Like, David, I am also concerned with the prospects for the traditional bond fund. I would prefer the managers have a pretty wide latitude in what they invest. For that reason, we use OSTIX, BSIIX, and LSBRX as core holds in most accounts. We have owned OSTIX almost since its beginning, and have never been disappointed in Carl Kaufman's efforts. Rick Reider's team at BlackRock is continuing to keep durations super low, but still turning out strong numbers. And Loomis just keeps going. Its potential volatility is a concern, but until rates start moving up (and maybe even when they do), the flexible mandate of this fund provides a pretty good base. We allocate 50% of bond holdings to specific foreign bond funds, and we continue to employ TGBAX, GSDIX, and GIMDX.
As for dividend income stock funds, we are starting to use GSRLX, a new Goldman fund run by a talented subadvisor group Dividend Assets Capital out of South Carolina. We are cautious about owning stocks that pay the highest dividend yields, since their prices have been bid up pretty high. But GSRLX and TIBIX are attractive since they look for GROWING dividends. GSRLX offers a chunk of MLPs, which is a plus.
And you might also look at PAUIX, which has had a very good dividend yield, currently at more than 4%.

Since the article touched upon numerous Emerging Market ETF recommendations - I thought I'd throw out there an interesting new ETF --- FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLTE)
Currently the ETF holds 1,699 stocks and so it is very diversified from a stock exposure perspective. Market Cap Exposure...
Large-cap: 45.25% | Mid-cap: 19.18% | Small-cap: 32.03% | Micro-cap: 3.54%

FlexShares® Morningstar Emerging Market Factor Tilt Index ETF seeks to enhance exposure to developing market stocks by tilting the portfolio toward the long-term growth potential of the small cap and value segments. It seeks to provide investors with an emerging market equity option that helps to meet their longer term capital appreciation needs. Designed to replace traditional market-weighted emerging market equity products, the Fund applies a tilt to smaller cap and value stocks using a multi-factor modeling approach that attempts to enhance portfolio risk/return characteristics. Realized capital gains and income dividends are anticipated to be declared and paid at least annually.

Fact Sheet:
http://www-ac.northerntrust.com/content//media/attachment/data/white_paper/1209/document/tlte_factsheet.pdf?1356493091219
=====
EGShares also added an interesting Emerging Markets ETF --- EGShares Emerging Markets Core ETF (EMCR).

The EGShares Emerging Markets Core exchange-traded fund (ETF) seeks investment results that correspond to the price and yield performance of the S&P Emerging Markets Core Index. The S&P Emerging Markets Core Index is a modified equally-weighted index designed to measure the market performance of up to 116 leading companies that S&P Dow Jones Indices determines to be representative of all industries domiciled in emerging market countries, using a rules-based methodology.

Fact Sheet:
http://emergingglobaladvisors.com/pdf/literature/FactSheet/EMCR_Fact_Sheet.pdf
Insights:
http://emergingglobaladvisors.com/pdf/articles/Industry Diversification in EM Core Holdings -- A Different Index Choice.pdf

Many EM investors have country and
industry concentrations because they use
conventional benchmarks as investment
portfolios.
We chose the S&P Emerging Markets
Core Index because it is designed to:
• Diversify industry exposure by reducing
concentration in legacy frontier market
sectors
• Tap into available liquidity to gain
exposure to potentially emerging
industries
• Reduce more mature economy
exposure, broadening EM country
diversification
• Serve as an investment index rather
than a benchmark

Hi again, Slick!
In January, we'll publish a list of fund profiles sorted by style. You might find some of the smaller or newer funds of interest.
In general, I'm a bit concerned about the prospects for longer-term investment grade bonds - we're at the tail end of a thirty year rally with real yields at or below zero. That tends to make me a bit skeptical of bond or hybrid funds and especially those staying close to a standard benchmark allocation. And I'm a bit concerned with small caps whose greatest gains tend to occur when we're coming out of recession and interest rates are dropping. GMO projects small caps and almost all bonds for negative real returns over the next 5-7 years.
In the hybrid realm:
1. I could imagine a buy-write or covered call fund as an alternative to a traditional stock/bond hybrid. Instead of relying on bonds for income, these funds can generate 1.5 - 2% per month in income from selling calls. I recently profile RiverNorth Dynamic Buy-Write and I'll update Bridgeway Managed Volatility (formerly Bridgeway Balanced) for January. Likewise, a good long/short fund (there aren't many) would give you the risk/return profile that hybrids have traditionally achieved without the risk of a bond bubble.
2. I'd certainly look at funds with a fair degree of flexibility and a strong track record. Osterweis Strategic Investment is a blend of Osterweis Income and Osterweis. And I do own T Rowe Price Spectrum Income, which Sven endorses and which can hold 15-20% in dividend-paying stocks.
3. I wouldn't rule out an emerging markets hybrid fund. GMO likes the prospects of both e.m. stocks and bonds. Fido just launched one (Total Emerging Markets) and the closed-end First Trust/Aberdeen Emerging Opportunities has a long, strong record.
In the income realm:
1. as a cash management option, I've been using RiverPark Short Term High Yield. It's structured to return 3-4% above a money market with very low volatility.
2. I might consider registering for my January conference call with Teresa Kong, manager of Matthews Asia Strategic Income. She's sharp, Matthews is first rate, and it would seriously diversify a domestic bond portfolio.
3. In the world of bond funds, Osterweis Income is distinguished and the new Scout Unconstrained Bond draws on the skills of one of Morningstar's Fixed-Income Manager of the Year nominees. They've got a really solid record. RiverNorth is about to launch a collaboration with OakTree (first-tier institutional bond guys who also run Vanguard Convertibles), focused on high income.
In the small cap world:
1. Aston River Road Independent Value and Pinnacle Value are managers with a distaste for over-priced stocks and an eye for value; over time, they tend to hold a lot of cash when they can't find stocks priced to produce "absolute returns."
2. for solid, unspectacular performance, I'd think about Mairs and Power Small Cap, at least in part because M&P have such a record for solid performance without drama.
3. finally, I would at least look at the Grandeur Peaks Global folks. They once ran the Wasatch global small cap operation and have now gone independent.
Nothing against the suggestions that the folks raised above, I'm just not as familiar with them and thought I might flag a few ideas.
Take great care,
David

I will second the choice of PGDPX. It's a well diversified dividend income fund holding every thing from EM bonds to Global equities, mlp's and more. Go to the Principlefunds.com website if interested. Fairly young fund, but good record so far. But I am biased having 10% in the fund.
I still like ARIVX for small cap only because conservative and capital protection is what I wanted. The 1year under performance will come with the decision to own this manager's skills. The total returns in 3-5-10 years is what I'm hoping for.

Reply to @msf: As a long-time American Funds holder I surely agree that their fixed income offerings are really sub-par. However they do have a number of fairly decent equity funds (if you can purchase without the load), some of which are referenced in the article.
YTD their "New Economy" fund has returned 23.8%, Smallcap World Fund 21%, and Capital World Growth and Income is at 19.2%, all with reasonable ERs.

Reply to @hank: I share your disappointment with most financial reporting (and unfortunately, most "reporting" in general). Though this article was somewhat short on details, I did not find it quite as weak as so many others that seem to be written to fill column space.
The writer does point out that there has been a general movement from large cap equity to bonds, and from actively managed funds to index funds (including ETFs). He does not talk about how AF's bond funds in particular are doing because the article is about equity funds. He does point out that while there was this trend out of LC equity, it was particularly pronounced with AF, and goes on to describe how AF equity funds differ from those in other families.
In doing so, he talks about AF's equity funds' relatively poor performance, which has since improved. (He does not note that AF's bond funds's performance has been even worse, as that would not explain the outflow from their equity funds; it would only go to explain why AF's bond funds did not benefit from the equity outflow.) He describes AF's conservative nature, and highlights a particular bad move by AF (holding lots of financials). What he doesn't make clear is that many other families (though far from all) made the same misstep in 2008.
The article does not go into nearly as much depth as the M* article I linked to (below) about how Capital Research is changing the way its managers and analysts work on the equity side. But it is not completely lacking in observations about the funds' management style or AF's relative performance. I don't think I'd throw lump it together with so many articles that deserve excoriation.

A difference between American Funds bond funds and equity funds is that, while much of the money in the bond funds is in Class A shares as you note, that's not necessarily the case for the equity funds.
See, e.g. the SAI for Bond Fund of America (I assume that's the fund you're talking about; the only other fund that meets your load/ER specs is US Government Securities). The vast majority is in class A ($23.7B), with class C having $2.5B, and class F-1 having $1.5B. None of the many other classes has over $1B in investment.
In contrast, consider EuroPacific Growth. While a good chunk of its moneys are in Class A ($31.4B), there's a bigger chunk in the no load classes F-1 ($7.4B), F-2 ($6.0B), R4 ($12.5B), R5 ($14.0B), R6 ($17.6B).
People are not flocking to AF's bond funds, I suspect because they're lousy. The fund you referenced (actually both of the funds meeting your specs) rates only 2*; Bond Fund of America has performed in the bottom decile over the past five years. (Note, this seems strange to me, since it was not in the bottom decile for any of the past dozen years, but that's what M* reports.) The average AF taxable bond fund rates only 2.4 stars.
Capital Group is working to overhaul its fixed income group and the focus of its fixed income funds, as M* has reported. Also reported by Reuters and others. Confirmation that performance is a major issue with these funds.

http://news.morningstar.com/articlenet/article.aspx?id=578169
* Hartford Capital Appreciation Adds Comanagers
* Federated to make changes to its equity fund lineup
* Eaton Vance Atlanta Capital SMID-Cap to close to new investors
* ING Small Company Reopens
* Aston Fires Subadvisor Veredus
* IShares Altering Benchmark Indexes for 11 Country-Specific ETFs

Mark,
I can certainly buy TFSHX in my 403b account (similar to 401k for educators). Not many people expect these funds, or any other alternatives, to outperform stocks over the long run. The main reason to add them to a portfolio is the same as with bonds: Each of the sources of your gains or losses experiences some kind of Brownian motion (stochastic jumps). If all of them jump in the same direction, it can be pretty scary. Bonds and stocks often jump in different directions at different times. The same is with other alternative investments. If they work well, they can make the ride more smooth. Like salt and pepper, they should be only a small part of your portfolio. But they may improve the taste.

Ten, fifteen year out, returns on bonds aren't going to look great. But it really all depends on what you're comfortable holding. It also depends on how much money you have, because series I bonds are much more attractive than treasuries, but you can only invest relatively small quantities. Same thing with FDIC insured accounts, but the limits are much higher.
Before you sell all your bonds, look at what long duration treasuries have done in the last couple of years. They've done really, really well during a period of time when everyone said interest rates were going to rise. Is that going to continue? Probably not, but who knows.
I'd keep in mind two things, one if you already hold a position, changes in the price don't change the income stream you get, simply the mark to market value which only matters if you sell. Two, if you reinvest at least part of the yield, falling prices makes you money because your prospective rate of return is higher.
Do you need to sell capital to pay for current or future expenses? Yeah, then it might make sense to sell bonds in leu of equity right now. Otherwise what are you going to do with the money? Cash isn't super different than a bond, arbitrage or "alternatives" are basically scams, and equity is a different beast all together.

Here's the link to a recording of the ARLSX call. We'll host it (and several neat new features) on-site in January.
Quick highlights:
1. they believe they can outperform the stock market by 200 bps/year over a full market cycle. Measuring peak to peak or trough to trough, both profit and stock market cycles average 5.3 years, so they think that's a reasonable time-frame for judging them.
2. they believe they can keep beta at 0.3 to 0.5. They have a discipline for reducing market exposure when their long portfolio exceeds 80% of fair value. The alarms rang in September, they reduce expose and so their beta is now at 0.34, near their low.
3. risk management is more important than return management, so all three of their disciplines are risk-tuned. The long portfolio, 15-30 industry leaders selling at a discount of at least 20% to fair value, tend to be low-beta stocks. Even so their longs have outperformed the market by 9%.
4. River Road is committed to keeping the fund open for at least 8 years. It's got $8 million in asset, the e.r. is capped at 1.7% but it costs around 8% to run. The president of River Road said that they anticipated slow asset growth and budgeted for it in their planning with Aston.
5. The fund might be considered an equity substitute. Their research suggests that a 30/30/40 allocation (long, long/short, bonds) has much higher alpha than a 60/40 portfolio.
An interesting contrast with RiverPark, where Mitch Rubin wants to "play offense" with both parts of the portfolio. Here the strategy seems to hinge on capital preservation: money that you don't lose in a downturn is available to compound for you during the up-cycle.
Negotiating now with Matthews about talking with Teresa Kong (MAINX) in January. They've agreed and we need to arrange date and time. The good folks at Seafarer are on-board to celebrate their first birthday with us in February. Still thinking about ultra-focused folks (RiverPark Wedgewood, Bretton, maybe Cook & Bynum) thereafter.
For what interest it holds,
David

A lite-hearted view of the current (well kinda current since 2010) thoughts regarding bond bubbles. This write is very much off-the-cuff, and in a poking fun, as well as more serious considerations and is by no means in any form of completeness; and may be considered an addendum to the Funds Boat.
Rip it, tear it and shread it as needed. We'll all learn something.
"Investors on the quest for yield along with safety are also plowing capital into investment-grade corporate securities, but only about 6.3% of respondents believe that these markets are overbought. About one in six respondents stated that more than one of the fixed-income markets is in bubble territory and a whopping one-fifth believe that all of the markets listed are price rich. In an uncertain macro-environment world where global central banks seem willing to underwrite anxieties, the end of fixed-income bubble markets seems far off."
This note, is from this article, CFA Institute.
Bad plan of the Week?
On Wednesday, the Fed announced another round of easing and said it's going to keep interest rates near zero until the nation's unemployment rate drops below 6.5 percent or inflation tops 2.5 percent.
Okay, my inflation adjusted 2 cents worth.....and then I'll attempt to keep my mouth shut about this until 2013.
---The easy part, bond prices in some sectors will stay near flat for the next year, some sectors will move either up or down in price !
1. So, the Fed. actually placed a plan with numbers, around which, one may do a pole dance. Who is going to play this game? The big money houses? Who is going to complain about whether the numbers (unemployment/C.P.I.) are real? And, Mr. Bernanke indicated that, every month, the Fed would purchase $40 billion worth of mortgage-backed securities (continued) and another $45 billion in long-term Treasuries. After awhile this is really big money, as the central bank will effectively be electronically printing over $1 trillion next year in order to buy more government bonds. Geez, an investor should be able to make a buck somewhere with this kind of action backing a plan.
2. Hey, what if the "new normal" unemployment rate, reported in fully accurate numbers, will not see the happy side of below 7% for years to come. One has to figure that inflation might ring the Fed. target bell first, eh?
3. Inflation, well except if the official CPI can't move past 2.5% (or projected, as per the Fed. statement). Then what?
Does this spell deflation or just a tiny bit of growth?
4. Perhaps growth is not going to be what it has been in the past 50 years. What if the developed countries have a Japanese moment, for a few decades? Opps, that could also be a problem for the lesser developed countries, too.
5. Perhaps a trend will find its place in the U.S. general populus of re-gifting, and when that does not clean out enough of the clutter in the households, the majority of them will have yard and garage sales in 2013. This action could actually stall sales at QVC, HSN, Amazon, various t.v. sell everything channels will begin to fail, numerous dollar stores and WalMart, too. GDP would drop 1%. And don't forget the ongoing action in the various blackmarket sectors of this country; or the kinder word of barter. Past whatever name for this activity, is no tax revenue.
6. And holy poof. The country needs tax revenue from somewhere; 'cause the outtie numbers are much too big relative to the innie numbers and gets into that debt thing-a-ma-bob. The "great debate", eh?
7. I sometimes wonder about generations of investors, the books that have been written and the charts and graphs that shape so much of what so many attempt to perform with investments in the equity sectors. It still is an equity-centric world; and I do believe that some of these folks get really upset about and with the fits and starts in equity sectors; and that some of the bond folks, while walking down a street, stop at the equity store; open the front door and yell inside, "Hey, we make money, too!; and if it wasn't for the bonds issued, your equity companies would not have a good life."
'Course, in the end; if and when some bond prices tumble off of a cliff and into the sea, for what reason, will be the question?
Must be growth somewhere pushing up the demand for money in other sectors; as within the next two years at the most, anyone and his brother's company will have been able to borrow (bond issues) as much cheap money as they could ever need for decades to come. Corporate bond issues will likely continue to fall from the sky for the next year, so that companies may take advantage of cheap money. Hopefully, they will have a good reason to raise the cash.
Perhaps the next big upmove will be in equities, for real reasons; and not because bonds are too expensive OR that the big money needs to go play in another arena for a short bit of time to reap the profits.
What would be the ramifications into some equity sectors, if some bond sectors had strong and sustained yield increases over a period of six months?
What about the much discussed contrary indicator? If so many are viewing bonds as over-priced; may this not be a contrary indicator? Are bonds over-priced for a good reason?
'Course, low yields today have the good and bad edge sides of the interest rate blade, eh?
Individuals with good credit scores may obtain low rate financing for homes, autos and related.
The other side of the blade for individuals who have some form of invested monies; but who are also risk intolerant suffer from near zero returns on capital via CD's and related. Another related area, but is seldom noted are monies invested by legal entities as cities, municipalities and/or townships who must keep money at the ready for budget needs. These accounts are generally parked in some form of demand account with local banks. These accounts currently may only provide for a .10% yield on the monies.
Will the U.S. and global consumers find room for spending in their budgets going forward; and therefore promote grow with companies, who will in turn, hire more employees? And what are all of the global boomers going to do with their monies?
The central bankers may yet "lead" this house back to some of its investing roots in equities. We're gonna have to find a balance somewhere.
Respectfully,
Catch

Reply to @wsanders: Not much of a correction? Maybe not in the open end high yield muni funds which are but 1% off their recent all time highs. But in HYD I would call a sudden 4.8% decline off all time highs and wiping out all the price gains since July a correction. Even more so since it's a plodding bond instrument. Again, one reason why I abhor ETFs. They can go to a discount to NAV like HYD in the blink of an eye and wipe out months and months of price gains. Maybe this is all unfounded worries about the taxation of munis and HYD will go right back to their highs. But in the meantime, I could never live with a 4.8% drawdown in any of my bond positions.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=hyd&insttype=&freq=&show=&x=28&y=15

Hopefully, none of us here, will be severly stung when some bond types rotate away from capital appreciation; for whatever reasons.
One would also hope that active managers of some bond funds would be able to adjust for changes, regardless of maturity of holdings. These are the "steriod" tools that may be in place within a fund's prospectus for "adjusting" holdings.
I suspect, if a large negative run on bond pricing comes into place; some damage will be done, whether holding individual bonds or the best of managed bond funds.
The same aspects would also apply to various equity sectors.
Not unlike the period beginning in mid-2007 through Mar. 2009; if there are more sellers versus buyers, prices go down, period.
Regards,
Catch

For others who hold Pimco funds, there were some distributions today; so, you may find some large drops in NAV's from today. Ironically, Pimco doesn't have these posted yet; but you will find the amounts at M*.
Sample:
PTTRX Distribution today, 12-12-12
with the NAV indicating a -2.41%
Distribution
Date 12/12/2012
Distribution
NAV 11.36
Long-Term
Capital Gain 0.1137
Short-Term
Capital Gain 0.1548
Return of Capital 0.0000
Dividend
Income 0.0000
Distribution
Total 0.2685

Hi Catch,
I don’t plan to make any major changes in my portfolio with respect to its holdings or even with my asset allocation except to move ballast from the cash area to equity area and back to the cash area, form time-to-time, as market valuations change. I often reduce equities if I feel they have become overbought … and, likewise, I will increase my allocation to equities should I feel they become oversold. In short words, buy equities when they are towards their 52 week lows and sell some of them off as they near or approach 52 week highs.
I currently have a total of fifty investment positions within my taxable, 401k and IRA accounts combined. From a recent Xray analysis the asset allocation bubbles at about 15% cash, 25% fixed, 50% equity and 10% other & not classified. The portfolio’s yield is north of five percent on amount invested and has about 20% of its value comprised of unrealized capital gains. Certainly, if a major downdraft developed I’d book some of these gains … especially, in the tax deferred accounts, where the tax man does not knock until distributions are taken. Within both equities and fixed I am about two thirds domestic and one third foreign. Within fixed I am about 40% short, 40% intermediate and 20% long maturities.
I have already sold or reduced positions for tax selling reasons in the taxable account for this year. I feel I am well positioned in all my accounts as 2013 approaches. From a price to earning ratio I have the S&P 500 Index selling on blended earnings at about 14.3 and feel it has room to run. I believe we will see the Index reach 1500 sometime between now and the end of the first quarter next year. In addition, I believe we might even see 1600 sometime in 2013. So, with this, I favor equities over fixed.
I wish all “Good Investing,” a great Christmas … and, a prosperous New Year.
Skeeter

As Mark intimated, I will let the market tell me what to do. Being a believer in less is better I try to hold as few funds as possible. Having rolled out of my small position in ABTYX, that leaves me with PONDX, WHIYX, SUBFX, and ANGIX. MWCRX is something I have been in and would probably still be in were it not for the outperformance of PONDX. It's an excellent fund with an excellent management team and in the tight rising channel I like to place my capital.

Howdy MoneyGrubber,
Fundalarm provided excellent points for consideration, relative to what type of bond fund, some diversification away from 90% equity exposure with a bond fund and looking forward as to what will be driving forces in the future to cause changes with interest rates moving higher.
You used PTTRX as a core bond fund example. I would expect this fund to continue to be able to manage interest rate swings; as well as many other broad based bond funds. Is this your core bond fund?
This discussion thread, in part; was based around this statement, " "If interest rates and inflation move quickly up". Quickly is relative to folks in their own time frame, eh?
Using the 10 year Treasury note as an example and that the current yield has been hanging out in the 1.6% range for many months; my view of quick for upward yield changes would currently be a .1% average weekly upward yield move for 6 to 8 weeks. If such upward yield moves, at a point in time in the future; could be maintained without some pull backs of consequence, I would have to assume a trend has begun. As noted previously, there should have already been other areas (upward equity prices for one) that would be showing strong positives, also which have suststained upward moves.
It is easy, among all of the other investment areas, with numerous talking and written opinions (from any source) and one's own convictions and knowledge towards their own portfolios; to try to find and then determine what to watch for clues that may affect one's portfolio.
As to watching, I do pay attention to the 10 year Treasury note yields. It is very easy to glance at this number at one of the tv business channels and be ho-hum about the yield number; but today this number is so small, that small changes are large percentage numbers that would not be ignored in the equity world. If one finds a sustained move from a current 1.6% to 1.7% yield in one week; the change is +6.25%. This number would be big talk in the equity world, eh? The following week finds a similar .1% upward yield move, with the 10 year now parked at 1.8%. The change is now at +12.5% in a two week period. After 8 weeks of similar moves, and now finding the 10 year yield at 2.3%; also finds the change equaling a 43.8% move reflected. Of course, bond prices would have moved downward during this same period. In theory, the downward pricing would have first been shown in plain jane Treasury issues, as well as etf's which follow these issues and closely related bonds. Likely, the best clues as to a fading bond market would be the actively managed bond funds; with pricing being reflected in the abilities and/or luck of management. IF broad based, active managed bond funds are able to manuver through the interest/yield rate increases with available adjustment tools, an investor being in the "right" bond fund should not suffer major losses. This does not mean that one should ignore their active managed bond fund for downward moves that are sustained. We all know a long list of active managed bond funds will always find funds at the bottom of the list; both during the good and bad times. Not unlike we individual investors, the professionals and highly trained/skilled will miss the boat from time to time.
Another aspect of considering when to sell a fund is "when did I buy it?" None of us ever want to give up what we've already earned. But, if you happened to buy PTTRX 4 years ago and "the bond bubble" started this week, you would have an easier decision and a bit of "wiggle room" about selling the fund; versus if you bought the fund the week before. You may also be dollar cost averaging via a retirement plan for many years into a PTTRX; so your cost during the growth of this fund has smoothed your investment. Worse case with any investment area/fund is to sell down in 25% chunks, if you are no longer happy with the fund or market conditions.
You noted a 20 year (long term) time frame prior to retirement, and assuming a traditional retirement age of 65. If you so desire, you have a 40 year long term horizon with your investments; assuming a 20 year post-retirement period. Although I am likely 20 years in front of you, our house hopefully, will continue to be long term investors, too; if I/we are able to average the longevity tables. Your advantage is that you should be able to continue to have cash flow into your house with employment, while we won't have this position and eventually will have cash flowing the other direction from our retirement accounts. Although employment provides for an ease of mind concerning investments, an investor of any age has to be mindful of preservation of investment capital in order to benefit from the greatest advantage an investor has; and this is the continued compounding of monies going forward, building upon what has been "retained" for compounding versus "I can make up a large investment loss with cash from employement". Yes, these are easy words to write; but less easy to deal with the reality.
At this point in time, I would not be concerned about a 10% portfolio holding in a broad based bond fund causing any damage to your overall portfolio return from a possible, future bond bubble; and such a fund will provide a cushion against your equity portfolio. You may also hold more bonds than you are aware of via equity funds positioned in these areas, too.
You may be assured that this house is watching for a "bond bubble" with this portfolio:
---High Yield/High Income Bond funds
FAGIX Fid Capital & Income
SPHIX Fid High Income
FHIIX.LW Fed High Income
DIHYX TransAmerica HY
---Total Bond funds
FTBFX Fid Total
PTTRX Pimco Total
---Investment Grade Bonds
ACITX 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
LSBDX Loomis Sayles
PONDX Pimco Income fund (steroid version)
PLDDX Pimco Low Duration (domestic/foreign)
All of these funds were positve on Dec. 10, Monday; with the exception of DPFFX, FBNDX and PLDDX, which were all "flat" for the day. The average gain was +.14%, ranging from .01% through .39%.
Are our bond funds expensive today? Well, surely more so versus 1,2 or 3 years ago. Would we buy any bond funds today? We (our house) will have to wait until 2013 to review this whole area. One always has to ask the question, regardless of investment sector involved. I have to ask the question today, as I look at one corporate bond fund, FBNDX with a current 30 day SEC yield of about 1.6% and compare this to an equity/dividend fund at Fidelity with a yield of 2.5%. Hmmm, perhaps it is time to rotate the bond fund; as if pricing does not continue upward from this point, I may expect only the 1.6% yield. Nope that ain't gonna work, eh? These are the questions in place at this house, but will have to be on hold until the new year to find what, if many investment sectors, may receive a face slap, pending actions in Washington and our being away from trading capabilities the last week of this year. Argh !!!
Prior to June, 2008; our house was also 90% equity. We will not likely find that positioning again, as we move into retirement; but do need to "find" the right mix going forward.
Any and all of these decisions come in a time of "an artifical and perverted" world of monetary involvement from central banks and global economies in flux worrying and concerned about growth and deflation, with the resulting investing circumstances perhaps being this house's "once in a lifetime" investing road course.
Lastly, your greatest investment asset; being you, is that you are thinking and considering the aspects of your house's investments. In my opinion, you are involved in, and part of an excellent community (MFO) from where you will obtain a wide range of opinons and thoughts from a vast group of thinkers, across a wide spectrum of topics, to help one another detail and rethink our investment portfolios, based in part; of where any of our house's are positioned related to one's investment risk and reward psychology. Heck, one may also obtain excellent guidance about the best wi-fi router for home use. A most excellent community, is this place.
Don't become discouraged about the one's (investments) that got away, or the should've, would've, could've investments that may have been missed. Also do not forget to pat yourself upon your back for investment work well done; as many others will not be aware of the amount of effort put forth to properly grow your hard earned monies.
Okay, I have blabbered enough to fill and fly a hot air ballon; and my chores list is staring at me, too.
Take care,
Catch

Also, a decent 5% or so cap gain in RYPNX (Opportunity) last week. They've only had LTCG distributions before at YE 2005-2008 and 2011 and never a substantial dividend.
In a high turnover fund like RYPNX I've always seen this as a sign of the managers doing their job, buying low and selling high, especially when CG distributions come in every good market year. Were they to miss a year, I'd suspect them of losses in high redemption years, for example Dodge & Cox hasn't paid a capital gain since 2008 and estimates they won't pay one this year, as investors bailed out when the fund tanked in 2008-09.