Vanguard Balanced Fund vs. Wellington
Vanguard Balanced Fund vs. Wellington
Those interested in why I'm asking this question can refer to my initial post found here.
I've changed my 401k holdings to just Vanguard's Wellington Fund (VWELX). I have had some discussions with the plan administrator, and the company they go with includes VBINX as the "default" fund choice if an employee screws up the enrollment paperwork and forgets to put any percentages under the corresponding fund choices for where the want monies funneled. I cannot access VBINX anymore as I have already chosen funds, then changed them... They are currently 100% with the Wellington Fund, as are future contributions.
I have been contacted by the plan administrator (a CFA and CFP who does not work for the company I work for) after I requested VBINX be offered as an actual option along with or instead of Wellington. His reply was:
" The Vanguard Wellington option in the plan is
very similar to the Vanguard Balanced Index option, but has produced
better performance over the long haul. The fund is a low-cost investment
option as {Bob Weir} had requested.
As such, we don't actively recommend the Balanced Index fund otherwise
we would have included it in the investment menu. "
I have purposefully waited on commenting to this point and wanted to see what you all thought.
My thought is essentially, I want to keep costs low, and VBINX's ER is 0.19% and VWELX's ER is 0.27%. And correct me if I'm wrong--while Wellington's long-term track record is legendary, it's still a managed fund, end of story, and the purist in me wants to avoid it.
Worth falling on my sword over this one?
I've changed my 401k holdings to just Vanguard's Wellington Fund (VWELX). I have had some discussions with the plan administrator, and the company they go with includes VBINX as the "default" fund choice if an employee screws up the enrollment paperwork and forgets to put any percentages under the corresponding fund choices for where the want monies funneled. I cannot access VBINX anymore as I have already chosen funds, then changed them... They are currently 100% with the Wellington Fund, as are future contributions.
I have been contacted by the plan administrator (a CFA and CFP who does not work for the company I work for) after I requested VBINX be offered as an actual option along with or instead of Wellington. His reply was:
" The Vanguard Wellington option in the plan is
very similar to the Vanguard Balanced Index option, but has produced
better performance over the long haul. The fund is a low-cost investment
option as {Bob Weir} had requested.
As such, we don't actively recommend the Balanced Index fund otherwise
we would have included it in the investment menu. "
I have purposefully waited on commenting to this point and wanted to see what you all thought.
My thought is essentially, I want to keep costs low, and VBINX's ER is 0.19% and VWELX's ER is 0.27%. And correct me if I'm wrong--while Wellington's long-term track record is legendary, it's still a managed fund, end of story, and the purist in me wants to avoid it.
Worth falling on my sword over this one?
Vanguard's Balanced Index Fund would be the ultimate index fund if they would just throw some Total International Stock Index Fund in there. But since it's U.S. only, I think it's not really the one-stop fund it was kind of meant to be.
But, if you are going to buy the Total International Stock Index Fund separately to augment it, then you might as well just buy all three funds separately so you can control your asset allocation. This, unfortunately, makes the Balanced Index Fund sort of irrelevant, and Wellington a better one-fund choice.
Bob
But, if you are going to buy the Total International Stock Index Fund separately to augment it, then you might as well just buy all three funds separately so you can control your asset allocation. This, unfortunately, makes the Balanced Index Fund sort of irrelevant, and Wellington a better one-fund choice.
Bob
- Christine_NM
- Posts: 2796
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Plus ca change, plus c'est le meme chose... this sounds like the old M* forum threads we used to have.
Bal Index has its uses. I own both. Wellington Adm in an IRA along with TIPS Adm fund and Intermediate Bond Adm.
In 2002 I started building a large chunk of Bal Index Admiral in my taxable account. It is now almost 20% of my total portfolio. Since retirement in 2005 I take its distributions in cash and they pay my quarterly estimated federal and state income tax. The plan is to keep as much in this fund as needed to have distributions match tax obligation.
The other funds/investments in my total taxable account:
Treasury Direct I & EE bonds
Money Market Account at Credit Union
Vang Ltd Term Tax Exempt Adm
Vang FTSE World ex US Adm
Vang Midcap Index Adm
Vang Tax-Managed Small Cap
Chevron stock.
Having a nice low volatility core fund like VBINX certainly doesn't prevent anyone from owning more aggressive funds. It has avoided any active rebalancing with taxable funds. To me that's a good thing.
So like any fund, it all depends how you use VBINX in a total portfolio. If it makes sense for you then own it. If not, don't.
Bal Index has its uses. I own both. Wellington Adm in an IRA along with TIPS Adm fund and Intermediate Bond Adm.
In 2002 I started building a large chunk of Bal Index Admiral in my taxable account. It is now almost 20% of my total portfolio. Since retirement in 2005 I take its distributions in cash and they pay my quarterly estimated federal and state income tax. The plan is to keep as much in this fund as needed to have distributions match tax obligation.
The other funds/investments in my total taxable account:
Treasury Direct I & EE bonds
Money Market Account at Credit Union
Vang Ltd Term Tax Exempt Adm
Vang FTSE World ex US Adm
Vang Midcap Index Adm
Vang Tax-Managed Small Cap
Chevron stock.
Having a nice low volatility core fund like VBINX certainly doesn't prevent anyone from owning more aggressive funds. It has avoided any active rebalancing with taxable funds. To me that's a good thing.
So like any fund, it all depends how you use VBINX in a total portfolio. If it makes sense for you then own it. If not, don't.
- Taylor Larimore
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- Joined: Tue Feb 27, 2007 7:09 pm
- Location: Miami FL
Re: Vanguard Balanced Fund vs. Wellington
Bob Weir wrote:
Worth falling on my sword over this one?
Not in my opinion.
If you want a balanced fund with about a 60% stock/40% bond allocation, either fund should be a good choice.
Best wishes.
Taylor
- Random Musings
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- Location: Pennsylvania
Bobby --
Be grateful you have the choice. If you want to be truckin' down that golden road of unlimited devotion to the promised land, there comes a time when you have to let that deal go down, and not fade away because of some jack straw-man of a 27bp ER. Otherwise the eyes of the world will see you're a passenger goin' down that road feelin' bad, like some wharf rat on a ship of fools with the mexicali blues. I know that's hard to handle, and it hurts me too, but i've been all around and around this world and it's not dire, wolf, you can beat it on down the line to an estimated profit. And we bid you good-night!
Who's Bob Weir!!
Be grateful you have the choice. If you want to be truckin' down that golden road of unlimited devotion to the promised land, there comes a time when you have to let that deal go down, and not fade away because of some jack straw-man of a 27bp ER. Otherwise the eyes of the world will see you're a passenger goin' down that road feelin' bad, like some wharf rat on a ship of fools with the mexicali blues. I know that's hard to handle, and it hurts me too, but i've been all around and around this world and it's not dire, wolf, you can beat it on down the line to an estimated profit. And we bid you good-night!
Who's Bob Weir!!
Value-based allocation.
- Random Musings
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- Joined: Thu Feb 22, 2007 3:24 pm
- Location: Pennsylvania
I recall a David Letterman show in the past that had both Jerry Garcia and Bob Weir on the show. Jerry and David were having a nice conversation while Bob seems to be staring at various things throughout the conversation - and I don't recall him really saying anything.Who's Bob Weir?
Letterman then said to Jerry, "looks like Bob is having a good time" or something to that effect.
This was in the early Letterman years (early 80's) before Jerry Garcia was "levitated" by Bob Weir in 1987. They have clips of that on the net but I haven't seen clips of their earlier meetings with Letterman (82 and 84, I think).
One of those things that just stick in your craw (and no, I'm not a "Deadhead").
RM
First of all, I'm very sorry about such a late reply. I had to leave town and was away from the 'net. Thank you to those who replied, especially Taylor, whose opinion I respect tremendously.
And since, as Random suggested, I am young, the "value tilt" that Wellington has appears to be worthwhile and interesting--that had not occurred to me.
And finally, nope, not the real Bob Weir. Just a young dead head (Jerry died when I was in early high school).
So I will probably continue on with Wellington as part of the overall portfolio and put all 401k monies towards it for as long as I am at the company.
Thanks, all!
8)
And since, as Random suggested, I am young, the "value tilt" that Wellington has appears to be worthwhile and interesting--that had not occurred to me.
And finally, nope, not the real Bob Weir. Just a young dead head (Jerry died when I was in early high school).
So I will probably continue on with Wellington as part of the overall portfolio and put all 401k monies towards it for as long as I am at the company.
Thanks, all!
8)
:^)
8) 8)dave.d wrote:Be grateful you have the choice. If you want to be truckin' down that golden road of unlimited devotion to the promised land, there comes a time when you have to let that deal go down, and not fade away because of some jack straw-man of a 27bp ER. Otherwise the eyes of the world will see you're a passenger goin' down that road feelin' bad, like some wharf rat on a ship of fools with the mexicali blues. I know that's hard to handle, and it hurts me too, but i've been all around and around this world and it's not dire, wolf, you can beat it on down the line to an estimated profit. And we bid you good-night!
(seems like I know you, rider.)
Bob Weir wrote:(Jerry died when I was in early high school)
8) 8)Bob Weir wrote:Thank you to those who replied, especially Taylor, whose opinion I respect tremendously.
There is a road...
--Pete
Impressive!dave.d wrote:Bobby --
Be grateful you have the choice. If you want to be truckin' down that golden road of unlimited devotion to the promised land, there comes a time when you have to let that deal go down, and not fade away because of some jack straw-man of a 27bp ER. Otherwise the eyes of the world will see you're a passenger goin' down that road feelin' bad, like some wharf rat on a ship of fools with the mexicali blues. I know that's hard to handle, and it hurts me too, but i've been all around and around this world and it's not dire, wolf, you can beat it on down the line to an estimated profit. And we bid you good-night!
Who's Bob Weir!!
:lol:
<hums Going Down the Road Feelin' Bad>
Re: Vanguard Balanced Fund vs. Wellington
I guess I'm the outlier here. I think you should respond (assuming you won't be putting you job in jeopardy) I own Wellington, and not Balanced Index, but the plan administrators response is plain ignorant.Bob Weir wrote:Those interested in why I'm asking this question can refer to my initial post found here.
I've changed my 401k holdings to just Vanguard's Wellington Fund (VWELX). I have had some discussions with the plan administrator, and the company they go with includes VBINX as the "default" fund choice if an employee screws up the enrollment paperwork and forgets to put any percentages under the corresponding fund choices for where the want monies funneled. I cannot access VBINX anymore as I have already chosen funds, then changed them... They are currently 100% with the Wellington Fund, as are future contributions.
I have been contacted by the plan administrator (a CFA and CFP who does not work for the company I work for) after I requested VBINX be offered as an actual option along with or instead of Wellington. His reply was:
" The Vanguard Wellington option in the plan is
very similar to the Vanguard Balanced Index option, but has produced
better performance over the long haul. The fund is a low-cost investment
option as {Bob Weir} had requested.
As such, we don't actively recommend the Balanced Index fund otherwise
we would have included it in the investment menu. "
I have purposefully waited on commenting to this point and wanted to see what you all thought.
My thought is essentially, I want to keep costs low, and VBINX's ER is 0.19% and VWELX's ER is 0.27%. And correct me if I'm wrong--while Wellington's long-term track record is legendary, it's still a managed fund, end of story, and the purist in me wants to avoid it.
Worth falling on my sword over this one?
Go back to 1990 and see which fund "wins". More importantly, the idea that the fund is not available to you, and the plan administrator says that they don't recommend it, and yet it is the default fund for those who don't pick their own choices seems very strange.
How can a fund they don't recommend be the default? How can the default be not available to everyone?
My guess is this is about MONEY and how much the administrator can make selling active vs passive. The reason VBINX is the default is to head off complaints that he was putting folks in an expensive fund without their knowledge. Then when you choose the more expensive one, he closes the door back out to the one he makes less money on.
If you decide to proceed, remind him of the prudent investor rules, and send along a picture of Adrian from one of the Diehards reunions :lol:
best,
Bill
Re: Vanguard Balanced Fund vs. Wellington
Agreed, agreed, and agreed.bilperk wrote:I guess I'm the outlier here. I think you should respond (assuming you won't be putting you job in jeopardy) I own Wellington, and not Balanced Index, but the plan administrators response is plain ignorant.Bob Weir wrote:Those interested in why I'm asking this question can refer to my initial post found here.
I've changed my 401k holdings to just Vanguard's Wellington Fund (VWELX). I have had some discussions with the plan administrator, and the company they go with includes VBINX as the "default" fund choice if an employee screws up the enrollment paperwork and forgets to put any percentages under the corresponding fund choices for where the want monies funneled. I cannot access VBINX anymore as I have already chosen funds, then changed them... They are currently 100% with the Wellington Fund, as are future contributions.
I have been contacted by the plan administrator (a CFA and CFP who does not work for the company I work for) after I requested VBINX be offered as an actual option along with or instead of Wellington. His reply was:
" The Vanguard Wellington option in the plan is
very similar to the Vanguard Balanced Index option, but has produced
better performance over the long haul. The fund is a low-cost investment
option as {Bob Weir} had requested.
As such, we don't actively recommend the Balanced Index fund otherwise
we would have included it in the investment menu. "
I have purposefully waited on commenting to this point and wanted to see what you all thought.
My thought is essentially, I want to keep costs low, and VBINX's ER is 0.19% and VWELX's ER is 0.27%. And correct me if I'm wrong--while Wellington's long-term track record is legendary, it's still a managed fund, end of story, and the purist in me wants to avoid it.
Worth falling on my sword over this one?
Go back to 1990 and see which fund "wins". More importantly, the idea that the fund is not available to you, and the plan administrator says that they don't recommend it, and yet it is the default fund for those who don't pick their own choices seems very strange.
How can a fund they don't recommend be the default? How can the default be not available to everyone?
My guess is this is about MONEY and how much the administrator can make selling active vs passive. The reason VBINX is the default is to head off complaints that he was putting folks in an expensive fund without their knowledge. Then when you choose the more expensive one, he closes the door back out to the one he makes less money on.
If you decide to proceed, remind him of the prudent investor rules, and send along a picture of Adrian from one of the Diehards reunions :lol:
best,
Money appears very clearly to be the motivator, and agree that this makes no earthly sense why VBINX would be the default but somehow inaccessible.
But you said it yourself--you own Wellington and not VBINX. The question I had--and that I have decided NOT to pursue with these guys--is whether or not it was worth making the argument. Since it's about principle but unlikely to make a significant impact on my bottom line all things considered, I will likely stick with Wellington and just let that sleeping dog lie.
Re: Vanguard Balanced Fund vs. Wellington
Wellington doesn't capture the entire domestic market like the VBINX fund does. Vanguard Balanced index appears to capture every sector of the U.S Stock Market and contains a diversified high quality Intermediate bond. Yes Wellington has done well but fund managers come and go, and some of these under performing sectors could do really well in the future.
Wellington also doesn't appear to contain any Real Estate. Next year or the year after could be allot better for REITs. Best to own them all according to Mr. Bogle and several other wise people on this forum. There have been several years where VBINX outperformed Wellington which strengthens my argument.
Unpredictable what the next hot Sector will be. If you own them all no need to worry. Wellington fund is a great fund in my opinion if you look at track record but Vanguard Balanced index fund appears to be more diversified.
Cheers
Wellington also doesn't appear to contain any Real Estate. Next year or the year after could be allot better for REITs. Best to own them all according to Mr. Bogle and several other wise people on this forum. There have been several years where VBINX outperformed Wellington which strengthens my argument.
Unpredictable what the next hot Sector will be. If you own them all no need to worry. Wellington fund is a great fund in my opinion if you look at track record but Vanguard Balanced index fund appears to be more diversified.
Cheers
Re: Vanguard Balanced Fund vs. Wellington
I would.Bob Weir wrote: and just let that sleeping dog lie.
"Confusion has its cost" - Crosby, Stills and Nash
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Re: Vanguard Balanced Fund vs. Wellington
Since it was founded in 1928, many of the managers of the Wellington fund have came and went. The Wellington fund has done well most of the time. The exception is from the late 1960s to late 1970s. During that time, the fund was managed with a more aggressive approach than it previously had been and subsequently has been. During that time, a higher percentage of the fund assets were in stocks including smaller capitalization stocks that were considered to have greater growth potential than the stocks the fund traditionally held (larger capitalization stocks with greater income potential).Rad-1 wrote:Wellington doesn't capture the entire domestic market like the VBINX fund does. Vanguard Balanced index appears to capture every sector of the U.S Stock Market and contains a diversified high quality Intermediate bond. Yes Wellington has done well but fund managers come and go, and some of these under performing sectors could do really well in the future.