
economic issues, investor sentiment and investment flows. Once the Adviser has
identified a theme that either benefits or disadvantages a specific sector or
country, it seeks to implement an investment strategy that is appropriate for
the Fund. In some cases, the Adviser utilizes a sector- or country-specific ETF
that offers exposure to a broad range of securities. In other situations, the
Adviser may select a single issue that is perceived to be particularly germane
to a specific concern or a small group of issues with characteristics that match
the goal of creating portfolio exposure to a macroeconomic theme."

Hi, Catch
I think it’s normal to be
“a bit anxious about growth going forward and
attempting to preserve the existing capital with continued positive returns.”
MJG and I go around and around when it comes to market timing.
I believe in it because it has worked for me and several hundred people
that I have instructed over the years.
Timing should be a consideration for investors going forward, since the
past 10-12 years have seen very poor returns using Wall Street’s traditional advice.
But if we’re happy with our returns, they’re what we expected and all that
we want, then we should just stick with the one who brought us here.
Hope you have a profitable 2012.

Howdy Flack,
Thank you for your time and efforts with the numbers. Our house has been in the markets since 1978; have not had to rebuild from any major market drops related to our holdings in those periods; a bit anxious about growth going forward and attempting to preserve the existing capital with continued positive returns.
Regards,
Catch

78.4 shares. Trad. IRA, credited to 2011. I dunno if China will manage a soft landing or not. And I've said over and over in here that "Asia is the future." That's still true. Even if we ARE in a "New Normal" environment. I think profits and our cap. gains from mutual funds will be more subdued for the foreseeable future, yes. On plain, simple straightforward demographics, Asia will be eating our lunch for years to come. In the West, we've already become an Empire of Consumption rather than Production. Biting off its own nose to spite its face, Asia wants to become like us. Regardless of the broader picture, including ethical considerations, Jakarta, Manila, Beijing and Mumbai will be doing better than ourselves here in the USA, going forward. Short and Medium-term, the dollar might make a temporary comeback. And let's remember that it's Quick-profit-in-and-out TRADERS that drive the market, not INVESTORS. ("In-and-out" remind you of anything in particular? It's deliberate.)

Reply to @philpill:
No I do not think this is advertising at all. This board is about Mutual Fund news!
Andrew Foster was lead manager of the wonderful Asian fund, MACSX and also co-manager of MAPIX.....and he was also Research Director (Matthews Asia).
He left to start his own firm (Seafarer Capital) and stated that he was interested in opening a new fund one day. It sounds like he is working on it by the looks of things.
Whether it's in these forums or David Snowball's Monthly Commentaries --- we discuss interesting new up & coming Funds all the time.

This is an untested fund of a very well tested manager, so this post is very appropriate:
Andrew Foster is the Lead Portfolio Manager of the Fund
Experience
2008 – 2011
Lead Manager of the Matthews Asia Growth and Income Fund (MACSX)
2005 – 2008
Co-Manager of the Matthews Asia Growth and Income Fund (MACSX)
2003 – 2005
Assistant Manager of the Matthews Asia Growth and Income Fund (MACSX)
2005 – 2011
Founder, Lead Manager and Co-Manager of Matthews India Fund (MINDX)
2006 – 2011
Founder, Lead Manager and Co-Manager of Matthews Asia Dividend Fund (MAPIX)
2008 – 2009
Acting Chief Investment Officer, Matthews International Capital Management (San Francisco)
2003 – 2007
Director of Research, Matthews International Capital Management (San Francisco)
1998 – 2001
Investment Analyst, Matthews International Capital Management (San Francisco)
1996 – 1998
Business Analyst, A.T. Kearney (Singapore)

There are some documents in the SEC's Edgar database that look like a draft of the prospectus. Link here:
http://www.sec.gov/Archives/edgar/data/915802/000119312511311116/d254427d485apos.htm
Looks like the fund will have Investor and Institutional fund clases with a expense ratios of 1.6% and 1.45%, respectively.
There was also more details on the strategy of the fund (posted bellow). Looks interesting...
"Principal Investment Strategies of the Fund
Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 80% of its total net assets in dividend-paying common stocks, preferred stocks, convertible securities and debt obligations of foreign companies.
The Fund may invest a significant amount of its net assets (50% to 80% under normal market conditions, measured at the time of purchase) in the securities of companies domiciled in developing countries. The Fund’s investment adviser, Seafarer Capital Partners, LLC (“Seafarer” or the “Adviser”), considers that most Central and South American, African, East and South Asian, and Eastern European nations are developing countries. Currently, these nations include, but are not limited to Brazil, Chile, China, Columbia, Czech Republic, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, South Africa, South Korea, Sri Lanka, Taiwan, Thailand, Turkey and Vietnam.
Seafarer identifies developing countries based on its own analysis and measure of industrialization, economic growth, per capita income, and other factors; it may also consider classifications produced by the World Bank, the International Finance Corporation, the United Nations, and private financial services firms such as FTSE and MSCI.
The Fund may also invest a significant amount of its net assets (20% to 50% under normal market conditions, measured at the time of purchase) in the securities of companies domiciled in selected foreign developed nations, which in the Adviser’s opinion have significant economic and financial linkages to developing countries. Currently, these nations include Australia, Hong Kong, Ireland, Israel, Japan, New Zealand, the United Kingdom and Singapore.
The Adviser determines a company’s location based on a number of factors. A company is generally regarded by the Adviser as being located in a particular country if the company: (i) is organized under the laws of, maintains its principal place of business in, or has, as its principal trading market for the company’s securities, the particular country; (ii) derives 50% or more of its total revenue or profit from either goods or services produced or sales made in the particular country; or (iii) has more than 50% or more of its assets in the particular country.
Exposure to non-U.S. companies through the Fund’s investments in exchange-traded funds (“ETFs”), including ETFs organized under U.S. law, will be included in the Fund’s percentage of total net assets invested in non-U.S. securities.
The Fund may typically invest in convertible securities and debt obligations of any quality or duration. The Fund may generally invest in companies of any size or capitalization, including smaller companies.
The Fund attempts to offer investors a relatively stable means of participating in a portion of developing countries’ growth prospects, while providing some downside protection, in comparison to a portfolio that invests purely in the common stocks of developing countries. The strategy of owning convertible bonds and dividend-paying equities is intended to help the Fund meet its investment objective while reducing the volatility of the portfolio’s returns."