1 Fund Portfolio -VWIAX

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FlyHi
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1 Fund Portfolio -VWIAX

Post by FlyHi » Tue Mar 27, 2012 11:47 am

For a very conservative investor who doesn't want to be bothered taking care of a portfolio does it make sense to own only Wellesley (VWIAX)? In a comparison I did Wellesley has out performed the 3 fund Portfolio/VG LifeStrategy Consrv Gro Inv (VSCGX) & VG Tgt Retirement Income Inv (VTINX) on a 3/5/10 year basis.
“If you want to feel rich, just count the things you have that money can't buy”

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jasonlitka
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Re: 1 Fund Portfolio -VWIAX

Post by jasonlitka » Tue Mar 27, 2012 11:52 am

Sure, why not, especially if you're at the age where you'd want the consistent income it provides.
Jason Litka

dbr
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Re: 1 Fund Portfolio -VWIAX

Post by dbr » Tue Mar 27, 2012 12:01 pm

FlyHi wrote:For a very conservative investor who doesn't want to be bothered taking care of a portfolio does it make sense to own only VWIAX? In a comparison I did Wellesley has out performed the 3 fund Portfolio/VG LifeStrategy Consrv Gro Inv (VSCGX) & VG Tgt Retirement Income Inv (VTINX) on a 3/5/10 year basis.


It could make sense. Whether it does or not doesn't have much to do with comparing the performance of those different funds over those periods of time.

I am not so sure I would say a fund that is 40% stocks is "very conservative." Well, actually it is not very conservative; it is a 3 on a scale of 5 by Vanguard's own risk system. Target Retirement Income is a 2 at 30% stocks. I don't think you get to a 1 with any amount of stocks. That doesn't mean investing only in bonds is a good idea. There are more hazards to investing than volatility, which is what Vanguard is measuring.

YDNAL
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Re: 1 Fund Portfolio -VWIAX

Post by YDNAL » Tue Mar 27, 2012 12:05 pm

FlyHi wrote:For a very conservative investor who doesn't want to be bothered taking care of a portfolio does it make sense to own only Wellesley (VWIAX)? In a comparison I did Wellesley has out performed the 3 fund Portfolio/VG LifeStrategy Consrv Gro Inv (VSCGX) & VG Tgt Retirement Income Inv (VTINX) on a 3/5/10 year basis.

It is difficult to argue with past history... but it could mean nothing going forward.
  • You should ignore 10-year returns since TR Income (VTINX) started in LATE 2003.
  • Wellesley (VWIAX)'s added annual return (2004-2011) is significantly impacted in 2006 (+5%) and 2011 (+4.5%).
    [edit to add detail]
Vanguard VWIAX wrote:2011 5.71% 4.04% 9.74% <--
2010 6.53% 4.19% 10.71%
2009 10.70% 5.43% 16.14%
2008 –14.22% 4.43% –9.79%
2007 1.28% 4.48% 5.76%
2006 6.69% 4.70% 11.39% <--
2005 –0.64% 4.19% 3.56%
2004 3.40% 4.30% 7.70%
Vanguard VTINX wrote:2011 2.40% 2.85% 5.25%
2010 6.74% 2.65% 9.39%
2009 11.24% 3.04% 14.28%
2008 –14.47% 3.54% –10.93%
2007 4.02% 4.15% 8.17%
2006 2.49% 3.89% 6.38%
2005 –0.62% 3.95% 3.33%
2004 3.38% 3.44% 6.82%
2003** 1.95% 0.55% 2.50%
** Since inception on 10/27/2003


That said, may I ask why limit diversification with Wellesly Admiral (VWIAX)?
https://personal.vanguard.com/us/funds/ ... st=tab%3A2

You would be investing in 58 Stocks and 622 Bonds.
  • Stocks are mostly the Large Value type with very limited Mid Caps and no Small Caps.
  • Bonds are mostly Corporate (investment grade).
    Vanguard VWIAX wrote:Distribution by issuer (% of bonds) as of 02/29/2012

    Asset-Backed 3.9%
    Commercial Mortgage-Backed 0.6%
    Finance 30.7%
    Foreign 2.9%
    Government Mortgage-Backed 8.4%
    Industrial 33.6%
    Other 5.5%
    Treasury/Agency 8.6%
    Utilities 5.8%
    Total 100.0%
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

snowman9000
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Re: 1 Fund Portfolio -VWIAX

Post by snowman9000 » Tue Mar 27, 2012 12:41 pm

It's a GREAT fund, and you could do a lot worse.

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Re: 1 Fund Portfolio -VWIAX

Post by KyleAAA » Tue Mar 27, 2012 12:45 pm

You could do much worse, however, if you're really that conservative it's probably wise to diversify a lot more than what Wellesley offers.

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FlyHi
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Re: 1 Fund Portfolio -VWIAX

Post by FlyHi » Tue Mar 27, 2012 1:18 pm

Thanks for all of the replies. I dodn't mean to say that Wellesley was the only way to go and I welcome any suggestions as to other funds to use. The person (my partner) that this investment is for is 66, lives off of her pension & SS, has not debts and her house is paid for. She has one year's income in savings.

I am trying to make her portfolio as simple as possible since she has no interest in getting involved with it.
“If you want to feel rich, just count the things you have that money can't buy”

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FlyHi
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Re: 1 Fund Portfolio -VWIAX

Post by FlyHi » Tue Mar 27, 2012 1:22 pm

dbr wrote:
FlyHi wrote:I am not so sure I would say a fund that is 40% stocks is "very conservative." Well, actually it is not very conservative; it is a 3 on a scale of 5 by Vanguard's own risk system. Target Retirement Income is a 2 at 30% stocks. I don't think you get to a 1 with any amount of stocks. That doesn't mean investing only in bonds is a good idea. There are more hazards to investing than volatility, which is what Vanguard is measuring.


The thing that I don't like about VTINX is that it has 25% invested in Prime Money Mkt & the TIPS fund.
“If you want to feel rich, just count the things you have that money can't buy”

DSInvestor
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Re: 1 Fund Portfolio -VWIAX

Post by DSInvestor » Tue Mar 27, 2012 2:02 pm

If she doesn't like the Prime Money Market and TIPs held by the TR Income fund, then she may prefer the LifeStrategy Conservative Growth fund (VSCGX) er=0.15% which has 40/60 stock/bond AA and holds TSM, TISM and TBM or the LifeStrategy Income fund (VASIX) er=0.13% which has 20/80 stock/bond AA.

Here's the composition of the Lifestrategy Conservative Growth Fund:
https://personal.vanguard.com/us/funds/ ... st=tab%3A2

YDNAL
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Re: 1 Fund Portfolio -VWIAX

Post by YDNAL » Tue Mar 27, 2012 2:19 pm

FlyHi wrote:Thanks for all of the replies. I dodn't mean to say that Wellesley was the only way to go and I welcome any suggestions as to other funds to use. The person (my partner) that this investment is for is 66, lives off of her pension & SS, has not debts and her house is paid for. She has one year's income in savings.

I am trying to make her portfolio as simple as possible since she has no interest in getting involved with it.
FlyHi wrote:The thing that I don't like about VTINX is that it has 25% invested in Prime Money Mkt & the TIPS fund.

Prime MM in Target Income (VTINX) can replace (or partial) your partner's savings account.

A 66yo living off Pension & SS should embrace 20% TIPS (perhaps even more) since Inflation should be a BIG concern for someone like your partner.

The alternatives to TR Income VTINX (I would question) are LS Income (20/80 Stocks/Bonds), or LS Conservative (40/60) — or a combination.
https://personal.vanguard.com/us/funds/ ... st=tab%3A2
https://personal.vanguard.com/us/funds/ ... st=tab%3A2
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

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joe8d
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Re: 1 Fund Portfolio -VWIAX

Post by joe8d » Tue Mar 27, 2012 10:42 pm

If she doesn't like the Prime Money Market and TIPs held by the TR Income fund, then she may prefer the LifeStrategy Conservative Growth fund (VSCGX) er=0.15% which has 40/60 stock/bond AA and holds TSM, TISM and TBM


Yes. That would be my recommendation and would use a separate STIG fund to dilute if desired.
All the Best, | Joe

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