Time For Me to Kick Wellington Through The Goalpost of Life?

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BHChinook
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Time For Me to Kick Wellington Through The Goalpost of Life?

Post by BHChinook »

About 5 years ago, I made the incredibly wise decision (for me) to move nearly all my assets into VTINX (Vanguard's Target Retirement Fund). It had (and still has) almost exactly the AA wanted and that I held in individual funds. In the past few years, it has evolved nicely by adding foreign bonds and by going to a ST TIPS fund. And I only had one fund to look at. Simplicity. But, as usual, I could not leave well enough alone. I got to wondering if I should have at least some of my assets in a managed fund instead of all in index funds. After all, occasionally managed funds outperform index funds and this issue of a possible bond bubble might be better defended by a good manager. Wellington, while having a little more stocks than I wanted and a different bond makeup that VTINX, seemed worth a try. No more lazing around on my couch; now I was getting involved... OK, just a little involved. So I moved about 1/3rd of my VTINX into Wellington.

Now, after two years, I'm not happy with the results of my little venture. I can already hear the groans from long-time Boggleheads, "two years, you're making decisions based on only two years!!!" Yes, I admit to having all the patience of a starving vulture. I'm ready to pounce...

I guess Wellington has been around so much longer that VTINX that it just has a huge family of faithful followers. VTINX remains small in comparison. It's such a perfect fund of funds; I'm not aware of another one like it. And unless someone just feels compelled to argue otherwise, I'm going to move back to purity... pure VTINX. And simplicity will once again return to my portfolio :happy
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sdsailing
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by sdsailing »

I don't get it. Wellington has done quite well in recent years.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by bluejello »

Go back to VTINX. Spend less time tinkering with your portfolio. Perhaps you could pick up another hobby, like writing a book? You're a very entertaining writer. :)
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by cfs »

From my side of the keyboard.

BHChinook, based on the prospectus, this is what I see on Wellington.

2012 = 12.57% Return
2013 = 19.33% Return
2014 = 05.85% Year-To-Date as of 10/23/2014

Vanguard's Target Retirement Fund is good for flying solo, good luck with your investment decision.
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abyan
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by abyan »

Unless I'm missing something, you made more money on Wellington these past two years than on Target Retirement:

Image

Here's the past two years, Wellington is yellow:

Image.
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BHChinook
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by BHChinook »

Rats!! I hate it when I have to eat crow... I re-checked and found I'd omitted a couple of transactions from my XIRR calculation and the more-sharp-eyed Bogleheaders (than me) are correct. Wellington has done better... my experiment will have to continue for awhile longer... :oops:
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bluejello
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by bluejello »

Wellington vs VTINX is not a fair comparison at all. Wellington is about 60% stocks, whereas VTINX is only 30%. Of course Wellington is going to outperform VTINX during a bull market for stocks. A more fair comparison would be Wellesley (VWINX) vs VTINX, since they both hold about 30% stocks:

https://www.google.com/finance?chdnp=1& ... qAHquYDQBA

Over the past 10 years, VTINX has outperformed VWINX by about 1.6%. Just for fun, let's also look at the past ten years for Wellington (active) vs Vanguard Lifestrategy Moderate (passive):

https://www.google.com/finance?chdnp=1& ... qQHxg4HoCA

Again pretty damn close, but the passive fund outperformed.

The real question here is — what is your asset allocation? Do you want to be 30% in stocks or 60% in stocks?
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by Grt2bOutdoors »

BHChinook wrote:Rats!! I hate it when I have to eat crow... I re-checked and found I'd omitted a couple of transactions from my XIRR calculation and the more-sharp-eyed Bogleheaders (than me) are correct. Wellington has done better... my experiment will have to continue for awhile longer... :oops:
I own Wellington amongst others, it has performed pretty darn well for a 65/35 fund over the last 5 years. BTW, investing is not an experiment. I'd hate to think you were basing your retirement and other future goal attainment on that of an "experiment". Investing is serious business.
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Toons
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by Toons »

Give it 10 years,then take a look :happy
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by Grt2bOutdoors »

bluejello wrote:Wellington vs VTINX is not a fair comparison at all. Wellington is about 60% stocks, whereas VTINX is only 30%. Of course Wellington is going to outperform VTINX during a bull market for stocks. A more fair comparison would be Wellesley (VWINX) vs VTINX, since they both hold about 30% stocks:

https://www.google.com/finance?chdnp=1& ... qAHquYDQBA

Over the past 10 years, VTINX has outperformed VWINX by about 1.6%. Just for fun, let's also look at the past ten years for Wellington (active) vs Vanguard Lifestrategy Moderate (passive):

https://www.google.com/finance?chdnp=1& ... qQHxg4HoCA

Again pretty damn close, but the passive fund outperformed.

The real question here is — what is your asset allocation? Do you want to be 30% in stocks or 60% in stocks?
Comparing Wellington with Lifestrategy Moderate growth is not an apples-to-apples view: Wellington is 65% large cap value, mainly domestic equities. Lifestrategy Moderate is a fund of funds - holding total market capitalization of both domestic and international, coupled with total bond market and total international bond. I also, don't find the Lifestrategy funds to be all that "passive" when the investment strategy team tinkers with the asset allocation, in the past they had a slice of Asset Allocation fund in there (a market-timing fund that was actively managed) then they added International Bond to it, what else will they change in the future? Wellington's charter is encased in stone - it doesn't change.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by dbr »

BHChinook wrote:Rats!! I hate it when I have to eat crow... I re-checked and found I'd omitted a couple of transactions from my XIRR calculation and the more-sharp-eyed Bogleheaders (than me) are correct. Wellington has done better... my experiment will have to continue for awhile longer... :oops:
Except of course your experiment is worth nothing and even continuing it for another ten years is also worth nothing.

If for some reason or another you want to hold part of your assets in Wellington, it is unlikely that your situation is so special that holding some Wellington would somehow turn out to be a mistake. It is probably at least as likely that there is no particular point to it either.
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TheTimeLord
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by TheTimeLord »

Wellington is the main reason I have a Vanguard account. But then again I am not a big fan of Target Retirement Funds of any flavor.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by pennstater2005 »

I like Wellington, based on past performance :happy What? Don't look at me like that :wink:
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by staythecourse »

pennstater2005 wrote:I like Wellington, based on past performance :happy What? Don't look at me like that :wink:
I must admit that Wellington fits into my definition of "guilty pleasure" for a knowledgeable investor. It is just a nice well designed, low cost actively managed product that has been around FOREVER.

Good luck.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by BigJohn »

BHChinook wrote:I got to wondering if I should have at least some of my assets in a managed fund instead of all in index funds......So I moved about 1/3rd of my VTINX into Wellington.
There are a lot worse choices for managed funds that Wellington or Wellesley but as others have alluded to, it's unclear to me that you have sound logic for your experiment. How did pick Wellington? Maybe I'm misinterpreting but from your posts it appears that you picked it simply because it was managed and had a good reputation. Was this a conscious decision to shift your overall asset allocation from 30% to 40% stocks? If not, I'd be very cautious about continuing your experiment or trying others. Over the last two years you have increased the risk of your portfolio. So far due to lucky market timing, you've come out ahead but the results could have been exactly the opposite and in a much bigger way if you had started your experiment in 2007/08.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by BigPrince »

My dad believes in a roughly a 50 index/50 active allocation.

20% of his overall assets sit in Wellington. He is pretty happy with it and it is his only actively managed fund that also incorporates Bonds.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by placeholder »

I don't like balanced funds and I don't like actively managed funds so I wouldn't use Wellington unless there were other factors at play.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by leonard »

BHChinook wrote:After all, occasionally managed funds outperform index funds and this issue of a possible bond bubble might be better defended by a good manager.
Even if Wellington beat in hindsight - this logic doesn't make sense to me.

Even if managed funds occasionally outperform index funds - that still means that most of the time they don't. So, your original reasoning essentially said "Although most of the time managed funds don't beat indexes, I'm going to buy one anyway."

Doesn't make any sense. Seems more like restless tinkering than a plan.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by ogd »

I was going to pop in and congratulate the OP for switching out of Wellington after a period of outperformance -- which is the right time to change investments -- but sadly that's not what we're doing here.

Performance chasing costs the average investor anywhere between 50 bp and 200 bp depending on the period, that is below the very funds they invest in. It sounds great on paper, matching the experience from areas of life where skill matters -- underperforming team members, ball players, mechanics -- but it just doesn't work in investing. Look up "behavioral gap".

It sounds like the OP will wait until they lose some money compared to their switching now. A bit counterproductive, isn't it?
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by bradshaw1965 »

Seems to me you got the best of both worlds, you got to investigate your feelings about market tracking deviation and got to keep the outperformance in the short term.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by ML 59 »

Chinook, our internet friend, you need to consider writing your Investment Policy Statement (IPS) before these urges get the better of you. I used to bounce around here and there until I found this site and wrote out my plan. BTW - it's not as easy as it sounds, but it feels good when you are done. :happy

Good luck.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by CyberBob »

In a recent interview in Investor's Business Daily, Jack Bogle seems to say that Wellington isn't the magical fund some people think it is:
John Bogle wrote:In Wellington Fund's case, in the last decade 97% of its return has been determined by the return of the index I put together for them in 1978.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by randomguy »

leonard wrote:
BHChinook wrote:After all, occasionally managed funds outperform index funds and this issue of a possible bond bubble might be better defended by a good manager.
Even if Wellington beat in hindsight - this logic doesn't make sense to me.

Even if managed funds occasionally outperform index funds - that still means that most of the time they don't. So, your original reasoning essentially said "Although most of the time managed funds don't beat indexes, I'm going to buy one anyway."

Doesn't make any sense. Seems more like restless tinkering than a plan.
But what if this particular managed fund has beaten the index fund consistently 30+ years? At what point do you decide they are generating some positive return and giving it to investors. The person in 1994 who picked Wellesly over Conservative growth (i.e. funds within 1%) for their 10k, now has 54k instead of 40k, 20 years later. High cost active funds in a taxable account are bad news. Low cost active funds in tax deferred (i.e. you don't want to pay taxes on all those distributions) can work out pretty well. Now the number of <.5% ER active funds out there can probably be counted on 2 hands:)
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by ogd »

randomguy wrote:But what if this particular managed fund has beaten the index fund consistently 30+ years? At what point do you decide they are generating some positive return and giving it to investors. The person in 1994 who picked Wellesly over Conservative growth (i.e. funds within 1%) for their 10k, now has 54k instead of 40k, 20 years later. High cost active funds in a taxable account are bad news. Low cost active funds in tax deferred (i.e. you don't want to pay taxes on all those distributions) can work out pretty well. Now the number of <.5% ER active funds out there can probably be counted on 2 hands:)
Wellesley isn't the one fund that finally disproves the rule about past performance.

The outperformance reflects several things: most importantly, the horrible wart of LSCG that existed before 2011, the Asset Allocation fund. It's no longer there, but it will leave its mark on performance for a long time. It should be noted that LSCG was not recommended here back then, for this reason, so it's only not in hindsight that we say it was a bad thing. Then, the underperformance of international. Then, the outperformance of value, most or all of which came in the form of avoiding the tech boom by construction. Lastly, the riskier nature of the bonds in Wellesley, which warrant higher returns in the long term.

You can construct a cheaper Wellesley from value and corporate indexes and get a more balanced comparison. Now if the point is that you didn't want to think about any of this and just pick a fund that picked the best thing to invest in, certainly it's a good choice. But when growth and international outperform (Any Day Now (TM)), don't expect Wellington to see that and switch in time because it just won't do that. It will just take it on the chin (comparatively) like any domestic value fund.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by leonard »

randomguy wrote:
leonard wrote:
BHChinook wrote:After all, occasionally managed funds outperform index funds and this issue of a possible bond bubble might be better defended by a good manager.
Even if Wellington beat in hindsight - this logic doesn't make sense to me.

Even if managed funds occasionally outperform index funds - that still means that most of the time they don't. So, your original reasoning essentially said "Although most of the time managed funds don't beat indexes, I'm going to buy one anyway."

Doesn't make any sense. Seems more like restless tinkering than a plan.
But what if this particular managed fund has beaten the index fund consistently 30+ years? At what point do you decide they are generating some positive return and giving it to investors. The person in 1994 who picked Wellesly over Conservative growth (i.e. funds within 1%) for their 10k, now has 54k instead of 40k, 20 years later. High cost active funds in a taxable account are bad news. Low cost active funds in tax deferred (i.e. you don't want to pay taxes on all those distributions) can work out pretty well. Now the number of <.5% ER active funds out there can probably be counted on 2 hands:)
So, you are advocating that past performance is a predictor of future performance in active funds? With index funds we have tracking error risk - which is low. With any active management you have the risk of management making decisions that cause deviation from index returns. For many funds - that is negative deviation. So, I don't see any reason to take the risk that management simply makes a mistake or a bad bet.

btw - OP is the one the used the rationale I stated above. Are you friends with the OP and discussed the OP's rationale outside of this thread? And, as a result of the discussion, determined that it wasn't simply restless tinkering - which was my specific point?
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TheTimeLord
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by TheTimeLord »

Someone set me straight because from what I have seen/read it is expenses not actively managed that is the true predictor on funds. It just so happens actively managed usually means high expenses. Considering the number of stocks Wellington holds I doubt there is much deviation in its stocks performance and the S&P 500. And likewise with its bond holdings either. Probably the only real lever they use is allocation which isn't different than a target date fund. Is Wellington actively managed, yes, does it have the fatal flaw of actively managed funds namely high expenses no.
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grap0013
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by grap0013 »

If VTINX had outperformed Wellington over the past 2 years everybody would've been telling you that you are selling low by making the change. How come nobody wants to sell Wellington high? That's what you are supposed to do at least if you are changing strategies. I personally do not like target date funds, but whatever you decide OP, stick with it!!
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BHChinook
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by BHChinook »

This thread has about run its course but I have found some gems in it that to me are worthy of being mined.

First, I need to confess to yet another blunder and then each poster can decide whether to take an oath to never in their lifetime reply to another of my threads (I hope that won’t happen). Remember, I’ve already confessed to having miscalculated an XIRR value that should have caused me to never start this thread. OK, it’s worse. I actually meant to say, “Kick Wellesley…”… Some of you picked up on this possibility by noting that Wellington and VTINX are apples and onions whilst Wellesley and VTINX are only apples and oranges. At least in the latter case, the equity percentages are roughly the same and so it would have made a little more sense (maybe not; that’s yet to be determined) for me to move partially from VTINX into Wellesley.

So while this thread is now in total disarray; let me focus briefly on the gems I found that are not affected by my error…
BTW, investing is not an experiment. I'd hate to think you were basing your retirement and other future goal attainment on that of an "experiment". Investing is serious business.
This position was voiced by several in different words and I can't refute it. Clearly, the word experiment is not appropriate. Perhaps if I had said, "to shift some assets into another asset class (managed vs. passive) in order to gain some diversity"? But then, as pointed out, I would need to stay with the decision for longer than two years.
I also, don't find the Lifestrategy funds to be all that "passive" when the investment strategy team tinkers with the asset allocation, in the past they had a slice of Asset Allocation fund in there (a market-timing fund that was actively managed) then they added International Bond to it, what else will they change in the future? Wellington's charter is encased in stone - it doesn't change.
I don't recall when VTINX had an AA Fund. They did add an International Bond fund which I agreed with at the time. I guess you could call it managed in that macro sense. I chose VTINX because it had (and still has) the approximate AA that I desire. It currently has (roughly) Total Stock Market 21%, Foreign Stock 9% (total equity 30%), Total Bond Market II 39%, Foreign Bond 14% (total bonds 53%), ST TIPS 17% (roughly 1/3rd of total bonds). Wellesley has roughly 32% US equities, 7% foreign equities (39% combined) and bonds 61%. I don't believe Wellesley has any TIPS, which I feel are an essential part of any retiree's AA (and let's not start this thread down that rabbit hole; there are plenty of threads assessing the relative merits of TIPS) so then you would need a separate TIPS fund in your AA. Granted, you could then select exactly the level of TIPS you wanted and not be limited to VTINX's 17%. In defense of my decision to "shift some assets into a managed asset class", I did calculate the impact on my overall AA and it currently comes to 32% equities, 67% bonds (including TIPS) and 1% cash. So I haven't shifted percentages very much.
I don't like balanced funds and I don't like actively managed funds so I wouldn't use Wellington unless there were other factors at play.
I assume this poster has an assortment of index funds that results in a desired AA. That's exactly what anyone using VTINX has. It's just that the distributions between funds is fixed (OK, within very small tolerances).
Even if managed funds occasionally outperform index funds - that still means that most of the time they don't. So, your original reasoning essentially said "Although most of the time managed funds don't beat indexes, I'm going to buy one anyway."
Yep, that's pretty much true. But it's done in the name of diversification.
Chinook, our internet friend, you need to consider writing your Investment Policy Statement (IPS) before these urges get the better of you. I used to bounce around here and there until I found this site and wrote out my plan. BTW - it's not as easy as it sounds, but it feels good when you are done. :happy
Good advice! I actually did this shortly after reading Bernstein's first book (which deeply influenced my investing life). I agree the IPS should be revisited from time to time but I'm at a point where mine is not changing much.
With index funds we have tracking error risk - which is low. With any active management you have the risk of management making decisions that cause deviation from index returns. For many funds - that is negative deviation. So, I don't see any reason to take the risk that management simply makes a mistake or a bad bet.
Both Wellesley and Wellington have long histories of stability. Are you suggesting that the performance of either of these could be adversely affected by bad management decisions?

Thanks to all...
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by John3754 »

BHChinook, you've said a number of times that you hold actively manages funds in order to get increased diversification, but if you already own broad market index funds then purchasing active funds does not give you increased diversification.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by BHChinook »

BHChinook, you've said a number of times that you hold actively manages funds in order to get increased diversification, but if you already own broad market index funds then purchasing active funds does not give you increased diversification.
That's true... but doesn't it add another type of diversification - managed vs. passive? The answer to this question is the heart of this thread...
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by sambb »

wellington = ACTIVE mgmt and different asset allocation
We could talk about active mgmt funds all day. There was a time when fidelity magellan was the place to be. And Janus. And Kaufman fund. etc etc.

I am not a fan of active management, but i used to be.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by BigJohn »

BHChinook wrote:... but doesn't it add another type of diversification - managed vs. passive? The answer to this question is the heart of this thread...
Don't confuse different with diversification. We diversify to reduce risk. That goes for adding bonds vs a 100% stock portfolio or using TSM/TISM vs investing in individual stocks. Adding a managed fund, regardless of expense ratio, is less diverse and higher risk than the total index. It may or may not have a higher return to compensate for that risk but it's always less diverse and higher risk.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by midareff »

BHChinook wrote:About 5 years ago, I made the incredibly wise decision (for me) to move nearly all my assets into VTINX (Vanguard's Target Retirement Fund). It had (and still has) almost exactly the AA wanted and that I held in individual funds. In the past few years, it has evolved nicely by adding foreign bonds and by going to a ST TIPS fund. And I only had one fund to look at. Simplicity. But, as usual, I could not leave well enough alone. :happy
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by beardsworth »

BHChinook wrote:I don't recall when VTINX had an AA Fund.
In a friendly tone . . .

BHChinook, the course of the thread gets more and more tortuous. :) You've acknowledged above that you miscalculated some numbers when you started the thread. And you've acknowledged that you actually meant the entire thread to be about Wellesley rather than Wellington. But, unless I've missed something, you've now misstated some comments above concerning the past makeup of Vanguard Target Retirement Income. The reason you don't recall when VTINX incorporated an asset allocation fund is that it never has--and no one above said otherwise.

However, as a historical note, and as others above did point out, the Vanguard LifeStrategy funds once contained the now-deceased and almost entirely unlamented Vanguard Asset Allocation Fund, a vehicle which, IMO, would more appropriately have been described as a "market timing" fund than an "asset allocation" fund. According to the judgment of its adviser, it could fluctuate anywhere from all-stocks (generally using only the S&P 500) to all-bonds. The inclusion of Vanguard Asset Allocation as a constituent within the LifeStrategy lineup meant that LifeStrategy owners could never be sure what their overall ratio of stocks-to-bonds would actually be at any given moment. So, when Vanguard decided to close the Asset Allocation Fund and thus also remove it from the LifeStrategy portfolios, I'd imagine most LifeStrategy owners cheerfully waved it goodbye and thought: Don't let the door hit you in the ass[et allocation]. :)

Best wishes in whatever you decide to do.
Last edited by beardsworth on Sat Oct 25, 2014 8:44 am, edited 1 time in total.
John3754
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by John3754 »

BHChinook wrote:
BHChinook, you've said a number of times that you hold actively manages funds in order to get increased diversification, but if you already own broad market index funds then purchasing active funds does not give you increased diversification.
That's true... but doesn't it add another type of diversification - managed vs. passive? The answer to this question is the heart of this thread...
No, adding an active fund to a passive portfolio does not add "another type of diversification", it adds another type of risk.
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madsinger
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by madsinger »

Yikes! Make sure you use the internet properly! The person who compared Life Strategy Moderate Growth and Wellington posted a link to an NAV chart, not a total return chart. The claim the the "passive fund" beat the "active fund" in this case is false. Using a total return chart from Morningstar:

http://quotes.morningstar.com/chart/fun ... arks%22%3A[%22%22%2C%22%22]%2C%22chartType%22%3A%22growth%22%2C%22startDay%22%3A%2210%2F26%2F2004%22%2C%22endDay%22%3A%2210%2F25%2F2014%22%2C%22chartWidth%22%3A955%2C%22SMA%22%3A[]}

shows that Wellington has handily outperformed the Life Strategy Moderate Growth Fund, by 8.41% to 6.48% (10 year annualized return, ending Sept 30, 2014).

I would not use this information to justify buying one fund over the other, but at least we should post factual information.

-Brad.
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madsinger
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by madsinger »

Ugh...sorry about that link above. But, go to:

http://quotes.morningstar.com/chart/fun ... ture=en-US

and add in the VSMGX ticker symbol to compare the total returns.

-Brad.
Last edited by madsinger on Sat Oct 25, 2014 12:11 pm, edited 1 time in total.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by BHChinook »

No, adding an active fund to a passive portfolio does not add "another type of diversification", it adds another type of risk.

Possibly, if Bernstein were reading this thread, he might take me aside and ask me why I had forgotten the rule about index funds (higher component diversification and lower cost). Before moving partially into Wellesley, I did consider changing my AA to slightly more stocks by changing some of my VTINX into TSM and TISM. I would have left my TIPS alone as my tweaking would not change the current 1/3rd of bonds appreciably. That's about midway between the two limits I see most commonly recommended (50% of bonds and 25% of bonds).

But Wellesley tweaked the AA with one additional fund rather than two, albeit with the introduction of "another type of risk".

It's interesting to see that both Wellesley and Wellington have very devoted followers within the Bogglehead community. One poster said they moved to Vanguard specifically to get Wellington. Oh well...

So what am I going to do? I'm going back to my IPS (as recommended) and hence back to VTINX. It has the AA consistent with my IPS. And I guess this does mean I'm going to "kick W.. through the goalpost of life". But that's just me; I fully understand why others will disagree and hold firmly to the two W's... :happy
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by BHChinook »

and and in the VSMGX ticker symbol to compare the total returns.

Thanks Brad. I use this tool frequently. I put VTINX into the comparison and, of course, it underperformed Wellington. Wellington has more equity so over the short 5-year period that VTINX can be examined, it did better. Wellington also has the most magnificent of charts if you take it to the maximum (back to 1930).

Only if you scrunch the comparison period down to 3-months does VTINX do better.

My wife has her little IRA in Wellington and it's produced 12% in slightly less than 3 years. She finally moved it from Mutual Discovery after Michael Price left and the fund moved to Franklin Templeton.

Even though I'm a bit like the kid looking wistfully through the window of the candy store, my IPS just balks at Wellington's high stock allocation :(
It's always easier to do nothing than to do something.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by Gambler »

BHChinook wrote:About 5 years ago, I made the incredibly wise decision (for me) to move nearly all my assets into VTINX (Vanguard's Target Retirement Fund). It had (and still has) almost exactly the AA wanted and that I held in individual funds. In the past few years, it has evolved nicely by adding foreign bonds and by going to a ST TIPS fund. And I only had one fund to look at. Simplicity. But, as usual, I could not leave well enough alone. I got to wondering if I should have at least some of my assets in a managed fund instead of all in index funds. After all, occasionally managed funds outperform index funds and this issue of a possible bond bubble might be better defended by a good manager. Wellington, while having a little more stocks than I wanted and a different bond makeup that VTINX, seemed worth a try. No more lazing around on my couch; now I was getting involved... OK, just a little involved. So I moved about 1/3rd of my VTINX into Wellington.

Now, after two years, I'm not happy with the results of my little venture. I can already hear the groans from long-time Boggleheads, "two years, you're making decisions based on only two years!!!" Yes, I admit to having all the patience of a starving vulture. I'm ready to pounce...

I guess Wellington has been around so much longer that VTINX that it just has a huge family of faithful followers. VTINX remains small in comparison. It's such a perfect fund of funds; I'm not aware of another one like it. And unless someone just feels compelled to argue otherwise, I'm going to move back to purity... pure VTINX. And simplicity will once again return to my portfolio :happy
wait.. what?
vtinx is 30% stocks/70% Bonds.
it's for people who are retired and/or non-risk takers.

Wellington is 65% stocks/35% bonds.

Why did you add Wellington after being 100% VTINX for years?
did you come out of retirement? or projected that you needed more $?
"Always be thankful for what you have no matter how much or how little" -EternalOptimist
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by BHChinook »

I'm 72 and retired 15 years ago. I was with Fidelity back then and very poorly advised. On paper I lost about 1/3 of my $2.2M nest egg in pretty short order. Bill Bernstein turned me around; I fired Fidelity and moved to Vanguard. For the first 10 years I had a blend of Index funds and then I discovered VTINX. It pretty much replicated what I had and I moved into it. I'm almost back up to my original nest egg. Why did I venture into "W"? I guess I was feeling a little more comfortable and I could take a little more risk... 😄
It's always easier to do nothing than to do something.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by grabiner »

BHChinook wrote:About 5 years ago, I made the incredibly wise decision (for me) to move nearly all my assets into VTINX (Vanguard's Target Retirement Fund). It had (and still has) almost exactly the AA wanted and that I held in individual funds. In the past few years, it has evolved nicely by adding foreign bonds and by going to a ST TIPS fund. And I only had one fund to look at. Simplicity. But, as usual, I could not leave well enough alone. I got to wondering if I should have at least some of my assets in a managed fund instead of all in index funds. After all, occasionally managed funds outperform index funds and this issue of a possible bond bubble might be better defended by a good manager.
Neither Wellington nor Wellesley (which is more comparable to Target Retirement Income) even tries to do that. When interest rates rise, all bond prices fall; nobody will pay face value for a bond yielding 3% when he can buy a bond at the same price yielding 4%. Wellington and Wellesley both have a bond duration of 6.3 years; therefore, if interest rates rise by 1%, both funds will lose 6.3% of their bond values. The Target Retirement funds hold Total Bond Market Index II, with a duration of 5.6 years, and Total International Bond Index, with a duration of 7 years, so they have about the same interest-rate risk.

Wellington and Wellesley are both fine choices for an IRA investment. They are actively managed, but they don't use this active management in undesirable ways such as charging high fees (Admiral shares cost 0.18%, compared to 0.16%-0.18% for TR funds) or changing allocations in a way you may not want.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by ogd »

BHChinook: you didn't mention LifeStrategy yourself (just VTINX, which had no AA fund), but a couple of other posters did, hence the responses.

Note that the way in which the Asset Allocation fund erred is more Wellesley-like than index-like, that is the managers used their freedom to do precisely the wrong thing at precisely the wrong time. This story gives me pause whenever I even think of adding manager risk.
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Re: Time For Me to Kick Wellington Through The Goalpost of L

Post by BigJohn »

BHChinook wrote:I'm 72 and retired 15 years ago........ I'm almost back up to my original nest egg. Why did I venture into "W"? I guess I was feeling a little more comfortable and I could take a little more risk... 😄
One of Bill Bernstein's sayings is "When you've won the game, why keep playing?". So if you're back to your original nest egg and are 72, I think a key question you need to think about is why should you be willing to take more risk?.

Based on everything you've said in this thread I seems you're motivation is not based on need but rather just a desire to try something different. Which brings me to one of Jack Bogle's sayings "Don't do something, just stand there!". You might want to consider just going back to 100% VTINX and leaving well enough alone.
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
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