Wellesley vs. LifeStrategy Conservative Growth

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Wellesley vs. LifeStrategy Conservative Growth

Postby steve roy » Sat Aug 31, 2013 9:41 pm

I wanted to compare Wellesley Admiral to LifeStrategy Conservative Growth and throw in a dazzling Nisian-style chart. But since I am as (technically) ept as a greased pig on ice in the chart-making department, here's a cruder version of stats:

Wellesley Admiral (VWIAX)

ten-year return: 6.90%
five-year return: 6.44%
three-year return: 14.64%
one-year return: 11.02%
YTD: 3.49%
p/e: 13.62x
bond wght: 58.6%
equity wght: 39%

LifeStrategy Conservative Growth

ten-year return: 4.92%
five-year return: 3.04%
three-year return: 12.38%
one-year return: 3.63%
YTD: 4.53%
p/e: 13.06x
bond wght: 54.16%
equity wght: 39.55%

http://www.macroaxis.com/invest/compare/VWIAX,VSCGX
http://finance.yahoo.com/q/bc?s=VWIAX&t ... =l&c=vscgx


You will note that through Labor Day, LifeStrategy is out-performing Wellesley, which is seldom the case. Randomness of Markets! Randomness of Markets!

I own a goodly slug of Wellesley Admiral (18 basis points vs. Lifestrategy's 15 basis points). My plan is to increase it somewhat on retirement, up to about 8% of the total portfolio. I flirted with the idea of maybe switching to LS Conservative Growth, but think I'll stick to the original plan, even though the equity and bond bets are more concentrated.
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Re: Wellesley vs. LifeStrategy Conservative Growth

Postby jimkinny » Sun Sep 01, 2013 10:18 am

I think one should compare an apple to an apple. Figure out what is in the funds, make sure that what is in the funds today was in the funds one, two etc years ago then if you still want to compare the funds, adjust for risk. I know, this is overly complicated and no one will bother but ......

I prefer index funds. that is what this comes down to. Do you want to have an actively managed fund or not. I have read that if the costs are kept low enough, that actively managed funds can perform as good as or better than index funds. I have read the opposite too, that over 25 years or so, the numbers tell us that the better performance is no better than chance. Once risk is adjusted for, I go with index funds.

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Re: Wellesley vs. LifeStrategy Conservative Growth

Postby ObliviousInvestor » Sun Sep 01, 2013 10:39 am

The LifeStrategy funds included an actively managed component (the Vanguard Asset Allocation Fund) until roughly 1.5 years ago. And until very recently, they did not include international bonds. In other words, I think past performance figures are even less meaningful than normal in the case of the LifeStrategy funds.
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Re: Wellesley vs. LifeStrategy Conservative Growth

Postby nisiprius » Sun Sep 01, 2013 10:53 am

Thanks for the compliment, but I keep hoping people will figure out that it takes an investment of about fifteen minutes of time to learn how to do those charts. All praise to Morningstar for providing what is really an awfully powerful tool. The ability to go more than ten years back is huge; the ability to choose arbitrary starting and ending points is huge.

Spend the fifteen minutes: How to use Morningstar growth charts
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Re: Wellesley vs. LifeStrategy Conservative Growth

Postby steve roy » Sun Sep 01, 2013 11:27 am

Okay. I've made the chart:

http://quote.morningstar.com/fund/chart ... %2C0%22%7D

Now how do I import it visually?
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Re: Wellesley vs. LifeStrategy Conservative Growth

Postby steve roy » Sun Sep 01, 2013 11:39 am

nisiprius wrote:Thanks for the compliment, but I keep hoping people will figure out that it takes an investment of about fifteen minutes of time to learn how to do those charts. All praise to Morningstar for providing what is really an awfully powerful tool. The ability to go more than ten years back is huge; the ability to choose arbitrary starting and ending points is huge.

Spend the fifteen minutes: How to use Morningstar growth charts


Good point. And I think VG Conservative Growth is a viable choice. On the other hand, Wellesley has proven itself to be a strong performer over a forty-year span. And it's cost-competitive.
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Re: Wellesley vs. LifeStrategy Conservative Growth

Postby Professor Emeritus » Sun Sep 01, 2013 12:07 pm

jimkinny wrote:I prefer index funds. that is what this comes down to. Do you want to have an actively managed fund or not. I have read that if the costs are kept low enough, that actively managed funds can perform as good as or better than index funds. I have read the opposite too, that over 25 years or so, the numbers tell us that the better performance is no better than chance. Once risk is adjusted for, I go with index funds.jim



I am a 100% believer in stock index funds. I'm simply not convinced that the Bond market is as easily indexed. Stock market indexing assumes that while there may be inside "information" there is no insider control of the market. I.e. it is an honest casino. I am so far unconvinced that such a structure exists on bonds or possibly even income oriented stocks of the type that Wellesley buys.

Part of the problem is that virtually every share of the same class of stock is"fungible" so that the laws of large number functions very well on stock. but suppose Facebook had 3 or 4 hundred classes of stock all with different set of priorities and triggering events. Imagine further that you had no real idea how many shares of each class had been issued. Taht is the debt market. Debt instruments are notoriously non fungible and pooling the debt instruments, which was touted as a panacea, turned out to be simply a method for large scale fraud.

I would only add that bond rating agencies are nothing more that "active managers" picking and choosing the winners and losers.


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Re: Wellesley vs. LifeStrategy Conservative Growth

Postby jimkinny » Mon Sep 02, 2013 11:00 am

Professor E., I do not have the knowledge to agree or disagree with what you wrote. I personally have CDs, TIPS and a Treasury fund.

I have not looked this up, but I think what you wrote applies mostly to corporate bonds and again, I am too lazy to verify this, but from my memory, the Wellesley has a large exposure to corporate bonds whereas the Life Strategy fund less so. I prefer very little risk in bonds. The managers at some active funds may be exceptional and thus are able to perform better than their peers at other active bond funds.

This leads to the the PIMCO total return conundrum, that is a staple on this forum: is this PIMCO fund better than this or that other fund etc....with no end in sight. We can write that such and such bond fund has done better than a index fund such as TBM, but unless we can access risk, it is all pretty much meaningless or more accurately just our opinions, IMO.

There may be the manager who can exploit market inefficiencies, but there is no way to evaluate past performance without knowing past risk. Further, there is no way of knowing before hand, if this manager will outperform in the future.

So, I will go with a fund like TBM, if I only have that choice, but better for me is a Treasury or CD.

jim

I edited this quite a bit.

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Re: Wellesley vs. LifeStrategy Conservative Growth

Postby Munir » Mon Sep 02, 2013 11:19 am

steve roy wrote:Okay. I've made the chart:

http://quote.morningstar.com/fund/chart ... %2C0%22%7D

Now how do I import it visually?


Unfortunately, these charts can be used to support arguments by a poster depending on the time period chosen. For example, in the chart covering these two funds, the less-than-one year graphs are quite different than the longer results. Some time periods show the two funds with equal results. It doesn't mean the charts are useless but the time period chosen has to be kept in mind.
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