Active or Not, I Love Wellington

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hoops777
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Re: Active or Not, I Love Wellington

Post by hoops777 »

The fund invests in mid to large value stocks and up to 25 pct in foreign securities.How is this based on or comparable to the SP 500 which is not a value index and has no foreign stocks.It seems to me this is comparing apples to oranges.
K.I.S.S........so easy to say so difficult to do.
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TheTimeLord
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Re: Active or Not, I Love Wellington

Post by TheTimeLord »

hoops777 wrote:The fund invests in mid to large value stocks and up to 25 pct in foreign securities.How is this based on or comparable to the SP 500 which is not a value index and has no foreign stocks.It seems to me this is comparing apples to oranges.
Vanguard compares the stock holdings to the S&P 500 when referencing its holdings. Just look at equity characteristics.
https://personal.vanguard.com/us/funds/ ... =INT#tab=2

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jimb_fromATL
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Re: Active or Not, I Love Wellington

Post by jimb_fromATL »

hoops777 wrote:Ok.I looked at the page.Wellington owns about 100 stocks that were each handpicked by the managers as well as 500 bonds.So how is that any different from any other fund where someone chooses all of the stocks. My idea of an index is all inclusive with no stock picking.I really do not get it.Sorry.
Isn't that the whole point of the OP? "...Active or Not, I Love Wellington..." ?

While it is actively managed, it has a very long history of meeting or beating most benchmark index funds and other managed funds over long periods of time.

IMO it also stands to reason for Vanguard to use the S&P 500 and a big bond fund as their basis for comparison because those are probably the most nearly representative of the best results that most investors are ever likely to achieve.

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Re: Active or Not, I Love Wellington

Post by texasdiver »

Well, I like it.

The only way I can get bonds in my wife's profit sharing account from her employer is to get Wellington or PIMCO Total Return at nearly twice the ER. None of the usual Vanguard index funds are available in the eclectic mix of high ER actively managed funds she has to chose from.

So I put her in 100% Wellington in that account years ago simply for the lack of a better option and it has turned out well. Very well in fact. Otherwise I would have just chosen a mix of Total Stock and Total Bond index funds had they been available.
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TheTimeLord
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Re: Active or Not, I Love Wellington

Post by TheTimeLord »

Tis the season to celebrate another fine year delivered by the Wellington Fund. Well done old beans. But while Wellington may be the love of my investing life in a Tax Deferred account, it may not be suitable for everyone or their individual strategies. And as we all know past performance is not necessarily indicative of future results.

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dbr
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Re: Active or Not, I Love Wellington

Post by dbr »

Why is it a fine year when they have failed to meet their benchmark this year, on three years, and on five years? They did manage to take less loss in the '08/'09 crash, which is worth something, enough to exceed their benchmark on ten year performance, but not relevant to saying recent performance has been remarkable.

Note, I have no concern one way or another whether someone does or doesn't hold Wellington, but I think it would be helpful to put some definition behind the term "fine year."
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TheTimeLord
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Re: Active or Not, I Love Wellington

Post by TheTimeLord »

dbr wrote:Why is it a fine year when they have failed to meet their benchmark this year, on three years, and on five years? They did manage to take less loss in the '08/'09 crash, which is worth something, enough to exceed their benchmark on ten year performance, but not relevant to saying recent performance has been remarkable.

Note, I have no concern one way or another whether someone does or doesn't hold Wellington, but I think it would be helpful to put some definition behind the term "fine year."
For me it is about actual not relative returns. Also, unless something is a straight up index like the S&P, DOW or NASDAQ, I look at its benchmark as more of a guide for investing style and returns instead of an absolute target. But if 11+% in a low inflation world is not a fine year for you so be it. I will take 11+% with low inflation any year, even if the S&P 500 does 30% that year, because historically it is an excellent one year return.

Years ago I learn a lesson. I was hired into a company and had access to the HR database. After a year I received a 19% raise and was very proud. So out of curiosity I decided to sort my department's staff by salary to see where I now stood. Well I discovered I was at the bottom, making the exact same as the 2 guys hired in the same time as me and the 3 new people they just brought on. At that point I learned to view my salary from the perspective of would I be happy doing my job for my salary and not from the perspective of my salary versus others salary. That's how I look at Wellington's returns, besides is there another fund somewhere trying to track the Wellington Composite Index I could switch to?
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dbr
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Re: Active or Not, I Love Wellington

Post by dbr »

TheTimeLord wrote: But if 11+% in a low inflation world is not a fine year for you so be it.
I don't think of investments having a fine year or a bad year. Investment performance is so noisy the concept doesn't really make any sense.
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TheTimeLord
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Re: Active or Not, I Love Wellington

Post by TheTimeLord »

dbr wrote:
TheTimeLord wrote: But if 11+% in a low inflation world is not a fine year for you so be it.
I don't think of investments having a fine year or a bad year. Investment performance is so noisy the concept doesn't really make any sense.
That's fine. Whatever is most effective for you. I understand what you are saying and where you are coming from. But for me personally I have no issue with the concept and rather embrace it.
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nisiprius
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Re: Active or Not, I Love Wellington

Post by nisiprius »

I think that when you hear yourself using words like "love" about an investment, it's time to take a deep breath and step back. Wellington does not experience feelings. Wellington does not love you. No matter how faithful you are to Wellington, Wellington did not take a vow to be faithful to you. I know it's only a word, and that you don't think you mean anything more about it then "I love potato chips" (but then again they are always warning us about emotional eating, too).
Last edited by nisiprius on Sat Dec 20, 2014 12:20 pm, edited 1 time in total.
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TheTimeLord
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Re: Active or Not, I Love Wellington

Post by TheTimeLord »

nisiprius wrote:I think that when you hear yourself using words like "love" about an investment, it's time to take a deep breath step back. Wellington does not experience feelings. Wellington does not love you. No matter how faithful you are to Wellington, Wellington did not take a vow to be faithful to you. I know it's only a word, and that you don't think you mean anything more about it then "I love potato chips" (but then again they are always warning us about emotional eating, too).
Forgive my use of hyperbole. I think Wellington is a well run mutual fund with a history of delivering more than adequate returns.
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stlutz
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Re: Active or Not, I Love Wellington

Post by stlutz »

besides is there another fund somewhere trying to track the Wellington Composite Index I could switch to?
65% VOO (S&P 500)
35% QLTA (A-AAA bond index)

If you want a portfolio that more resembles Wellington, use VLUE instead of VOO.
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RyeWhiskey
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Re: Active or Not, I Love Wellington

Post by RyeWhiskey »

Wellington, and Wellesley for that matter, are terrific funds and excellent single choices for people who have limited options or desire the idea of having a manager try their best on their behalf. Bogleheads probably won't end up under either of these rubrics but it doesn't mean there isn't a place for such funds. I certainly have no qualm with either fund and have considered using Wellington for a specific purpose but opted against it due to tax considerations as the investment would be in a taxable account. I also think that one will achieve better diversification with a set of low costs indexes and so this is what I advocate. If, however, someone didn't like the idea of index investing I wouldn't hesitate to put forward Wellington/Wellesley as the best actively managed options available. :beer
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sjjsjr
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Re: Active or Not, I Love Wellington

Post by sjjsjr »

Beth* wrote:
TheTimeLord wrote:Well it is another great year for Wellington (up 8.98% YTD ER 0.18% Admiral). To me this fund continues to demonstrate active management with low fees can work. Seriously is there any legit reason to avoid this fund with its very long history of success?
Dividends and capital gains distributions if you hold it in a taxable account. I've held Wellington for a long time in a taxable account so there would be serious tax implications if I sold it but I'm not contributing any more money to it because of the taxable income it generates each year.
I would be very happy to pay more taxes each year....doesn't that mean I am making even more money?
John3754
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Re: Active or Not, I Love Wellington

Post by John3754 »

sjjsjr wrote:
Beth* wrote:
TheTimeLord wrote:Well it is another great year for Wellington (up 8.98% YTD ER 0.18% Admiral). To me this fund continues to demonstrate active management with low fees can work. Seriously is there any legit reason to avoid this fund with its very long history of success?
Dividends and capital gains distributions if you hold it in a taxable account. I've held Wellington for a long time in a taxable account so there would be serious tax implications if I sold it but I'm not contributing any more money to it because of the taxable income it generates each year.
I would be very happy to pay more taxes each year....doesn't that mean I am making even more money?
No it does not. If we're talking about funds held in a taxable account and Fund A returns X% via growth and Fund B also return X% but this time via capital gains and/or dividend distributions then with fund B you are paying more taxes and making less money, even though the total return was the same as Fund A.
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Re: Active or Not, I Love Wellington

Post by tibbitts »

As of the most recent quarter-end, Wellington has now underperformed its benchmark for 1, 3, and 5 years. That's pretty devastating for an active fund manager, whose existence is based on beating benchmarks. So I'm speculating another benchmark is actually being used internally - otherwise the fund managers would be eating dog food by now.

At least for the equity portion, Wellington seems to more closely resemble value index and there's been underperformance there, vs. 500 index, plus Wellington has historically included a tiny sliver of international, and that too has underperformed. Maybe add to that an every-so-slightly lower duration in the bond index and you get about the shortfall that the fund has experienced.

But, even ignoring tax consequences, the love doesn't seem justified in recent times - or at least the romance ought to be fading a bit by now.
dbr
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Re: Active or Not, I Love Wellington

Post by dbr »

tibbitts wrote:As of the most recent quarter-end, Wellington has now underperformed its benchmark for 1, 3, and 5 years. That's pretty devastating for an active fund manager, whose existence is based on beating benchmarks. So I'm speculating another benchmark is actually being used internally - otherwise the fund managers would be eating dog food by now.
On the face of it that composite benchmark isn't what the fund strategy actually is. The stock portfolio is dividend and value "biased" compared to the S&P 500. It is strange to bizarre that they publish the benchmark that they do. More than that investing in index funds that would match that composite is easy enough to do. The only active management would be the choice of stock/bond ratio. Personally I don't think it is a good idea to invest in any fund where the strategy that the fund is going to follow is not crystal clear at all times. The advantage of such a fund over some combination of index funds would be that there is no straightforward index strategy that matches the particular approach the fund offers, assuming that strategy is based on some solid fundamental idea.
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TheTimeLord
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Re: Active or Not, I Love Wellington

Post by TheTimeLord »

tibbitts wrote:As of the most recent quarter-end, Wellington has now underperformed its benchmark for 1, 3, and 5 years. That's pretty devastating for an active fund manager, whose existence is based on beating benchmarks. So I'm speculating another benchmark is actually being used internally - otherwise the fund managers would be eating dog food by now.

At least for the equity portion, Wellington seems to more closely resemble value index and there's been underperformance there, vs. 500 index, plus Wellington has historically included a tiny sliver of international, and that too has underperformed. Maybe add to that an every-so-slightly lower duration in the bond index and you get about the shortfall that the fund has experienced.

But, even ignoring tax consequences, the love doesn't seem justified in recent times - or at least the romance ought to be fading a bit by now.
Except Wellington's doesn't depend on beating their benchmark because it is a contrived benchmark used to by this single fund. The benchmark isn't representative in the sense the S&P 500 would be to VOO but more about a representation of where the assets come from but it doesn't include Wellington's value slant. But I guess you could buy 65% S&P 500 Index and 35% Barclays U.S. Credit A or Better Bond Index. As Mr. Bogle has pointed out large U.S. companies are international companies and he sees no reason for buying international companies and definitely not more than 20% of your portfolio.
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lululu
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Re: Active or Not, I Love Wellington

Post by lululu »

Things must be going well if there are two pages arguing about whether a fund that returns more or less 8% long term is a dog or not.
dbr
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Re: Active or Not, I Love Wellington

Post by dbr »

lululu wrote:Things must be going well if there are two pages arguing about whether a fund that returns more or less 8% long term is a dog or not.
There is no basis for concluding any such thing.
Miriam2
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Re: Active or Not, I Love Wellington

Post by Miriam2 »

TheTimeLord wrote: . . . That's how I look at Wellington's returns, besides is there another fund somewhere trying to track the Wellington Composite Index I could switch to?
I don't know what index it tracks, but what about T. Rowe Price Capital Appreciation Fund [PRWCX]? Invests in "value-oriented stocks, bonds, and other income-generating securities." Common and preferred stocks 63%, bonds 28 %, and reserves 9% (on 6/30/14). Isn't it a competitor fund to Wellington?
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Re: Active or Not, I Love Wellington

Post by Grt2bOutdoors »

stlutz wrote:
besides is there another fund somewhere trying to track the Wellington Composite Index I could switch to?
65% VOO (S&P 500)
35% QLTA (A-AAA bond index)

If you want a portfolio that more resembles Wellington, use VLUE instead of VOO.
Actually, I think the equity portion of the benchmark should be one that requires that companies pay a dividend yield higher than the S&P 500 - if you look at their holdings you'll see many of them exceed the collective yield of the S&P 500. I agree the composite bond portion should be a high grade corporate bond index.
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TheTimeLord
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Re: Active or Not, I Love Wellington

Post by TheTimeLord »

Miriam2 wrote:
TheTimeLord wrote: . . . That's how I look at Wellington's returns, besides is there another fund somewhere trying to track the Wellington Composite Index I could switch to?
I don't know what index it tracks, but what about T. Rowe Price Capital Appreciation Fund [PRWCX]? Invests in "value-oriented stocks, bonds, and other income-generating securities." Common and preferred stocks 63%, bonds 28 %, and reserves 9% (on 6/30/14). Isn't it a competitor fund to Wellington?
T. Rowe Price Capital Appreciation Fund ER 0.71% Turnover 57% vs. Vanguard Wellington Admiral ER 0.18% Turnover 35%

So Wellington starts with a 0.53% head start every year. That said the fund has a history of excellent performance. Better than Wellington if I am comparing correctly. That is probably because Wellington has a value/conservative slant and Capital Appreciation has a risk slant. And for the past 5 years risk has been the place to be.
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Miriam2
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Re: Active or Not, I Love Wellington

Post by Miriam2 »

I also have in my notes (sorry I cannot find the source) that the T. Rowe Capital Appreciation bond component may have "leveraged loans, convertible bonds, preferred bonds, option writing, and covered calls." Now I don't know what that means, but it sounds riskier than Wellington's corporate bonds, treasury bonds and notes, and sovereign bonds.
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Re: Active or Not, I Love Wellington

Post by Grt2bOutdoors »

TheTimeLord wrote:
Miriam2 wrote:
TheTimeLord wrote: . . . That's how I look at Wellington's returns, besides is there another fund somewhere trying to track the Wellington Composite Index I could switch to?
I don't know what index it tracks, but what about T. Rowe Price Capital Appreciation Fund [PRWCX]? Invests in "value-oriented stocks, bonds, and other income-generating securities." Common and preferred stocks 63%, bonds 28 %, and reserves 9% (on 6/30/14). Isn't it a competitor fund to Wellington?
T. Rowe Price Capital Appreciation Fund ER 0.71% Turnover 57% vs. Vanguard Wellington Admiral ER 0.18% Turnover 35%

So Wellington starts with a 0.53% head start every year. That said the fund has a history of excellent performance. Better than Wellington if I am comparing correctly. That is probably because Wellington has a value/conservative slant and Capital Appreciation has a risk slant. And for the past 5 years risk has been the place to be.
TRP Capital Appreciation is also performing quite a bit of derivative investing - selling/buying puts and calls - if you make the "wrong call" it could detract from fund performance and it is somewhat more costly to trade in the options markets.
I would say the Cap App fund is a relatively good fund to hold, but not in a taxable account - you'll get eaten alive with distributions.
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Re: Active or Not, I Love Wellington

Post by Grt2bOutdoors »

Miriam2 wrote:I also have in my notes (sorry I cannot find the source) that the T. Rowe Capital Appreciation bond component may have "leveraged loans, convertible bonds, preferred bonds, option writing, and covered calls." Now I don't know what that means, but it sounds riskier than Wellington's corporate bonds, treasury bonds and notes, and sovereign bonds.
It's quite risky - you can get burned severely if you don't know what you are doing and it will detract from fund returns.
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Miriam2
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Re: Active or Not, I Love Wellington

Post by Miriam2 »

Interesting differences between Wellington and Capital Appreciation. We have Cap App in an IRA. I see we need to re-think that fund.

Like TheTimeLord, I have owned Wellington for years - before I learned about the 3 Fund Portfolio. I owned it through the 2001 tech bubble bear market and through the 2008 great recession - never sold it. It bounced back from those down markets so "easily" - I know, I'm overstating it! - but as an average investor, I was so relieved that Vanguard could manage it and not lose my hard-earned money. It seems one value of Wellington is the way it rides out the bear markets.
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Re: Active or Not, I Love Wellington

Post by cfs »

Leading the pack.

Shipmates, good ole Wellington is leading the balanced funds pack at Vanguard again this year, leading target retirements, life strategy, etc, but the year is not over yet, and oh by the way the other W is doing fine too. Good luck with your W investments and have a Merry Christmas.
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Re: Active or Not, I Love Wellington

Post by Toons »

sjjsjr wrote:
Beth* wrote:
TheTimeLord wrote:Well it is another great year for Wellington (up 8.98% YTD ER 0.18% Admiral). To me this fund continues to demonstrate active management with low fees can work. Seriously is there any legit reason to avoid this fund with its very long history of success?
Dividends and capital gains distributions if you hold it in a taxable account. I've held Wellington for a long time in a taxable account so there would be serious tax implications if I sold it but I'm not contributing any more money to it because of the taxable income it generates each year.
I would be very happy to pay more taxes each year....doesn't that mean I am making even more money?
Thats how it was explained to me in so many words years ago.,,or to to put it another way,would you rather not make the money and not pay the taxes? :happy
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dbr
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Re: Active or Not, I Love Wellington

Post by dbr »

Toons wrote:
sjjsjr wrote:
Beth* wrote:
TheTimeLord wrote:Well it is another great year for Wellington (up 8.98% YTD ER 0.18% Admiral). To me this fund continues to demonstrate active management with low fees can work. Seriously is there any legit reason to avoid this fund with its very long history of success?
Dividends and capital gains distributions if you hold it in a taxable account. I've held Wellington for a long time in a taxable account so there would be serious tax implications if I sold it but I'm not contributing any more money to it because of the taxable income it generates each year.
I would be very happy to pay more taxes each year....doesn't that mean I am making even more money?
Thats how it was explained to me in so many words years ago.,,or to to put it another way,would you rather not make the money and not pay the taxes? :happy
That is not what is going on in this discussion.
ANC
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Re: Active or Not, I Love Wellington

Post by ANC »

Miriam2 wrote:Interesting differences between Wellington and Capital Appreciation. We have Cap App in an IRA. I see we need to re-think that fund.
I think you need to make two comparisions:

1. A higher-risk Wellington.
As you and others have pointed out, Capital Apprecation is currently more risky and expensive in fixed income (but not always ,i.e., its high cash position in 2002).

2. A lower-risk Dividend Growth
Another way of looking at Capital Apprecation is as TRP's most conservative stock fund.

"The fund seeks long-term capital appreciation by investing primarily in common stocks. It may hold fixed-income and other securities to help preserve principal value."
http://www3.troweprice.com/fb2/fbkweb/o ... cker=PRWCX

Commpare the two funds' annual returns over the last 10 years--they are hard to distinguish. Whereas, Dividend Growth uses its dividend income to stabilize the portfolio and provide additional income at the same time, Capital Apprecation does something similar with such instruments as high-yield bonds and bank loans, while still keeping 20% or so in investment grade bonds and cash.

As such, you should consider its stock allocation as 80% or so, not its nominal value of 60%.
FreddieG
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Re: Active or Not, I Love Wellington

Post by FreddieG »

My entire 401k (1.1m) is in Wellington. I plan to leave it there (unless convinced otherwise :happy ). I am 58 and months away from retirement.
Miriam2
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Re: Active or Not, I Love Wellington

Post by Miriam2 »

ANC wrote: I think you need to make two comparisons:
1. A higher-risk Wellington.
As you and others have pointed out, Capital Apprecation is currently more risky and expensive in fixed income (but not always ,i.e., its high cash position in 2002).
2. A lower-risk Dividend Growth
Another way of looking at Capital Apprecation is as TRP's most conservative stock fund.

Commpare the two funds' annual returns over the last 10 years--they are hard to distinguish. Whereas, Dividend Growth uses its dividend income to stabilize the portfolio and provide additional income at the same time, Capital Apprecation does something similar with such instruments as high-yield bonds and bank loans, while still keeping 20% or so in investment grade bonds and cash.
As such, you should consider its stock allocation as 80% or so, not its nominal value of 60%.
Thanks ANC - Looks like I should post a question when I can for a discussion on Capital Appreciation. We use it as our T.Rowe account "companion" to our Vanguard Wellington. But we have owned Wellington for almost 20 years, bought Cap App last year.
John Bogle, "The Twelve Pillars of [Financial] Wisdom"- Pillar 5: Diversify, Diversify, Diversify.
anakinskywalker
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Re: Active or Not, I Love Wellington

Post by anakinskywalker »

tibbitts wrote:
TheTimeLord wrote:Well it is another great year for Wellington (up 8.98% YTD ER 0.18% Admiral). To me this fund continues to demonstrate active management with low fees can work. Seriously is there any legit reason to avoid this fund with its very long history of success?
People have said the same thing about many other active funds that have subsequently underperformed for long periods of time.

The problem with underperformance (and wellington has been experiencing slight underperformance for some time now relative to its admittedly probably inappropriate benchmark) is that you don't know when to bail. Obviously not a after a few months, but what about a year or two? Three? I'm sure you're aware of wellington's long period of horrible underperformance (relatively to almost any reasonable benchmark, actually) the fund suffered years ago. Would you have held on? Really? I know I wouldn't have.
Could you please clarify the period you're referring to? I looked at the total return chart on M* but wasn't able to tell which period you might be referring to. I'm new to active mutual funds and only recently started considering Wellington. Any additional thoughts you could share would be very useful too.

Thanks,
Anakin
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Re: Active or Not, I Love Wellington

Post by anakinskywalker »

cfs wrote:Leading the pack.

Shipmates, good ole Wellington is leading the balanced funds pack at Vanguard again this year, leading target retirements, life strategy, etc, but the year is not over yet, and oh by the way the other W is doing fine too. Good luck with your W investments and have a Merry Christmas.
By the "other W" do you mean Wellesley income or Windsor II?

I'm trying to pick some good low-cost active funds and would appreciate any thoughts you could share on your experience.

Anakin
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cfs
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Re: Active or Not, I Love Wellington

Post by cfs »

anakinskywalker wrote:
cfs wrote:Leading the pack.

Shipmates, good ole Wellington is leading the balanced funds pack at Vanguard again this year, leading target retirements, life strategy, etc, but the year is not over yet, and oh by the way the other W is doing fine too. Good luck with your W investments and have a Merry Christmas.
By the "other W" do you mean Wellesley income or Windsor II?

I'm trying to pick some good low-cost active funds and would appreciate any thoughts you could share on your experience.

Anakin
Good morning, on the "active balanced world of funds" both Wellington and Wellesley (the other W) are "realiable, reliable, reliable" both managed by respected teams. Of course they will have challenging years from time to time, but that is part of investing. Note that this conversation is from last year, but this year again the funds are doing okay when compared to the rest of the balanced funds. For hands off investors the target retirement, life strategy, balanced index, Wellington, and Wellesley could be good choices. Please follow your IPS, good luck with your retirements, and have a Feliz Navidad.
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anakinskywalker
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Re: Active or Not, I Love Wellington

Post by anakinskywalker »

cfs wrote:
anakinskywalker wrote:
cfs wrote:Leading the pack.

Shipmates, good ole Wellington is leading the balanced funds pack at Vanguard again this year, leading target retirements, life strategy, etc, but the year is not over yet, and oh by the way the other W is doing fine too. Good luck with your W investments and have a Merry Christmas.
By the "other W" do you mean Wellesley income or Windsor II?

I'm trying to pick some good low-cost active funds and would appreciate any thoughts you could share on your experience.

Anakin
Good morning, on the "active balanced world of funds" both Wellington and Wellesley (the other W) are "realiable, reliable, reliable" both managed by respected teams. Of course they will have challenging years from time to time, but that is part of investing. Note that this conversation is from last year, but this year again the funds are doing okay when compared to the rest of the balanced funds. For hands off investors the target retirement, life strategy, balanced index, Wellington, and Wellesley could be good choices. Please follow your IPS, good luck with your retirements, and have a Feliz Navidad.
Thank you so much and wish you a Feliz Navidad too! :-) If you don't mind, may I ask if you own one or more of these funds? If yes any thoughts you could share would be great. Also if not, your thoughts on why you choose to stay away from them would also be most useful to me.

Thanks so much,
Anakin
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cfs
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Re: Active or Not, I Love Wellington

Post by cfs »

anakinskywalker wrote:
cfs wrote:
anakinskywalker wrote:
cfs wrote:Leading the pack.

Shipmates, good ole Wellington is leading the balanced funds pack at Vanguard again this year, leading target retirements, life strategy, etc, but the year is not over yet, and oh by the way the other W is doing fine too. Good luck with your W investments and have a Merry Christmas.
By the "other W" do you mean Wellesley income or Windsor II?

I'm trying to pick some good low-cost active funds and would appreciate any thoughts you could share on your experience.

Anakin
Good morning, on the "active balanced world of funds" both Wellington and Wellesley (the other W) are "realiable, reliable, reliable" both managed by respected teams. Of course they will have challenging years from time to time, but that is part of investing. Note that this conversation is from last year, but this year again the funds are doing okay when compared to the rest of the balanced funds. For hands off investors the target retirement, life strategy, balanced index, Wellington, and Wellesley could be good choices. Please follow your IPS, good luck with your retirements, and have a Feliz Navidad.
Thank you so much and wish you a Feliz Navidad too! :-) If you don't mind, may I ask if you own one or more of these funds? If yes any thoughts you could share would be great. Also if not, your thoughts on why you choose to stay away from them would also be most useful to me.

Thanks so much,
Anakin
Held Wellesley as the solo fund in my 401k for years (including the 2008 market debacle when the fund did pretty good compared to other Vanguard funds). I retired last year and closed my 401k, moving all the money to my traditional IRA. After retiring I made changes to my portfolio, I no longer hold balanced funds--a couple of equity and bond funds make things easier (for me) to rebalance. But again, any of the target retirement, life strategy, balanced index, Wellington, and Wellesley could be good choices for anyone looking to place the portfolio in full auto-pilot. Good luck with your investments.
~ Member of the Active Retired Force since 2014 ~
anakinskywalker
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Re: Active or Not, I Love Wellington

Post by anakinskywalker »

cfs wrote:
anakinskywalker wrote:
cfs wrote:
anakinskywalker wrote:
cfs wrote:Leading the pack.

Shipmates, good ole Wellington is leading the balanced funds pack at Vanguard again this year, leading target retirements, life strategy, etc, but the year is not over yet, and oh by the way the other W is doing fine too. Good luck with your W investments and have a Merry Christmas.
By the "other W" do you mean Wellesley income or Windsor II?

I'm trying to pick some good low-cost active funds and would appreciate any thoughts you could share on your experience.

Anakin
Good morning, on the "active balanced world of funds" both Wellington and Wellesley (the other W) are "realiable, reliable, reliable" both managed by respected teams. Of course they will have challenging years from time to time, but that is part of investing. Note that this conversation is from last year, but this year again the funds are doing okay when compared to the rest of the balanced funds. For hands off investors the target retirement, life strategy, balanced index, Wellington, and Wellesley could be good choices. Please follow your IPS, good luck with your retirements, and have a Feliz Navidad.
Thank you so much and wish you a Feliz Navidad too! :-) If you don't mind, may I ask if you own one or more of these funds? If yes any thoughts you could share would be great. Also if not, your thoughts on why you choose to stay away from them would also be most useful to me.

Thanks so much,
Anakin
Held Wellesley as the solo fund in my 401k for years (including the 2008 market debacle when the fund did pretty good compared to other Vanguard funds). I retired last year and closed my 401k, moving all the money to my traditional IRA. After retiring I made changes to my portfolio, I no longer hold balanced funds--a couple of equity and bond funds make things easier (for me) to rebalance. But again, any of the target retirement, life strategy, balanced index, Wellington, and Wellesley could be good choices for anyone looking to place the portfolio in full auto-pilot. Good luck with your investments.
Thank you cfs (for the advice as well as the good wishes)! :-) Wish you a long and happy retirement! :-)

Anakin
anakinskywalker
Posts: 478
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Re: Active or Not, I Love Wellington

Post by anakinskywalker »

Any thoughts on Windsor and Windsor II? I have them available in my 401K (which also has wellesley, wellington, primecap, and some more funds that might be closed to new investors).

It's not immediately clear to me how Windsor and Windsor II differ from Wellington in terms of suitability. I plan to read their prospectus, annual reports etc. but any thoughts would be great. Apologies if this thread is for Wellington only and I am thread-jacking by asking about Windsor.

Thanks,
Anakin
CedarWaxWing
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Re: Active or Not, I Love Wellington

Post by CedarWaxWing »

dbr wrote:
tibbitts wrote:
hoops777 wrote:Ok.I looked at the page.Wellington owns about 100 stocks that were each handpicked by the managers as well as 500 bonds.So how is that any different from any other fund where someone chooses all of the stocks.My idea of an index is all inclusive with no stock picking.I really do not get it.Sorry.
What everyone is referring to is that Wellington's managers, and VG, benchmark their performance against an index, the composite index shown on the page you visited. That has nothing to do with Wellington being indexed; it has to do with whether you would have (over those historical periods) been better off holding the index itself. Whether you agree with the index they've chosen is another matter, as is whether Wellington achieved the returns it did with more or less risk. Those factors can be more difficult to determine. Also, no costs are taken out of the benchmark index, so you'd have to subtract a tiny percentage for the expense ration of similar index funds to get a fair comparison."


Is this not a reasonable way to try to compare with an index...? Then again...it only covers a little more than a decade. Also, with only about 100 stocks in the fund, and the length of the manager's tenure... I would think the real risk of manager change, and one unknown outlying stock that acts up at any time in the near or not so near future... (as in what happened with Sequx fund) makes a true comparison impossible, or inaccurate at best.

One bad apple, if bad enough, could have a very big impact. IF the manager is not capable of making one big big mistake on one holding... maybe his performance is persistant. Then again... Magellen, Legg Mason Value... and more recently now Sequoia fund, and Yatckman for that matter... suggest that the risk is not determinable. That means it may be a very low risk to stay with Wellington (I have been tempted to get into it...but have also had 3 of the other 4 funds in my more active days... and have no idea how long the current manager will be around, or his state of health... of if it really takes 60 years to know that the manager effect is not a matter of chance. Even if my y guess is that it is not... the odds say I would be wrong. Since I cannot go out to dinner with those guys at Wellington... I would have to simply guess if they are as solid as there fund record would suggest. Therefore, If I were to put money in that fund... it might be interesting to me, and I would do so if I were to not have to touch it for a very long time...since I could not re-balance myself. I think I would have to see the prospectus to verify that they do not have one huge overweighted equity in the group, like Sequx had. :)


https://www.portfoliovisualizer.com/bac ... unt=100000

If hope the formatting mails out ok...paste and copy did not work well, so I modified it. :)

Portfolio Returns
Portfolio performance statistics
# Initial Balance Final Balance CAGR Std.Dev. Best Year Worst Year Max. Drawdown Sharpe Ratio Sortino Ratio US Mkt Correlation
1 $100,000 $235,142 6.34% 9.92% 23.56% -26.15% -36.89% 0.54 0.78 0.98
2 $100,000 $276,927 7.59% 9.67% 22.34% -22.23% -32.46% 0.68 1.01 0.95
3 $100,000 $273,026 7.48% 9.67% 22.20% -22.30% -32.53% 0.67 0.99 0.95
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Kenster1
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Re: Active or Not, I Love Wellington

Post by Kenster1 »

By Jack Bogle

Reflections on Wellington Fund’s 75th Birthday
https://www.vanguard.com/bogle_site/sp2 ... onbth.html
.
Walter Morgan served as Wellington’s Chairman for 42 years before turning the reins over to me in 1972. I’m proud to have served in that role for another 27 years, including two years as senior chairman. As an employee ever since 1951, to say nothing of being a pleased and proud shareholder throughout that entire long period, I have been a witness to more than 52 years of Wellington’s 75-year history, and privileged to play a major role in shaping that history. In each of these capacities—leader, servant, and owner—I’m proud to dedicate this extensive 75th birthday card to the memory of Mr. Morgan, my predecessor, my sponsor, my mentor, my hero, and my friend for a full half-century.

Walter Morgan would want you to enjoy reading this history, to learn from it, and to take from it what you may. Happy 75th Birthday to Wellington Fund!

Sincerely,

John C. Bogle
SURGEON GENERAL'S WARNING: Any overconfidence in your ability, willingness and need to take risk may be hazardous to your health.
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stemikger
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Re: Active or Not, I Love Wellington

Post by stemikger »

gwrvmd wrote:If someone over 50 asks me for some quick investment advise, I give them a one word answer "Wellington"
For the past 30 years it has been excellent advise........Gordon
I like John Bogle's choice for a one-fund portfolio. The Vanguard Balanced Index Fund is the one he always recommends. Having said that, you are in good hands with Wellington. I believe it's the oldest mutual fund around.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!
Dandy
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Re: Active or Not, I Love Wellington

Post by Dandy »

Great track record no doubt. I read a long time ago that people fall in love with a stock or fund and the advice is that the fund/stock doesn't know you or love you back. A fund that has performed well for you becomes like the family dog - it has been loyal and good. If/when it acts up a bit you will be more forgiving because after all it has been good to you and for you for many years.

Lots of people are loving Wellington - so much so that they have started to close the fund to some type of investors. That should give you pause (not paws!) since it usually indicates that the fund is getting a bit to large for the portfolio managers comfort. Don't be overly influenced by your love of the fund going forward. Alas, very popular funds get lots of attention and lots of additional money. That is not always good for the future prospects of the fund.

We need to look at our investments with an unloving mind. This is business not romance - no hurt feelings upon rejection or finding some better investment partners. If it starts to underperform for awhile we should be prepared to move on.
CWhea1775
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Re: Active or Not, I Love Wellington

Post by CWhea1775 »

Is Wellington reverting to the mean? If I read the new annual report correctly. The fund has underperformed it's own benchmarks for the last 1, 3, and 5 years. I have always loved this fund and have held it for 30 years, but it appears that their active management decision-making is reflecting the same disturbing trend as almost every other active fund.
jjface
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Re: Active or Not, I Love Wellington

Post by jjface »

CWhea1775 wrote:Is Wellington reverting to the mean? If I read the new annual report correctly. The fund has underperformed it's own benchmarks for the last 1, 3, and 5 years. I have always loved this fund and have held it for 30 years, but it appears that their active management decision-making is reflecting the same disturbing trend as almost every other active fund.
Wellington is a fund that seems to track a similar asset allocation fairly well and then every now and then makes a good decision that once in a while permanently boosts performance by a small margin. At least that is how it appears to me. It doesn't seem to be so extreme that a bad decision here or there would have such a large impact like many other active funds.
sambb
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Re: Active or Not, I Love Wellington

Post by sambb »

CWhea1775 wrote:Is Wellington reverting to the mean? If I read the new annual report correctly. The fund has underperformed it's own benchmarks for the last 1, 3, and 5 years. I have always loved this fund and have held it for 30 years, but it appears that their active management decision-making is reflecting the same disturbing trend as almost every other active fund.
thanks for this information. active is active..
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bottlecap
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Re: Active or Not, I Love Wellington

Post by bottlecap »

Never fall in love with investments or money.

JT
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TheTimeLord
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Re: Active or Not, I Love Wellington

Post by TheTimeLord »

CWhea1775 wrote:Is Wellington reverting to the mean? If I read the new annual report correctly. The fund has underperformed it's own benchmarks for the last 1, 3, and 5 years. I have always loved this fund and have held it for 30 years, but it appears that their active management decision-making is reflecting the same disturbing trend as almost every other active fund.
Just for fun, name one fund that I can invest in that tracks the benchmark Wellington uses. My point is their benchmark really isn't worth anything unless you could directly invest in a fund that tracks it. In other words the reason it matters if a fund that benchmarks against the S&P 500 and underperforms or exceeds the benchmark is because I can buy a fund that will track that benchmark. Otherwise we are just talking about funds relative performance to each other.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
fortyofforty
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Re: Active or Not, I Love Wellington

Post by fortyofforty »

I am about to use Wellington as a TLH foil for LifeStrategy Growth and Balanced Index. It seems to split the difference between the two of those, and I wouldn't mind getting "stuck" in it should the market rise in the next month or so. It's not perfect--no fund is--but it will suit my needs.
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