Complement to Vanguard Wellington Fund

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ultraviolet
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Complement to Vanguard Wellington Fund

Post by ultraviolet » Fri Aug 09, 2019 2:09 pm

I recently opened a Roth IRA at Vanguard for myself. My wife has one as well that is invested in one of their Target Retirement funds. The idea for my Roth was to use actively managed funds since my wife's is fully passive index funds. Right now I have Wellington and next year I'd like to round it out with a mid/small blend fund. I've narrowed it down and my choices are the Strategic Equity fund or the Explorer fund.

With a 70% Wellington/30% other fund blend, Strategic Equity's Morningstar box would be:

28 23 14
09 07 11
03 03 02

Explorer would be:

28 22 14
03 06 14
03 04 06

Both seem like acceptable exposure to me so my question is, does anybody have any opinions about which one would be a better choice? I'm inclined to go with Explorer because Wellington manages both but there's also a few other managers on that fund. Strategic equity is managed by the Vanguard Quantitative Equity Group which I don't know anything about.

Any thoughts?

wriley4409
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Re: Compliment to Vanguard Wellington Fund

Post by wriley4409 » Fri Aug 09, 2019 3:13 pm

I think that Explorer is better complement, as it tends to skew to small/growth where Wellington is skewed toward large/value. The Strategic Equity fund appears to be evenly balanced between value and growth.

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RickBoglehead
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Re: Compliment to Vanguard Wellington Fund

Post by RickBoglehead » Fri Aug 09, 2019 3:25 pm

MattB wrote:
Fri Aug 09, 2019 2:09 pm
I recently opened a Roth IRA at Vanguard for myself. My wife has one as well that is invested in one of their Target Retirement funds. The idea for my Roth was to use actively managed funds since my wife's is fully passive index funds.

Any thoughts?
Two thoughts.

1) Why? Why have one person in passive funds and the other in active funds?

2) Vanguard Total Stock Market beats Wellington, no?
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Topic Author
ultraviolet
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Re: Compliment to Vanguard Wellington Fund

Post by ultraviolet » Fri Aug 09, 2019 6:12 pm

RickBoglehead wrote:
Fri Aug 09, 2019 3:25 pm
MattB wrote:
Fri Aug 09, 2019 2:09 pm
I recently opened a Roth IRA at Vanguard for myself. My wife has one as well that is invested in one of their Target Retirement funds. The idea for my Roth was to use actively managed funds since my wife's is fully passive index funds.

Any thoughts?
Two thoughts.

1) Why? Why have one person in passive funds and the other in active funds?

2) Vanguard Total Stock Market beats Wellington, no?
Answer to your first question: I've been reading Vanguard's suggestions to utilize both active and passive funds and I think there's some logic to that. I'm sure some people will say they're just trying to sell me the active funds but I like the idea.

And to answer your other question: there's no bonds in Total stock market so Wellington and TSM aren't really an equal comparison.

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ultraviolet
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Re: Compliment to Vanguard Wellington Fund

Post by ultraviolet » Fri Aug 09, 2019 6:19 pm

wriley4409 wrote:
Fri Aug 09, 2019 3:13 pm
I think that Explorer is better complement, as it tends to skew to small/growth where Wellington is skewed toward large/value. The Strategic Equity fund appears to be evenly balanced between value and growth.
Thanks for your suggestion. I agree.

My other retirement account is skewed towards large growth with several individual stock holdings plus the Vanguard S&P 500 and the Extended Market index funds. I felt Wellington was a good compliment to that being value oriented. Plus at 35% bonds in Wellington I only hold a small percentage in the other account to equal my 10% total allocation between the two accounts.

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steve roy
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Re: Compliment to Vanguard Wellington Fund

Post by steve roy » Fri Aug 09, 2019 7:15 pm

I utilize both Vanguard's index funds and actively managed tax exempt bond funds; also Wellesley actively managed stock and bond fund. Overall cost: 10 basis points.

30/ 70 stock bond allocation.

Grasshopper
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Re: Complement to Vanguard Wellington Fund

Post by Grasshopper » Sat Aug 10, 2019 7:32 am

I have a 2 fund portfolio consisting of all my tIRA and Roths in Wellington, and all my taxable in VT Total World. My 10 year personal performance was 9.2% from Vanguard's website. Retired for 13 years spend my taxable income, reinvest my tax deferred. I like VT for taxable because I can take capital gains when I want not when the fund decides. Wellington throws off a lot of CG and still has 24.82% of unrealized gains. It just happens that on my total investable net worth the the bond percent of Wellington equals 25% of the total, which is my allocation to bonds.

dbr
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Re: Complement to Vanguard Wellington Fund

Post by dbr » Sat Aug 10, 2019 11:39 am

It makes no sense to choose an active fund because some of your money is in a passive fund. I would ignore anything you read at Vanguard in the line of investing advice, at least that particular note. Some of their white papers are good education but are information and not advice.

That doesn't mean that Wellington is a bad investment. It could be a good choice for any particular investor but the reason is not that part of one's portfolio should be invested in active funds.

It seems there have been a few postings lately noticing that Vanguard has started to shill some of its more specialized funds. If that is a real trend, I am not sure it is a good thing.

I personally would say it is simpler and more straightforward if some of the investment is in basic total market funds to not mess around with balanced or special allocation funds at all.

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ultraviolet
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Re: Complement to Vanguard Wellington Fund

Post by ultraviolet » Sat Aug 10, 2019 12:45 pm

I think at the end of the day any investment with Vanguard will be a good one. I don’t have the knowledge, experience or resources that the professionals at Vanguard have so I’m inclined to trust their advice. They’ve guided their clients in the right direction for nearly 50 years. The cost of their active funds are well below the average plus, I already have most of my money in index funds. Just looking for opinions on a couple small cap options.

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Re: Complement to Vanguard Wellington Fund

Post by Grt2bOutdoors » Sat Aug 10, 2019 12:48 pm

MattB wrote:
Sat Aug 10, 2019 12:45 pm
I think at the end of the day any investment with Vanguard will be a good one. I don’t have the knowledge, experience or resources that the professionals at Vanguard have so I’m inclined to trust their advice. They’ve guided their clients in the right direction for nearly 50 years. The cost of their active funds are well below the average plus, I already have most of my money in index funds. Just looking for opinions on a couple small cap options.
Go with Explorer. I hold Wellington in my Roth. I hold broad based index funds in both taxable and employer retirement funds.
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Topic Author
ultraviolet
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Re: Complement to Vanguard Wellington Fund

Post by ultraviolet » Sat Aug 10, 2019 7:40 pm

Thanks for the suggestions! I think I’m going with Explorer. It’s one of their original 11 funds and I think it’ll be a great long term investment.

tj
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Re: Complement to Vanguard Wellington Fund

Post by tj » Sat Aug 10, 2019 10:32 pm

MattB wrote:
Sat Aug 10, 2019 7:40 pm
Thanks for the suggestions! I think I’m going with Explorer. It’s one of their original 11 funds and I think it’ll be a great long term investment.
Explorer has a ton of sub advisors though. It's unfortunate they keep adding sub advisors rather than closing the funds like prinecap.

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ultraviolet
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Re: Complement to Vanguard Wellington Fund

Post by ultraviolet » Sun Aug 11, 2019 9:43 am

tj wrote:
Sat Aug 10, 2019 10:32 pm
MattB wrote:
Sat Aug 10, 2019 7:40 pm
Thanks for the suggestions! I think I’m going with Explorer. It’s one of their original 11 funds and I think it’ll be a great long term investment.
Explorer has a ton of sub advisors though. It's unfortunate they keep adding sub advisors rather than closing the funds like prinecap.
True. That was an initial concern but I feel ok with it.

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