40/60 allocation returns ytd

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gododgers
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40/60 allocation returns ytd

Post by gododgers » Fri Sep 14, 2018 9:47 am

Curious to know how other 40/60 allocations are performing YTD. Appears Vanguard Wellesley Income fund VWINX is only returning .41% YTD. Likely due to rising interest rates.

CoAndy
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Re: 40/60 allocation returns ytd

Post by CoAndy » Fri Sep 14, 2018 10:45 am

:beer

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galeno
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Re: 40/60 allocation returns ytd

Post by galeno » Fri Sep 14, 2018 10:52 am

Our 40/60 port is up 0.18% YTD.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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vineviz
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Re: 40/60 allocation returns ytd

Post by vineviz » Fri Sep 14, 2018 10:54 am

Vanguard LifeStrategy Moderate Growth Fund (VSMGX) is up 1.31%.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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watchnerd
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Re: 40/60 allocation returns ytd

Post by watchnerd » Fri Sep 14, 2018 10:56 am

gododgers wrote:
Fri Sep 14, 2018 9:47 am
Curious to know how other 40/60 allocations are performing YTD. Appears Vanguard Wellesley Income fund VWINX is only returning .41% YTD. Likely due to rising interest rates.
My taxable account is 40% stock / 60% bonds and has returned .52% YTD.

You can see the asset allocation breakdown in my sig.
Tax Sheltered: 35% US Stock | 35% ex-US Stock | 30% TTM || Taxable: 35% US Stock | 35% ex-US Stock | 15% TTM | 15% Munis

pkcrafter
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Re: 40/60 allocation returns ytd

Post by pkcrafter » Fri Sep 14, 2018 11:05 am

Lifestrategy conservative (40/60) is up 1.21%, but I would not worry about this. Wellesley is a good fund and you should continue to hold.

Vanguard total bond is down -1.55

LS Moderate is 60/40.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Kevin8696
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Re: 40/60 allocation returns ytd

Post by Kevin8696 » Fri Sep 14, 2018 11:45 am

gododgers wrote:
Fri Sep 14, 2018 9:47 am
Curious to know how other 40/60 allocations are performing YTD. Appears Vanguard Wellesley Income fund VWINX is only returning .41% YTD. Likely due to rising interest rates.
Wellesley is being hit from both sides... their portfolio of dividend paying stocks is waaay out of favor, and the increase in intermediate-term bond yields has clobbered them. YTD as of yesterday for VWIAX was 0.39%.

Two funds that seem to best replicate the Wellesley stock and bond portfolios (as proxies) are:

1. Vanguard High Dividend Yield Index Fund (VHDYX)
2. Vanguard Intermediate-term Bond Index Fund (VBILX)

Stocks - VHDYX performance YTD is 4.33%, far below the 10.43% posted by Vanguard Total Stock Market Index Fund (VTSAX).

Bonds - VBILX performance YTD is (1.86%).

Mixing these two funds 35/65 per Wellesley's allocation model results in YTD performance of 0.31%. Pretty close to actual.

Wellesley holders might want to think about busting out of the single-fund approach used in the Wellesley model, and look to a broader market approach to stocks (500 Index or Total Stock Market), and maybe shorten up the bond side too, since money market yields are now over 2%.
Last edited by Kevin8696 on Fri Sep 14, 2018 11:53 am, edited 2 times in total.

kaeltor
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Re: 40/60 allocation returns ytd

Post by kaeltor » Fri Sep 14, 2018 11:46 am

What's YTD return on VTSAX?

Kevin8696
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Re: 40/60 allocation returns ytd

Post by Kevin8696 » Fri Sep 14, 2018 11:49 am

kaeltor wrote:
Fri Sep 14, 2018 11:46 am
What's YTD return on VTSAX?
YTD as of 9/13 for VTSAX was 10.43%

Jordan4FI
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Re: 40/60 allocation returns ytd

Post by Jordan4FI » Fri Sep 14, 2018 11:54 am

It is just a down year, I wonder how many of us that are active on here just started investing in the last 10 years.. I started pretty much early last year.. If so then we have seen the last 10 years having outstanding performance, and I think people are forgetting this is a long game idea.. Not just here on this forum but online in all the places I am part of. So many are talking ill of this year and feel the end is near.. Just go with it, always.. I feel kinda bad that I missed the huge gains of the last decade, but I will get them next time around.

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Re: 40/60 allocation returns ytd

Post by chisey » Fri Sep 14, 2018 11:59 am

40% Total World (VT) / 60% Total Bond (BND) is up 0.29% YTD.

My heavily tilted benchmark (I call it the franken40/60) is up 0.34%, so our portfolio is in that ballpark.

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goingup
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Re: 40/60 allocation returns ytd

Post by goingup » Fri Sep 14, 2018 12:40 pm

Kevin8696 wrote:
Fri Sep 14, 2018 11:45 am
Wellesley holders might want to think about busting out of the single-fund approach...
That's not how most Wellesley investors roll. :D The W/W fund holders are in them for the long long haul. A season of soft performance doesn't mean much. (Wellington fund holder here, so I'm projecting a little.)

Whatyear?
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Re: 40/60 allocation returns ytd

Post by Whatyear? » Fri Sep 14, 2018 12:41 pm

And yet my 50/50 portfolio has a YTD return of 3.97%. That's because a good chunk of my equity component is small-cap which had a YTD return the last I checked of about 17.4% v. 10% for total stock market. Similarly, a good chunk of my fixed component is high-yield bonds, with a YTD return of 2.66% v. -1.0% for total bond market. I know it's a risk, but it's been working for me the past 8 or 9 years, to the point where if we do have a sudden big crash I think I'll still come out ahead v. a more conservatively constructed 50/50 mix. We shall see!

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Sheepdog
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Re: 40/60 allocation returns ytd

Post by Sheepdog » Fri Sep 14, 2018 12:49 pm

goingup wrote:
Fri Sep 14, 2018 12:40 pm
Kevin8696 wrote:
Fri Sep 14, 2018 11:45 am
Wellesley holders might want to think about busting out of the single-fund approach...
That's not how most Wellesley investors roll. :D The W/W fund holders are in them for the long long haul. A season of soft performance doesn't mean much. (Wellington fund holder here, so I'm projecting a little.)
agree
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

WellesleyOrBust
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Re: 40/60 allocation returns ytd

Post by WellesleyOrBust » Fri Sep 14, 2018 1:25 pm

I think Wellesley/Wellington folks are sleeping fine (graphs courtesy of Simba's backtesting spreadsheet rev17d)

Portfolio Cycle Comparison (30 Years) for Wellesley vs 40:60, 50:50, 60:40 portfolio's (end value inflation adjusted):

Image

Image

Image


1970-2017 Lazy Portfolio Annualized Returns:

Image
Last edited by WellesleyOrBust on Fri Sep 14, 2018 3:31 pm, edited 1 time in total.

Kevin8696
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Re: 40/60 allocation returns ytd

Post by Kevin8696 » Fri Sep 14, 2018 2:16 pm

Whatyear? wrote:
Fri Sep 14, 2018 12:41 pm
And yet my 50/50 portfolio has a YTD return of 3.97%. That's because a good chunk of my equity component is small-cap which had a YTD return the last I checked of about 17.4% v. 10% for total stock market. Similarly, a good chunk of my fixed component is high-yield bonds, with a YTD return of 2.66% v. -1.0% for total bond market. I know it's a risk, but it's been working for me the past 8 or 9 years, to the point where if we do have a sudden big crash I think I'll still come out ahead v. a more conservatively constructed 50/50 mix. We shall see!
Regarding the "good chunk" of your portfolio in high-yield bonds... I hope you realize that those debt instruments do not behave like most bonds when the equity market takes a dive... they are highly correlated to stocks. So when the stock market zigs, the high-yield stuff zigs too.

Remember 2008 ? Total Stock Market Fund down 37.04%, High-Yield Corporate Fund down 21.29%, Total Bond Market Fund up 5.05%.

I ran a test on Portfolio Visualizer to check the correlation of returns for the past 25 years among three funds: Vanguard Total Stock Market (VTSMX), Vanguard Total Bond Market (VBMFX), and Vanguard High-Yield Corporate Fund (VWEHX).

https://www.portfoliovisualizer.com/bac ... ion3_3=100

Turns out that Total Stock Market and Total Bond Market have a correlation of 0.01, while the High-Yield Bond fund was correlated 0.63 to stocks.

Lastly, the High-Yield Fund portfolio carries much higher credit risk than the overall bond market. Avg credit rating for Total Bond Market Fund is "AA", compared to a rating of "B" for the High-Yield Fund's portfolio. Any rating below "BBB" is referred to as "junk bonds".

Please consider that your portfolio risk is much higher than that of a traditional 50/50 portfolio.

If it looks like a duck, and quacks like a duck...
Last edited by Kevin8696 on Fri Sep 14, 2018 8:10 pm, edited 1 time in total.

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Re: 40/60 allocation returns ytd

Post by pkcrafter » Fri Sep 14, 2018 2:40 pm

Jordan4FI wrote:
Fri Sep 14, 2018 11:54 am
It is just a down year, I wonder how many of us that are active on here just started investing in the last 10 years.. I started pretty much early last year.. If so then we have seen the last 10 years having outstanding performance, and I think people are forgetting this is a long game idea.. Not just here on this forum but online in all the places I am part of. So many are talking ill of this year and feel the end is near.. Just go with it, always.. I feel kinda bad that I missed the huge gains of the last decade, but I will get them next time around.
Jordan, you have an excellent perspective for only being a member for only 3 months. You better print this and pin on you wall for future reference. :happy

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Whatyear?
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Re: 40/60 allocation returns ytd

Post by Whatyear? » Fri Sep 14, 2018 3:09 pm

Kevin8696 wrote:
Fri Sep 14, 2018 2:16 pm
Whatyear? wrote:
Fri Sep 14, 2018 12:41 pm
And yet my 50/50 portfolio has a YTD return of 3.97%. That's because a good chunk of my equity component is small-cap which had a YTD return the last I checked of about 17.4% v. 10% for total stock market. Similarly, a good chunk of my fixed component is high-yield bonds, with a YTD return of 2.66% v. -1.0% for total bond market. I know it's a risk, but it's been working for me the past 8 or 9 years, to the point where if we do have a sudden big crash I think I'll still come out ahead v. a more conservatively constructed 50/50 mix. We shall see!
Regarding the "good chunk" of your portfolio in high-yield bonds... I hope you realize that those debt instruments do not behave like most bonds when the equity market takes a dive... they are highly correlated to stocks. So when the stock market zigs, the high-yield stuff zigs too.

Remember 2008 ? Total Stock Market Fund down 37.04%, High-Yield Corporate Fund down 21.29%, Total Bond Market Fund up 5.05%.

I ran a test on Portfolio Visualizer to check the correlation of returns for the past 25 years among three funds: Vanguard Total Stock Market (VTSMX), Vanguard Total Bond Market (VBMFX), and Vanguard High-Yield Corporate Fund (VWEHX).

https://www.portfoliovisualizer.com/bac ... ion3_3=100

Turns out that Total Stock Market and Total Bond Market have a correlation of 0.01, while the High-Yield Bond fund was correlated 0.63 to stocks.

Lastly, the High-Yield Fund portfolio carries much higher credit risk than the overall bond market. Avg credit rating for Total Bond Market Fund is "AA", compared to a rating of "B" for the High-Yield Fund's portfolio. Any rating below "BBB" is referred to as "junk bonds".

Please consider that your portfolio risk is much higher than that of a traditional 50/50 portfolio.

If it looks like a duck, and quacks like a duck...
Hi Kevin, yes, I definitely know it's a risk (as I mention in my original post) , but I think I've been lucky enough over the past 9 years that I will still come out ahead when the high-yield bond fund crashes like a stock fund. But like I said, we shall see. I know it's not a guarantee . . . .

BTW, the fund is FAGIX (Fidelity Capital and Income). In 2008 it was down ~32% but then was up 72% in 2009, and has never really settled back down. Junk bonds or not, I'm keeping it. :)

.

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Re: 40/60 allocation returns ytd

Post by pkcrafter » Fri Sep 14, 2018 3:13 pm

Jordan4FI wrote:
Fri Sep 14, 2018 11:54 am
It is just a down year, I wonder how many of us that are active on here just started investing in the last 10 years.. I started pretty much early last year.. If so then we have seen the last 10 years having outstanding performance, and I think people are forgetting this is a long game idea.. Not just here on this forum but online in all the places I am part of. So many are talking ill of this year and feel the end is near.. Just go with it, always.. I feel kinda bad that I missed the huge gains of the last decade, but I will get them next time around.
Again, you have great perspective. The only thing I don't see is down year. Market is up 10%, so I'm not complaining about bonds. Old saying is "if at least one of your investments isn't underperforming, you aren't diversified."

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galeno
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Re: 40/60 allocation returns ytd

Post by galeno » Wed Sep 19, 2018 1:59 pm

Wow. How time flies. I've been a member for over 10 years.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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Re: 40/60 allocation returns ytd

Post by mariezzz » Wed Sep 19, 2018 10:02 pm

Jordan4FI wrote:
Fri Sep 14, 2018 11:54 am
It is just a down year, I wonder how many of us that are active on here just started investing in the last 10 years.. I started pretty much early last year.. If so then we have seen the last 10 years having outstanding performance, and I think people are forgetting this is a long game idea.. Not just here on this forum but online in all the places I am part of. So many are talking ill of this year and feel the end is near.. Just go with it, always.. I feel kinda bad that I missed the huge gains of the last decade, but I will get them next time around.
How is 10.43% on VTSAX less than 9 months into the year a down year?
I'll agree with you on that for VBTLX, though.

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Re: 40/60 allocation returns ytd

Post by Jordan4FI » Thu Sep 20, 2018 9:01 am

mariezzz wrote:
Wed Sep 19, 2018 10:02 pm
Jordan4FI wrote:
Fri Sep 14, 2018 11:54 am
It is just a down year, I wonder how many of us that are active on here just started investing in the last 10 years.. I started pretty much early last year.. If so then we have seen the last 10 years having outstanding performance, and I think people are forgetting this is a long game idea.. Not just here on this forum but online in all the places I am part of. So many are talking ill of this year and feel the end is near.. Just go with it, always.. I feel kinda bad that I missed the huge gains of the last decade, but I will get them next time around.
How is 10.43% on VTSAX less than 9 months into the year a down year?
I'll agree with you on that for VBTLX, though.
It is just me then.. I am in Target Date Funds, but I like the total simple broad aspect of it with auto balancing and in the long long term, it should give me what my goals are.. YTD 3.26% which I guess is not all to bad alone it's self.. I also have not noticed how well the 3rd Qtr is doing, so my comment was actually based on 2nd Qtr numbers.. VTSAX at that time was just 3.6%

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bigROI
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Re: 40/60 allocation returns ytd

Post by bigROI » Thu Sep 20, 2018 1:50 pm

I have a 55/45 custom portfolio that has returned about 1.7%ytd made up of standard cores with 20% Total International Bonds 33% Total International Stock and the rest domestic. I have a return of around 4.7% on VTMFX witch is a 50/50 balanced tax managed fund.
A penny saved is much more then a penny earned when you consider the tax/SS/medicare cut.

Jordan4FI
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Re: 40/60 allocation returns ytd

Post by Jordan4FI » Thu Sep 20, 2018 2:11 pm

bigROI wrote:
Thu Sep 20, 2018 1:50 pm
I have a 55/45 custom portfolio that has returned about 1.7%ytd made up of standard cores with 20% Total International Bonds 33% Total International Stock and the rest domestic. I have a return of around 4.7% on VTMFX witch is a 50/50 balanced tax managed fund.
I like the look of the 50/50 you use.. Didn't see that one, Vanguard has so many I never took all the time to look at every fund and see how it works, but that 50/50 would be nice for me when I hit a later age... that or I will stick with either the 60/40 or 40/60 Lifestrategy Funds at that time. I use Target Date right now so it hits my desired AA at future age, then at that age I will make the determination to what fund is next..

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TierArtz
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Re: 40/60 allocation returns ytd

Post by TierArtz » Thu Sep 20, 2018 3:02 pm

4.03% using VG TSM (49%) and TBM (51%). Actually, that return is for my dad (81-years-old). His past and on-going contributions to a VG taxable account were/are 40/60, but performance differences over the last 6 years since I introduced him to investing have shifted him close to 50/50. He's not interested in re-balancing or even shifting contributions to 100% bond for awhile.

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Re: 40/60 allocation returns ytd

Post by mariezzz » Wed Sep 26, 2018 11:55 pm

Jordan4FI wrote:
Thu Sep 20, 2018 9:01 am
mariezzz wrote:
Wed Sep 19, 2018 10:02 pm
Jordan4FI wrote:
Fri Sep 14, 2018 11:54 am
It is just a down year, I wonder how many of us that are active on here just started investing in the last 10 years.. I started pretty much early last year.. If so then we have seen the last 10 years having outstanding performance, and I think people are forgetting this is a long game idea.. Not just here on this forum but online in all the places I am part of. So many are talking ill of this year and feel the end is near.. Just go with it, always.. I feel kinda bad that I missed the huge gains of the last decade, but I will get them next time around.
How is 10.43% on VTSAX less than 9 months into the year a down year?
I'll agree with you on that for VBTLX, though.
It is just me then.. I am in Target Date Funds, but I like the total simple broad aspect of it with auto balancing and in the long long term, it should give me what my goals are.. YTD 3.26% which I guess is not all to bad alone it's self.. I also have not noticed how well the 3rd Qtr is doing, so my comment was actually based on 2nd Qtr numbers.. VTSAX at that time was just 3.6%
Equities have been more volatile this year, that's for sure, compared to the last few. This year how well the market is doing really has depended on when you look at it.

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Re: 40/60 allocation returns ytd

Post by international001 » Thu Sep 27, 2018 3:44 am

Kevin8696 wrote:
Fri Sep 14, 2018 11:45 am

Two funds that seem to best replicate the Wellesley stock and bond portfolios (as proxies) are:

1. Vanguard High Dividend Yield Index Fund (VHDYX)
2. Vanguard Intermediate-term Bond Index Fund (VBILX)
Are you sure? Wellesley shows a historical much higher sharpe ratio

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Re: 40/60 allocation returns ytd

Post by Jerry55 » Fri Sep 28, 2018 8:36 pm

WellesleyOrBust wrote:
Fri Sep 14, 2018 1:25 pm
I think Wellesley/Wellington folks are sleeping fine (graphs courtesy of Simba's backtesting spreadsheet rev17d)
I hold both, Wellesley in Roth IRA, Wellington in taxable, but they're not my only holdings. They're stable and I'm good with that.
However, they only make up about 30% of my overall portfolio, 10% in Dodge & Cox International

My TSP makes up the remainder....approx. 60% split 80% /10% /10% in C Fund, S Fund and I fund.

I Don't really look at YTD figures, just progress.
Retired CSRS on 12/19/2012 @ age 57 w/39 years | Good Bye Tension, Hello Pension !!!

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Re: 40/60 allocation returns ytd

Post by Kevin8696 » Sat Sep 29, 2018 8:01 pm

international001 wrote:
Thu Sep 27, 2018 3:44 am
Kevin8696 wrote:
Fri Sep 14, 2018 11:45 am

Two funds that seem to best replicate the Wellesley stock and bond portfolios (as proxies) are:

1. Vanguard High Dividend Yield Index Fund (VHDYX)
2. Vanguard Intermediate-term Bond Index Fund (VBILX)
Are you sure? Wellesley shows a historical much higher sharpe ratio
For the 10-yr period 2008-2017, Wellesley (VWIAX) had a Sharpe ratio of 1.08 compared to 1.00 for a 35/65 mix of VHDYX and VBILX.
Last edited by Kevin8696 on Mon Oct 01, 2018 8:10 am, edited 1 time in total.

international001
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Re: 40/60 allocation returns ytd

Post by international001 » Mon Oct 01, 2018 6:53 am

Kevin8696 wrote:
Sat Sep 29, 2018 8:01 pm
international001 wrote:
Thu Sep 27, 2018 3:44 am
Kevin8696 wrote:
Fri Sep 14, 2018 11:45 am

Two funds that seem to best replicate the Wellesley stock and bond portfolios (as proxies) are:

1. Vanguard High Dividend Yield Index Fund (VHDYX)
2. Vanguard Intermediate-term Bond Index Fund (VBILX)
Are you sure? Wellesley shows a historical much higher sharpe ratio
For the 10-yr period 2008-2017, Wellesley (VWIAX) had a Sharpe ratio of 1.08 compared to 1.00 for a 35/65 mix of VHDYX and VBILX.
Hmm.. I guess I did something wrong. 'much' is just 0.08. Still, can we attribute this small difference to the magic of active?

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