VWELX [Vanguard Wellington]

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maria00200
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VWELX [Vanguard Wellington]

Post by maria00200 » Fri Mar 17, 2017 7:17 am

What does everyone think about the oldest mutual fund in the country, VWELX? I was reading up on it and the returns on it since 1929 have been impressive, with a low expense ratio. Why not just invest in this one fund and forget everything else?

livesoft
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Re: VWELX

Post by livesoft » Fri Mar 17, 2017 7:18 am

Because it is not tax efficient would be one reason for folks who have a taxable account.

Because the managers who ran the fund in the 1930s and 1940s are probably dead and not running the fund today. And the managers running the fund today will probably be dead in not running the fund in the future.
Last edited by livesoft on Fri Mar 17, 2017 7:21 am, edited 1 time in total.
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MotoTrojan
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Re: VWELX

Post by MotoTrojan » Fri Mar 17, 2017 7:20 am

Pricier and more bonds than a younger investor would want as well.

maria00200
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Re: VWELX

Post by maria00200 » Fri Mar 17, 2017 7:23 am

ah i see.

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jimb_fromATL
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Re: VWELX

Post by jimb_fromATL » Fri Mar 17, 2017 8:25 am

maria00200 wrote:What does everyone think about the oldest mutual fund in the country, VWELX? I was reading up on it and the returns on it since 1929 have been impressive, with a low expense ratio. Why not just invest in this one fund and forget everything else?
It's still a great fund. I've lost track of the number of complicated portfolios I've seen people describe in newsletters, magazine and website articles, here and on other forums -- that turn out NOT to have done as well as Wellington over any significant period of time.

However, it is closed to new investors, so for a lot of folks it's mostly of academic interest.

Here's some gee-whiz data:

Wellington:
  • The geometric mean -- or CAGR (Compound Annual Growth Rate) -- for VWELX for a single lump sum for 40 years from 1977 through 2016 has been 10.8%. A lump sum of $10,000 would have grown to $605,719.

    Perhaps more meaningful for folks investing periodically such as in an IRA or 401(k), the APY ( CAGR) for dollar-cost-averaging in VWELX with periodic investments has been 10.64%. Investing $1,000 at the beginning of each year would give you $583,349.
The S&P 500:
  • The geometric mean -- or CAGR (Compound Annual Growth Rate) -- for the S&P 500 index fund VFINX for a single lump sum for 40 years from 1977 through 2016 has been 10.82%. A lump sum of $10,000 would have grown to $608,586.

    For dollar-cost-averaging in VFINX with periodic investments has been 10.68%. Investing $1,000 at the beginning of each year would give you $589,263.
Notice that if you were investing for retirement like most people do -- with a little bit every month or year instead of a single large lump sum at the beginning of your career -- Wellington did better than the stock market over the last 40 years.

Here are some samples of how it compares to some other popular and relatively well-known funds over different time spans (for the data available on Yahoo):

VWELX = VG Wellington
VFINX = VG S&P 500 Index
VWINX = VG Wellesley
VGTSX = Vanguard Total Intl Stock Index Inv
10-year T. Bond = Yearly avg for 10yr T-bonds
FFNOX = Fidelity 4in1
VGSTX = VG Star fund

40 years 1977-2016
  • VWELX: 40 yr lump sum APY= 10.804%; $10,000 lump 40 years = $605,719. DCA APY= 10.641%; $1000/yr 40yr = $583,349.
    VFINX: 40 yr lump sum APY= 10.817%; $10,000 lump 40 years = $608,586. DCA APY= 10.677%; $1000/yr 40yr = $589,263.
    VWINX: 40 yr lump sum APY= 10.32%; $10,000 lump 40 years = $508,448. DCA APY= 9.81%; $1000/yr 40yr = $461,601.
    10-year T. Bond: 40 yr lump sum APY= 7.105%; $10,000 lump 40 years = $155,710. DCA APY= 6.92%; $1000/yr 40yr = $209,115.
30 years 1987-2016
  • VWELX: 25 yr lump sum APY= 9.346%; $10,000 lump 25 years = $93,338. DCA APY= 8.682%; $1000/yr 25yr = $87,826.
    VFINX: 25 yr lump sum APY= 9.037%; $10,000 lump 25 years = $86,960. DCA APY= 8.281%; $1000/yr 25yr = $82,479.
    VWINX: 25 yr lump sum APY= 8.793%; $10,000 lump 25 years = $82,227. DCA APY= 7.833%; $1000/yr 25yr = $76,931.
    10-year T. Bond: 25 yr lump sum APY= 5.776%; $10,000 lump 25 years = $40,711. DCA APY= 5.021%; $1000/yr 25yr = $50,268.
    VGSTX: 25 yr lump sum APY= 8.424%; $10,000 lump 25 years = $75,532. DCA APY= 7.585%; $1000/yr 25yr = $74,044.
    fixed 5.%: 25 yr lump sum APY= 5.%; $10,000 lump 25 years = $33,864. DCA APY= 5.%; $1000/yr 25yr = $50,113.
17 years 2000-2016
  • VWELX: 17 yr lump sum APY= 7.534%; $10,000 lump 17 years = $34,380. DCA APY= 7.943%; $1000/yr 17yr = $36,242.
    VFINX: 17 yr lump sum APY= 4.398%; $10,000 lump 17 years = $20,784. DCA APY= 7.786%; $1000/yr 17yr = $35,680.
    VWINX: 17 yr lump sum APY= 6.668%; $10,000 lump 17 years = $29,963. DCA APY= 6.947%; $1000/yr 17yr = $32,825.
    VGTSX: 17 yr lump sum APY= 2.614%; $10,000 lump 17 years = $15,507. DCA APY= 4.065%; $1000/yr 17yr = $24,799.
    10-year T. Bond: 17 yr lump sum APY= 5.391%; $10,000 lump 17 years = $24,413. DCA APY= 4.214%; $1000/yr 17yr = $25,156.
    FFNOX: 17 yr lump sum APY= 4.327%; $10,000 lump 17 years = $20,546. DCA APY= 6.504%; $1000/yr 17yr = $31,423.
    VGSTX: 17 yr lump sum APY= 6.322%; $10,000 lump 17 years = $28,354. DCA APY= 6.665%; $1000/yr 17yr = $31,925.
10 years 2007-2016
  • VWELX: 10 yr lump sum APY= 6.892%; $10,000 lump 10 years = $19,474. DCA APY= 8.615%; $1000/yr 10yr = $16,201.
    VFINX: 10 yr lump sum APY= 6.826%; $10,000 lump 10 years = $19,355. DCA APY= 10.657%; $1000/yr 10yr = $18,201.
    VWINX: 10 yr lump sum APY= 6.969%; $10,000 lump 10 years = $19,615. DCA APY= 7.138%; $1000/yr 10yr = $14,900.
    VGTSX: 10 yr lump sum APY= .882%; $10,000 lump 10 years = $10,918. DCA APY= 2.506%; $1000/yr 10yr = $11,488.
    10-year T. Bond: 10 yr lump sum APY= 4.582%; $10,000 lump 10 years = $15,652. DCA APY= 3.237%; $1000/yr 10yr = $11,965.
    FFNOX: 10 yr lump sum APY= 5.213%; $10,000 lump 10 years = $16,622. DCA APY= 7.802%; $1000/yr 10yr = $15,471.
    VGSTX: 10 yr lump sum APY= 5.557%; $10,000 lump 10 years = $17,174. DCA APY= 7.131%; $1000/yr 10yr = $14,894.
jimb
Last edited by jimb_fromATL on Fri Mar 17, 2017 8:32 am, edited 1 time in total.

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KSOC
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Re: VWELX

Post by KSOC » Fri Mar 17, 2017 8:29 am

I just bought Wellington in an IRA I transferred to Vanguard from Ameriprise. This is small amount of money from an old employer that I never added to and may not ever contribute to it. But I always had my eye on this fund and thought this was the perfect bucket for it. Going from an ER of 1.61 (and a $24 a year contract charge) to .26 ER & zero contract charge seems like a sunny day to me!
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maria00200
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Re: VWELX

Post by maria00200 » Fri Mar 17, 2017 8:48 am

I'm not showing that VWELX is closed to new investors. Where did you see that?

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Re: VWELX

Post by KSOC » Fri Mar 17, 2017 9:03 am

maria00200 wrote:I'm not showing that VWELX is closed to new investors. Where did you see that?
You can only buy it though Vanguard Brokerage. Not available from another brokerage.
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Re: VWELX

Post by dbr » Fri Mar 17, 2017 9:06 am

maria00200 wrote:What does everyone think about the oldest mutual fund in the country, VWELX? I was reading up on it and the returns on it since 1929 have been impressive, with a low expense ratio. Why not just invest in this one fund and forget everything else?
Because it may not match the asset allocation you want and should have, because it is not tax efficient in a taxable account, because it has manager risk that is avoided by investing in index funds, because past performance does not predict future performance, because it is a mirage that there is a magic bullet in investing, . . .

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Re: VWELX

Post by jimb_fromATL » Fri Mar 17, 2017 9:08 am

maria00200 wrote:I'm not showing that VWELX is closed to new investors. Where did you see that?
On Vanguard's site where it shows
  • Wellington Fund Investor Shares (VWELX)
    Closed to new investors.
... and On Vanguard's site where they announced
  • "...Vanguard Dividend Growth Fund is closed to new investors as of July 28, 2016. The fund will remain open to existing investors for additional purchases..."
...and in discussions on several websites and talk forums for a few years now including this thread

jimb

maria00200
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Re: VWELX

Post by maria00200 » Fri Mar 17, 2017 9:15 am

thanks for the info :)

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Re: VWELX

Post by brokendirtdart » Fri Mar 17, 2017 9:22 am

Note that on the Personal Investors page, VWELX and VWENX show as open.

https://personal.vanguard.com/us/funds/ ... IntExt=INT

The previous link is to the advisor site.

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Re: VWELX

Post by Grt2bOutdoors » Fri Mar 17, 2017 9:24 am

livesoft wrote:Because it is not tax efficient would be one reason for folks who have a taxable account.

Because the managers who ran the fund in the 1930s and 1940s are probably dead and not running the fund today. And the managers running the fund today will probably be dead in not running the fund in the future.
The former equities slice manager passed away in a plane crash, so what? The performance has been as good, if not better, than the past.
Agree - not efficient in a taxable account, however in a tax-deferred account it works just fine.
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Re: VWELX

Post by The Wizard » Fri Mar 17, 2017 9:29 am

brokendirtdart wrote:Note that on the Personal Investors page, VWELX and VWENX show as open.

https://personal.vanguard.com/us/funds/ ... IntExt=INT

The previous link is to the advisor site.
Correct, somebody is confused.
Wellington is not currently closed to new investors when I logon either. A few other funds are indeed marked as closed...
Attempted new signature...

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Re: VWELX

Post by capgain » Fri Mar 17, 2017 9:31 am

I own this in a taxable account, so my returns suffer a bit, but I still appreciate its risk adjusted returns. The comparisons to the S&P 500 above didn't discuss the fact that VWELX achieves comparable returns over time with less risk. As rates rise, however, the bond allocation may suffer.

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Re: VWELX

Post by brokendirtdart » Fri Mar 17, 2017 9:42 am

The Wizard wrote:
brokendirtdart wrote:Note that on the Personal Investors page, VWELX and VWENX show as open.

https://personal.vanguard.com/us/funds/ ... IntExt=INT

The previous link is to the advisor site.
Correct, somebody is confused.
Wellington is not currently closed to new investors when I logon either. A few other funds are indeed marked as closed...

For full disclosure, I wanted to buy VWELX in my Vanguard Roth a couple months ago and I swear it was marked as closed. I bought Wellesley instead which is fine.

I am "stuck" with Admiral shares on Wellington in my taxable account right now. I've owned it for years and am happy despite the tax bill. I would like to liquidize and open in a Roth, but that would realize too much in capital gains right now.

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Re: VWELX

Post by jimb_fromATL » Fri Mar 17, 2017 10:49 am

brokendirtdart wrote:
The Wizard wrote:
brokendirtdart wrote:Note that on the Personal Investors page, VWELX and VWENX show as open.

https://personal.vanguard.com/us/funds/ ... IntExt=INT

The previous link is to the advisor site.
Correct, somebody is confused.
Wellington is not currently closed to new investors when I logon either. A few other funds are indeed marked as closed...
For full disclosure, I wanted to buy VWELX in my Vanguard Roth a couple months ago and I swear it was marked as closed. I bought Wellesley instead which is fine.
Other folks have seen that it was closed, too.

And Vanguard is contributing to the confusion. this announcement
  • "...Vanguard Dividend Growth Fund is closed to new investors as of July 28, 2016. The fund will remain open to existing investors for additional purchases..."
...comes up at the top in a web search but there's nothing stating that it applies only to outside brokers and fund managers, and it certainly is not suggested by page address, which is:
https : //personal.vanguard.com/us/insights/article/fund-announcement-072016

However, when you click down to the summary prospectus at the link you gave it says:
  • "...Vanguard Wellington™ Fund
    Supplement to the Prospectus and Summary Prospectus
    Important Note Regarding Vanguard Wellington Fund
    Vanguard Wellington Fund will be closed to all prospective financial advisory,
    institutional, and intermediary clients (other than clients who invest through a
    Vanguard brokerage account).

    The Fund will remain closed until further notice and there is no specific time
    frame for when the Fund will reopen. During the Fund’s closed period, all current
    shareholders may continue to purchase, exchange, or redeem shares of the
    Fund online, by telephone, or by mail..."
So ... which is the latest and which is right? Folks who have been unable to buy it in the last couple of years may want to try again.

jimb

onourway
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Re: VWELX [Vanguard Wellington]

Post by onourway » Fri Mar 17, 2017 10:57 am

Wellington is not closed if you have a Vanguard brokerage account and are buying through this portal. (I have moved both our Roth IRA's to Wellington within the last month). It IS closed to outside brokerages - I know because I also tried to buy into it through my 401k brokerage option - again, within the last month.

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Re: VWELX [Vanguard Wellington]

Post by dollar_elbow » Fri Mar 17, 2017 11:34 am

The Wellington fund is almost immediately dismissed on the board because it is not a true index fund, but I don't think its returns can be so easily dismissed. If you pick any of the Target Date or Lifestrategy funds, even if you choose one with a very high stock allocation, say 80% or 90%, Wellington has outperformed them over the last decade. There was an earlier criticism of Wellington holding approximately 35% in bonds and being too conservative for young investors, but I'd say this is an advantage. You have the stability of a higher bond allocation, but the performance of a much riskier portfolio were you to try and replicate the performance yourself with index funds. Even the Balanced Index fund, which is widely touted as an index alternative to the Wellington fund, has never really matched its performance and has only a slightly cheaper ER.

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Re: VWELX [Vanguard Wellington]

Post by SpringMan » Fri Mar 17, 2017 2:03 pm

"The Wellington fund is almost immediately dismissed on the board because it is not a true index fund, but I don't think its returns can be so easily dismissed"
I agree with respect to returns part, though many Bogleheads give Vanguard's low cost actively managed funds a pass. I own Wellesley Income which costs 15 bp for admiral shares. I think Wellington admiral, VWENX, is 16 bp. Also popular, though closed to most, are Vanguard PRIMECAP managed funds. On bond funds good active management exists at Vanguard too with ERs around 10 bp. Looking at our portfolio, we still have 82% passively invested.
Best Wishes, SpringMan

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Re: VWELX [Vanguard Wellington]

Post by FactualFran » Fri Mar 17, 2017 2:51 pm

maria00200 wrote:What does everyone think about the oldest mutual fund in the country, VWELX? I was reading up on it and the returns on it since 1929 have been impressive, with a low expense ratio. Why not just invest in this one fund and forget everything else?
According to http://www.investopedia.com/ask/answers ... lfunds.asp VWELX is not the oldest mutual fund in the country.

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Re: VWELX [Vanguard Wellington]

Post by VaR » Fri Mar 17, 2017 10:43 pm

How does Wellington compare to a 70/30 allocation rebalanced annually? I think you can come very close if you tilt your bond portfolio a bit towards investment grade corporate bonds. For instance Vanguard Total Stock Market and Vanguard Intermediate Term Investment Grade.

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Re: VWELX [Vanguard Wellington]

Post by investor » Sat Mar 18, 2017 2:49 am

Wellington fund is one of the best funds out there. It is good one stop shopping for a tax deferred account . The expense ratio is very similar to that of an index fund. Managers change from time to time but the performance continues on. I have owned this fund for many years.(decades). In the case of Wellington active management is an advantage.

Check the monthly Madsinger posts on this forum. See how well it holds up to other portfolios. Check the poerformance with "portfolio visualizer.com". It will compare funds back to 1985.

investor

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Re: VWELX [Vanguard Wellington]

Post by onourway » Sat Mar 18, 2017 6:25 am

VaR wrote:How does Wellington compare to a 70/30 allocation rebalanced annually? I think you can come very close if you tilt your bond portfolio a bit towards investment grade corporate bonds. For instance Vanguard Total Stock Market and Vanguard Intermediate Term Investment Grade.
Typically has performed much better. I made a post discussing this earlier this week. viewtopic.php?f=1&t=213842

Wellington often performs more like an 80/20 Index portfolio (if not better) during growth periods, yet provides the safety of a 60/40 allocation during down-turns. It's very hard to match its recent (20+ years) performance from any 3-fund combination I've been able to put together.

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Re: VWELX [Vanguard Wellington]

Post by Grasshopper » Sat Mar 18, 2017 7:08 am

We use Wellington in our tax advantaged accounts and Total World (VT) in our taxable, and a bunch of cash.

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Re: VWELX [Vanguard Wellington]

Post by F150HD » Sat Mar 18, 2017 9:02 am

this thread is confusing

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Re: VWELX [Vanguard Wellington]

Post by Grt2bOutdoors » Sat Mar 18, 2017 9:27 am

F150HD wrote:this thread is confusing
We should have a StLutz post a "Definitive Thread on Wellington". That ought to settle the matter once and for all. :P
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Backtest Comparison, FYI Re: VWELX [Vanguard Wellington]

Post by Vegomatic » Sat Mar 18, 2017 10:33 am

http://tinyurl.com/vwelx-ei-ig

Above, FYI, is link to [Backtest Portfolio Allocation] tool at PortfolioVisualizer.com.

It shows performance of Wellington to 65/35 rebalanced allocation of Vanguard Equity Income Fund and Vanguard I/T Investment Grade Fund. Other funds (and allocations) can be used. (Try it and see how you 'might have done.'

Note that there are various 'rebalance' options that are available (annual, quarterly, monthly, ... etc.) that can also be used. Wellington - when held in a retirement account - is tough to beat.

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Re: Backtest Comparison, FYI Re: VWELX [Vanguard Wellington]

Post by jimb_fromATL » Sat Mar 18, 2017 11:00 am

Vegomatic wrote:http://tinyurl.com/vwelx-ei-ig

Above, FYI, is link to [Backtest Portfolio Allocation] tool at PortfolioVisualizer.com.

It shows performance of Wellington to 65/35 rebalanced allocation of Vanguard Equity Income Fund and Vanguard I/T Investment Grade Fund. Other funds (and allocations) can be used. (Try it and see how you 'might have done.'

Note that there are various 'rebalance' options that are available (annual, quarterly, monthly, ... etc.) that can also be used. Wellington - when held in a retirement account - is tough to beat.
+1 for Portfolio Visualizer. It is also one of the few calculators I've found online that will let you compare funds with monthly or yearly incremental contributions the way most people invest in real life, instead of the tables of returns for a single lump sum at the beginning.

Investing a large lump sum at the beginning of your career and adding nothing else is NOT reality for most folks, and depending on timing, the lump sum results can be wildly different compared to dollar-cost averaging with periodic payments like you'd do in a 401(k) or ira or most taxable investments. To illustrate the problem:
  • The geometric mean -- or CAGR (Compound Annual Growth Rate) -- for the S&P 500 (VFINX) for a single lump sum for 10 years from 2007 through 2016 has only been 6.83%. A lump sum of $10,000 would have grown to $19,355.

    But for investing periodically with new money such as in an IRA or 401(k), the APY for VFINX has been 10.66%. Investing $1,000 at the beginning of each year would give you $18,201. So most folks investing for retirement should be more interested in the annual return and end result for DCA with periodic investments instead a a single lump sum invested 10 years ago.

    The geometric mean -- or CAGR (Compound Annual Growth Rate) -- for VWELX for a single lump sum for 10 years from 2007 through 2016 has been 6.89%. A lump sum of $10,000 would have grown to $19,474.

    For new money investing periodically such as in an IRA or 401(k), the APY ( CAGR) for dollar-cost-averaging in VWELX with periodic investments has been 8.61%. Investing $1,000 at the beginning of each year would give you $16,201. A little less for new money in VWELX in this particular instance, but the money you already had was safer because VWELX did not drop nearly as hard in the crash of 2008/2009.
Portfolio Visualizer won't accept $0 as the starting amount, but you can enter $1. And it appears to assume a periodic contribution at the end of the first period instead of the beginning, so it may not match up exactly with yearly and monthly data from sources like Yahoo. But since it's all speculation, and since you don't contribute the same fixed amount at exactly one month or other intervals over a lifetime anyway, the interest or loss on the extra dollar or an extra month over several years is insignificant anyway.

By the way, the monthly and yearly total returns data in the tables from portfoliovisualizer can be copied and pasted into your own spreadsheets -- with a little work -- and are a source of monthly and yearly returns that are not easy to find anywhere else on a lot of funds.

jimb
Last edited by jimb_fromATL on Sat Mar 18, 2017 11:17 am, edited 3 times in total.

tibbitts
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Re: VWELX [Vanguard Wellington]

Post by tibbitts » Sat Mar 18, 2017 11:03 am

Wellington is a slippery slope away from the index world. Why go there and not, for example, TRP Capital Appreciation (assuming we ignore the respective open/closed situations)?

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Re: VWELX [Vanguard Wellington]

Post by onourway » Sat Mar 18, 2017 11:19 am

tibbitts wrote:Wellington is a slippery slope away from the index world. Why go there and not, for example, TRP Capital Appreciation (assuming we ignore the respective open/closed situations)?
A big part of it is cost. Wellington Admiral shares cost 0.16% vs. the 0.7% PRWCX charges. But yes, the Capital Appreciation fund has been one of the good ones as well. They exist.

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Re: VWELX [Vanguard Wellington]

Post by F150HD » Sat Mar 18, 2017 12:00 pm

Grt2bOutdoors wrote:
F150HD wrote:this thread is confusing
We should have a StLutz post a "Definitive Thread on Wellington". That ought to settle the matter once and for all. :P
Its open. Its closed. Its open. Its closed. :oops:

I was just in this fund last year but someone posted a link to a thread from 2013 (?) stating it was closed.

Guess I just hope folks vet their info before posting info here.

Anyway....I think I'll go back to focusing on livesoft's post count again :wink:

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Re: VWELX [Vanguard Wellington]

Post by Dan999 » Sat Mar 18, 2017 12:17 pm

This fund is open. I bought some shares today.
Dan999

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Re: VWELX [Vanguard Wellington]

Post by jimb_fromATL » Sat Mar 18, 2017 12:21 pm

Dan999 wrote:This fund is open. I bought some shares today.
Dan999
People have reported that they were unable to open it in the last couple of years, and it has shown as closed in the past, which it does not now for individuals. And people who already had it could always still contribute to it.

Did you already have the fund, or did you open it today?
Did you do through a brokerage account directly with Vanguard?

jimb

dh
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Re: VWELX [Vanguard Wellington]

Post by dh » Sat Mar 18, 2017 12:31 pm

F150HD wrote:this thread is confusing
+1

Jack Bogle owns shares in this fund. If it is good enough for him, it is good enough for me. :sharebeer

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Re: VWELX [Vanguard Wellington]

Post by Dan999 » Sat Mar 18, 2017 12:43 pm

I did it online. I did not own any shares but had in the past, and It was an available fund to choose from when doing and exchange online.
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F150HD
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Re: VWELX [Vanguard Wellington]

Post by F150HD » Sat Mar 18, 2017 12:44 pm

dh wrote:Jack Bogle owns shares in this fund. If it is good enough for him, it is good enough for me. :sharebeer
yea, but does Jack Bogle know livesoft's post count? That is truly the question. :wink:

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Re: VWELX [Vanguard Wellington]

Post by VaR » Sat Mar 18, 2017 6:46 pm

onourway wrote:
VaR wrote:How does Wellington compare to a 70/30 allocation rebalanced annually? I think you can come very close if you tilt your bond portfolio a bit towards investment grade corporate bonds. For instance Vanguard Total Stock Market and Vanguard Intermediate Term Investment Grade.
Typically has performed much better. I made a post discussing this earlier this week. viewtopic.php?f=1&t=213842

Wellington often performs more like an 80/20 Index portfolio (if not better) during growth periods, yet provides the safety of a 60/40 allocation during down-turns. It's very hard to match its recent (20+ years) performance from any 3-fund combination I've been able to put together.
It took me a couple of hours but I replicated the current Wellington portfolio allocation in Portfolio Visualizer. I came up with two comparison portfolios.
Image

The hard part is finding assets in the right asset classes where PortfolioVisualizer has the most history. I also want to admit that I think Total Stock Market outperformed large cap and large cap value over this period so Portfolio 2 and Portfolio 3 look better than if we were doing a strict like-for-like comparison.

Anyway, I do think that Wellington has done a great job with this fund. It's hard to tell from their results whether they are outperforming in the equity portfolio or the fixed income portfolio or if they are getting outperformance due to adjustments to their equity allocation between 60% and 70%. In particular in their fixed income portfolio they are 80% corporates and 20% Treasurys. I don't know if that's a consistent allocation or if they time that allocation. I also don't know if they adjust the duration of their fixed income portfolio based on strategy.

I'm still interested in whether they are outperforming due to producing alpha or whether we just don't know the combination of factors represented in their portfolio. It's a balanced portfolio so it's extremely difficult to extract the performance of the equity portfolio and the fixed income portfolio. There also aren't any good free online tools to do factor analysis of fixed income returns.

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Re: VWELX [Vanguard Wellington]

Post by onourway » Sat Mar 18, 2017 7:28 pm

VaR wrote:
onourway wrote: It took me a couple of hours but I replicated the current Wellington portfolio allocation in Portfolio Visualizer. I came up with two comparison portfolios.
Image

The hard part is finding assets in the right asset classes where PortfolioVisualizer has the most history. I also want to admit that I think Total Stock Market outperformed large cap and large cap value over this period so Portfolio 2 and Portfolio 3 look better than if we were doing a strict like-for-like comparison.

Anyway, I do think that Wellington has done a great job with this fund. It's hard to tell from their results whether they are outperforming in the equity portfolio or the fixed income portfolio or if they are getting outperformance due to adjustments to their equity allocation between 60% and 70%. In particular in their fixed income portfolio they are 80% corporates and 20% Treasurys. I don't know if that's a consistent allocation or if they time that allocation. I also don't know if they adjust the duration of their fixed income portfolio based on strategy.

I'm still interested in whether they are outperforming due to producing alpha or whether we just don't know the combination of factors represented in their portfolio. It's a balanced portfolio so it's extremely difficult to extract the performance of the equity portfolio and the fixed income portfolio. There also aren't any good free online tools to do factor analysis of fixed income returns.
Nice.

The one thing I'll note is your portfolios still suffered a bit worse of a maximum drawdown than Wellington. This is one of the hardest things to replicate. The closest I've come is the portfolio I had in that post I linked above. Here is the direct link.

I'd appreciate any thoughts on that combination. Seems to nearly match on the draw-downs as well.

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Re: VWELX [Vanguard Wellington]

Post by alec » Sat Mar 18, 2017 7:54 pm

VaR wrote:
onourway wrote:
VaR wrote:How does Wellington compare to a 70/30 allocation rebalanced annually? I think you can come very close if you tilt your bond portfolio a bit towards investment grade corporate bonds. For instance Vanguard Total Stock Market and Vanguard Intermediate Term Investment Grade.
Typically has performed much better. I made a post discussing this earlier this week. viewtopic.php?f=1&t=213842

Wellington often performs more like an 80/20 Index portfolio (if not better) during growth periods, yet provides the safety of a 60/40 allocation during down-turns. It's very hard to match its recent (20+ years) performance from any 3-fund combination I've been able to put together.
It took me a couple of hours but I replicated the current Wellington portfolio allocation in Portfolio Visualizer. I came up with two comparison portfolios.
Image

The hard part is finding assets in the right asset classes where PortfolioVisualizer has the most history. I also want to admit that I think Total Stock Market outperformed large cap and large cap value over this period so Portfolio 2 and Portfolio 3 look better than if we were doing a strict like-for-like comparison.

Anyway, I do think that Wellington has done a great job with this fund. It's hard to tell from their results whether they are outperforming in the equity portfolio or the fixed income portfolio or if they are getting outperformance due to adjustments to their equity allocation between 60% and 70%. In particular in their fixed income portfolio they are 80% corporates and 20% Treasurys. I don't know if that's a consistent allocation or if they time that allocation. I also don't know if they adjust the duration of their fixed income portfolio based on strategy.

I'm still interested in whether they are outperforming due to producing alpha or whether we just don't know the combination of factors represented in their portfolio. It's a balanced portfolio so it's extremely difficult to extract the performance of the equity portfolio and the fixed income portfolio. There also aren't any good free online tools to do factor analysis of fixed income returns.
You can do a five factor regression, like Robert T did in this conversation from February. I just used excel to do the regressions back in 2005.
Here are the factor loads of Vanguard Wellington over the same time period as the earlier estimates for Vanguard Wellesley. With again thanks to Alec for the data from 1970-2004, which I extended to 2014.

8/1970 to 12/2014

-0.01 = Alpha
+0.65 = Mkt
-0.13 = Size
+0.15 = Value
+0.17 = Term
+0.16 = Default

Mkt (Mkt-rf), size (SmB), and value (HmL) are from Ken French’s website. Term and default are from the AQR website (data ends 12/2014).

As with Vanguard Wellesley, adding momentum and quality doesn’t improve the explanatory power (no increase in R^2).

The above results implies:

An average 65:35 stock:bond portfolio
Within stocks a -0.20 and 0.24 size and value load
Within bonds a 0.48 and 0.45 term and default load
Alpha was not statistically different from zero (the alpha estimate from 08/1929 to 12/2014 = -0.03 and not statistically different from zero).

Within equities, Vanguard Wellesley had a larger value tilt than Vanguard Wellington (0.51 vs. 0.24 value load).

Robert
You can look back through the quarterly/annual reports on the SEC EDGAR system to see the characteristics of the bond portfolio. Hint: other than changing from long term bonds to intermediate term bonds around 2000, the bond characteristics don't seem to have changed. Wellington sticks close to its investment policy.
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Re: VWELX [Vanguard Wellington]

Post by VaR » Sat Mar 18, 2017 9:42 pm

onourway wrote:
VaR wrote:I'm still interested in whether they are outperforming due to producing alpha or whether we just don't know the combination of factors represented in their portfolio. It's a balanced portfolio so it's extremely difficult to extract the performance of the equity portfolio and the fixed income portfolio. There also aren't any good free online tools to do factor analysis of fixed income returns.
Nice.

The one thing I'll note is your portfolios still suffered a bit worse of a maximum drawdown than Wellington. This is one of the hardest things to replicate. The closest I've come is the portfolio I had in that post I linked above. Here is the direct link.

I'd appreciate any thoughts on that combination. Seems to nearly match on the draw-downs as well.
So I'm starting to think that looking for a static portfolio to match the historical returns of Wellington may be impossible. It is, after all, an active fund and does adjust it's strategy - though always within it's mandate from Vanguard.

Here's an interesting graph comparing Wellington with the "Morningstar Mod Tgt Risk TR USD" benchmark between 1/1/2002 and 12/31/2010. I'd say that the benchmark explains Wellington's returns over this period.
Image

Now look at 1/1/2011-12/31/2016. Not so much.
Image
Could it be that as a result of the European Debt Crisis, Wellington reduced their international exposure just a bit from 33% of equity exposure, which is the allocation in the "Morningstar Mod Tgt Risk TR USD" benchmark, to 15% equities, which is the allocation that we see in today's disclosures.

Over in PortfolioVisualizer, I created a third portfolio for the period 1/1/2011-10/31/2016. After 10/31, it performance diverges from this allocation because Wellington is overweight Financials and others.

What's interesting to me is that Wellington Management Cos other Vanguard funds do perform well, just not as well. Equity Income has performed well, but that's attributable to the outperformance of high dividend yield stocks over the past 6 years.

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Re: VWELX [Vanguard Wellington]

Post by BigRed1949 » Wed Jan 24, 2018 12:18 pm

VWELX is shown as closed by Morningstar.

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Re: VWELX [Vanguard Wellington]

Post by bearcub » Wed Jan 24, 2018 2:33 pm

When I was in the workforce I contributed biweekly to the Wellington fund in my 401k for about 20 years. Did well. Could of did better, but could of did a lot worse. I was not a Bogelhead for most of those years. Just thought it was a decent balanced fund.

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Re: VWELX [Vanguard Wellington]

Post by dharma student » Tue Jan 30, 2018 3:24 pm

It is an offering in my 401k I am considering adding. I am heavy in Primecap (large growth) and wish to add both more Large Value and bonds to my portfolio....seems like a good fit.

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Re: VWELX [Vanguard Wellington]

Post by Grt2bOutdoors » Tue Jan 30, 2018 3:35 pm

dharma student wrote:
Tue Jan 30, 2018 3:24 pm
It is an offering in my 401k I am considering adding. I am heavy in Primecap (large growth) and wish to add both more Large Value and bonds to my portfolio....seems like a good fit.
What other offerings are in your 401k account?
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Re: VWELX [Vanguard Wellington]

Post by Outafter20 » Wed Jan 31, 2018 12:32 am

BigRed1949 wrote:
Wed Jan 24, 2018 12:18 pm
VWELX is shown as closed by Morningstar.
It's closed if you buy it outside of a Vanguard account. You can still buy directly from Vanguard.

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Re: VWELX [Vanguard Wellington]

Post by Slowtraveler » Wed Jan 31, 2018 1:22 am

Wellington is closed to new institutional investors.

I want to like it but the high financial sector focus deters me. I'll stick to Wellesley.

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Re: VWELX [Vanguard Wellington]

Post by Grt2bOutdoors » Wed Jan 31, 2018 7:19 am

Slowtraveler wrote:
Wed Jan 31, 2018 1:22 am
Wellington is closed to new institutional investors.

I want to like it but the high financial sector focus deters me. I'll stick to Wellesley.
Read the tea leaves - in a rising economy with rising rates the financial sector’s profitability will rise, higher earnings leads to higher stock prices over time. These positions were picked up on the cheap years ago. As for Wellesley- the equity slice is managed by same manager. While they don’t exactly mimic each other, they are very similar.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: VWELX [Vanguard Wellington]

Post by SandraBumble » Thu May 17, 2018 2:30 pm

Can some kind person explain to me how to interpret Wellington's gains when looking at cost basis on Vanguard? The gains seem piddly compared to my other holdings, despite the fact that I've been holding and adding since 2013. Is that because I bought 1/4 of my holdings recently, raising the average cost per share? Or is there something I'm not understanding about how this is calculated?

Also, I have vwelx in a non-tax advantaged account. Should I sell and buy more VTSAX, etc?

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Re: VWELX [Vanguard Wellington]

Post by HoleInTheAir » Thu May 17, 2018 2:48 pm

SandraBumble wrote:
Thu May 17, 2018 2:30 pm
Can some kind person explain to me how to interpret Wellington's gains when looking at cost basis on Vanguard? The gains seem piddly compared to my other holdings, despite the fact that I've been holding and adding since 2013. Is that because I bought 1/4 of my holdings recently, raising the average cost per share? Or is there something I'm not understanding about how this is calculated?

Also, I have vwelx in a non-tax advantaged account. Should I sell and buy more VTSAX, etc?
Wellington had a very large capital gains pay out at the end of 2017, which makes the cost basis look pretty bad. At one time, in absolute terms, I was up a bit in the amount I had invested, but it showed me at a loss on the cost basis page due to the cap gain payout, along with ending dividend.

I would take the amount you invested originally, and compare that to the value today, instead of using their basis. I do that in Excel, and periodically check to make sure the amounts are the same.

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