Zacks says sell Wellesley!?

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nbseer
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Zacks says sell Wellesley!?

Post by nbseer »

Zacks has a "strong sell' rating (it's worst possible ranking) on Vanguard Wellesley (VWIAX). Complete with scary red warning! What's up with that?
livesoft
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Re: Zacks says sell Wellesley!?

Post by livesoft »

Look at this year's performance and the performance of the long bonds that it holds. It has really cost folks money this year with the FOMC raising the FFR. This is expected to continue.
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Re: Zacks says sell Wellesley!?

Post by jhfenton »

Zack's ratings are complete and utter nonsense. You would be better served by forgetting that they exist.
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Re: Zacks says sell Wellesley!?

Post by Dottie57 »

jhfenton wrote:Zack's ratings are complete and utter nonsense. You would be better served by forgetting that they exist.

Who is zack? And why care what he says?
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Re: Zacks says sell Wellesley!?

Post by zhiwiller »

Dottie57 wrote:
jhfenton wrote:Zack's ratings are complete and utter nonsense. You would be better served by forgetting that they exist.

Who is zack? And why care what he says?

Sorry guys. - zack
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Re: Zacks says sell Wellesley!?

Post by whodidntante »

If I owned it, I would sell it.
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Re: Zacks says sell Wellesley!?

Post by nisiprius »

Do they suggest a similar fund that has a strong "buy" rating?
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Re: Zacks says sell Wellesley!?

Post by WolfgangPauli »

My 1 year return is 6.3%, 5 year is 6.8% and since my investment started (2009), 8.0%...

Small part of my portfolio but it seems to be doing OK for me...
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Re: Zacks says sell Wellesley!?

Post by nisiprius »

livesoft wrote:Look at this year's performance and the performance of the long bonds that it holds. It has really cost folks money this year with the FOMC raising the FFR. This is expected to continue.
OK, I'm looking at it and I'm not seeing it. What am I missing?

This year, it's made 3.5% so far and the year isn't even half up.

Where's the place where it "has really cost folks money this year?" A raggedy edge, to be sure. But to my eyeball, I can't find any period of four months or more where it didn't make money.

Source


Image

Last ten years.
Image

Since inception (47 years).
Image

Looks good to me, and nothing grossly awful this year. What am I supposed to be seeing, livesoft? What would you compare it to?
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Re: Zacks says sell Wellesley!?

Post by nisiprius »

Morningstar is giving it five stars (for risk- and category-adjusted past performance), and a "gold" analyst rating.
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Re: Zacks says sell Wellesley!?

Post by livesoft »

nisiprius wrote:This year, it's made 3.5% so far and the year isn't even half up.
[...]
Looks good to me, and nothing grossly awful this year. What am I supposed to be seeing, livesoft? What would you compare it to?
Wellesley is about 40% stocks and 60% bonds. YTD is about 3.5%. Another fund with 40/60 asset allocation is LifeStrategy Conservative Growth with YTD about 4.9%. That's a relatively huge difference between the two 40/60 funds. One can even say that LS ConsGrowth is doing 40% better. :)

The LifeStrategy funds with their higher allocation to International equities have been doing quite well this year.

Is the Zacks recommendation important in the long run? No. But that's not what the OP asked.
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Re: Zacks says sell Wellesley!?

Post by MadDwag »

Zacks ratings are BS. Save money and headaches by tuning them and other "experts" out.
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Re: Zacks says sell Wellesley!?

Post by mortfree »

that's scary- I have 40% of my retirement savings in Wellesley. Age 40.


.
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Re: Zacks says sell Wellesley!?

Post by Sheepdog »

mortfree wrote:that's scary- I have 40% of my retirement savings in Wellesley. Age 40.


.
Not scary to me and Wellesley is the vehicle which gives me most of my annual income. And, I am over twice your age with an even higher percentage of savings.
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Re: Zacks says sell Wellesley!?

Post by Dancer »

For the last 10 years, Lifestrategy Conservative growth has returned 4.87%/year.

Wellesley 6.85%.

Might be the start of a long international bull market and Lifestrategy will beat for the next 10. Might not.

Wellesley is a solid conservative fund with a large value / corporate bond tilt.

Current duration is 6.5 years, so in line with total bonds 6.1.
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Re: Zacks says sell Wellesley!?

Post by iamlucky13 »

Did Zack say whether his reason is because his investment strategy changed, or because the fund itself changed?

Oh, right. It's based on short term trends being tracked by a company with a financial interest in getting you worried enough about short term trends you'll subscribe to their reports or hire them for investment management.
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Re: Zacks says sell Wellesley!?

Post by cinghiale »

Recommendations such as these are blunt instruments, and are written to gain attention, attract paid subscribers, and create buzz on the sponsor links.

I've held a rather modest position in Wellesley for a long, long time. It has "delivered" far more often than it has "disappointed."

In the end, ask yourself: What do these (or does this) Zacks writer(s) know that the seasoned managers of Wellesley Income Fund don't.
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Re: Zacks says sell Wellesley!?

Post by bgscms »

I only listen to a guy named Jack not Zacks!
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Re: Zacks says sell Wellesley!?

Post by BogleMelon »

I would never listen to someone who has a list of suggested funds to buy (Strong buy according to their classification), among which (the #1 fund) a fund with ER 2.78%!

https://www.zacks.com/funds/top-ranked- ... uoteribbon

http://www.morningstar.com/funds/XNAS/WCPSX/quote.html
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Re: Zacks says sell Wellesley!?

Post by finite_difference »

livesoft wrote:
nisiprius wrote:This year, it's made 3.5% so far and the year isn't even half up.
[...]
Looks good to me, and nothing grossly awful this year. What am I supposed to be seeing, livesoft? What would you compare it to?
Wellesley is about 40% stocks and 60% bonds. YTD is about 3.5%. Another fund with 40/60 asset allocation is LifeStrategy Conservative Growth with YTD about 4.9%. That's a relatively huge difference between the two 40/60 funds. One can even say that LS ConsGrowth is doing 40% better. :)

The LifeStrategy funds with their higher allocation to International equities have been doing quite well this year.

Is the Zacks recommendation important in the long run? No. But that's not what the OP asked.
Wellesley is 33% stock and 67% bond. And stock is outperforming bonds significantly this year.

I have read many posts here and the consensus seems to be that Vanguard Wellington 67/33 and its sister fund, Vanguard Wellesley 33/67, are highly recommended funds on here, despite being actively managed. Tune out the noise.
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Re: Zacks says sell Wellesley!?

Post by goingup »

I don't own Wellesley, but do own Wellington. If Zack's said sell Wellington I would not give it a thought. First of all, I'd never know about it because I don't follow Zack's. Wellesley will be around a lot longer that Zack's I suspect. That said, it's probably wise to own some international funds in your portfolio. :)
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Re: Zacks says sell Wellesley!?

Post by dbr »

Just so people know what this is: https://www.zacks.com/

That does not mean there is any value there whatsoever.
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Re: Zacks says sell Wellesley!?

Post by ponyboy »

Who's zacks? I also have wellesley...no complaints here. No plan of selling...have a nice day.
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Re: Zacks says sell Wellesley!?

Post by Levett »

I was unaware that Wellesley, to use a Dan Weiner term, was ever viewed as a "hot hand" fund.

Rumors of Wellesley's demise have been greatly exaggerated.

With $51.7 billion in assets, it appears its investors have stayed the course.

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Re: Zacks says sell Wellesley!?

Post by selftalk »

Again as Buffet wrote in his annual Berkshire report in 2014 I think it was " market forecasters will fill you ears but never your wallet."
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Re: Zacks says sell Wellesley!?

Post by livesoft »

finite_difference wrote:Wellesley is 33% stock and 67% bond. And stock is outperforming bonds significantly this year.

I have read many posts here and the consensus seems to be that Vanguard Wellington 67/33 and its sister fund, Vanguard Wellesley 33/67, are highly recommended funds on here, despite being actively managed. Tune out the noise.
It's a nitpick, but since you mentioned 33/67 twice, here is what Vanguard posts on its website for Wellesley Admiral class:
Image

Now if folks expected Wellesley to be 33% stocks and the managers have moved closer to 40% stocks, then that might be another reason to sell it.
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Re: Zacks says sell Wellesley!?

Post by finite_difference »

livesoft wrote:
finite_difference wrote:Wellesley is 33% stock and 67% bond. And stock is outperforming bonds significantly this year.

I have read many posts here and the consensus seems to be that Vanguard Wellington 67/33 and its sister fund, Vanguard Wellesley 33/67, are highly recommended funds on here, despite being actively managed. Tune out the noise.
It's a nitpick, but since you mentioned 33/67 twice, here is what Vanguard posts on its website for Wellesley Admiral class:
Image

Now if folks expected Wellesley to be 33% stocks and the managers have moved closer to 40% stocks, then that might be another reason to sell it.
So I guess that's what they mean by "about" -- since they are willing to let it float by 5%? I did not check the actual proportions. So if they have stayed this year at 38.5/61.5 then that is much closer to 40/60, and you comparison is much more apples to apples.
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Re: Zacks says sell Wellesley!?

Post by jpohio »

I have had this fund for 15 plus years, done very well for me. No intention of selling.
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Re: Zacks says sell Wellesley!?

Post by dwickenh »

Selling now would be performance chasing in livesoft's example of lifestrategy with it's foreign stock component. Wellesley is a long term investment that has shown to be a well managed, inexpensive, active fund. I have 20% of my portfolio in this fund. I also have 10% of my portfolio in foreign stock funds. I am not missing the surge in foreign stocks, but also did not miss the under-performance of those same foreign stocks in prior years.
My 20% is in a tax deferred account so TLH is not a concern.

This is a long term race, not a sprint. Traders will sprint and that is not me.

Best to you,

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Re: Zacks says sell Wellesley!?

Post by livesoft »

dwickenh wrote:Selling now would be performance chasing in livesoft's example of lifestrategy with it's foreign stock component.
Or maybe it is just about rebalancing? In 2016, Wellesley returned 8.16% while LifeStrategy Conservative Growth returned 5.96%. If one was only looking at 2016, then staying in Wellesley could be called performance chasing, couldn't it? :twisted:
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Re: Zacks says sell Wellesley!?

Post by dbr »

If Wellesley were really such a great fund people would not keep asking whether or not they should be invested in it.
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Re: Zacks says sell Wellesley!?

Post by livesoft »

Quite a lot of emotions come to the fore whenever discussing Wellesley and Wellington.
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Re: Zacks says sell Wellesley!?

Post by BHUser27 »

From this article...

"Who are the most (least) accurate stock gurus?"
http://www.cbsnews.com/news/who-are-the ... ock-gurus/

Emphasis mine...
The following is a summary of CXO's findings:

Across all forecasts, accuracy was worse than the proverbial flip of a coin -- just under 47 percent.
The average guru also had a forecasting accuracy of about 47 percent.

The distribution of forecasting accuracy by the gurus looks very much like the proverbial bell curve -- what you would expect from random outcomes. That makes it very difficult to tell if there is any skill present.
The highest accuracy score was 68 percent and the lowest was 22 percent.

There were many well-known forecasters among the "contestants." I've highlighted 10 of the more famous, most of whom I'm sure you'll recognize, along with their forecasting score.

James Dines, founder of The Dines Letter. According to his Website, "he is truly a living legend... one of the most-accurate and highly regarded Security Investment Analysts today." His forecasting accuracy score was 50 percent. Not quite the stuff of which legends are made.

Ben Zacks, a co-founder of well-known Zacks Investment Research and senior strategist and portfolio manager at Zacks Wealth Management Group. His score was 50 percent.
Nuff said
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Re: Zacks says sell Wellesley!?

Post by selftalk »

BHUser27, great article on the gurus. Everyone should read this and realize what J. Bogle said. He knows no one who can consistently predict the market. So many people refuse to believe that.
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Re: Zacks says sell Wellesley!?

Post by AllieTB1323 »

Vanguard Wellesley (VWIAX), Own a small position and haven't any plans to sell. Our timeline is measured in decades so the day to day noise isn't important. Reflexive trading raises costs and brings down the return.

Isn't Jack Bogle's advise something like "Don't do something; just stand there"?
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Re: Zacks says sell Wellesley!?

Post by Lobster »

BogleMelon wrote:I would never listen to someone who has a list of suggested funds to buy (Strong buy according to their classification), among which (the #1 fund) a fund with ER 2.78%!

https://www.zacks.com/funds/top-ranked- ... uoteribbon

http://www.morningstar.com/funds/XNAS/WCPSX/quote.html
But what better way can you imagine to turn $10,000 into $3,000 in such short order? Clearly Zacks is offering advice on how to accumulate a small fortune. First, start with a large fortune...
Submit to the relentless rules of humble arithmetic and avoid the tyranny of compounding costs.
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Re: Zacks says sell Wellesley!?

Post by lazydavid »

finite_difference wrote:So I guess that's what they mean by "about" -- since they are willing to let it float by 5%? I did not check the actual proportions. So if they have stayed this year at 38.5/61.5 then that is much closer to 40/60, and you comparison is much more apples to apples.
My understanding is the target for Wellesley is 35/65, and the target for Wellington is 65/35, but that they do drift just slightly. Wellington at the moment is 64.82% stock(82/18 US/Intl), 30.92% bonds, 3.33% Other, and 0.94% cash according to Morningstar.

I have a sizeable holding in Wellington--it makes up my wife's entire tIRA that she rolled over from a profit sharing account. The only change I intend to make to this is to gradually migrate to Wellesley as we get older.
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Re: Zacks says sell Wellesley!?

Post by parsi1 »

BHUser27 wrote:From this article...

"Who are the most (least) accurate stock gurus?"
http://www.cbsnews.com/news/who-are-the ... ock-gurus/

Emphasis mine...
The following is a summary of CXO's findings:

Across all forecasts, accuracy was worse than the proverbial flip of a coin -- just under 47 percent.
The average guru also had a forecasting accuracy of about 47 percent.

The distribution of forecasting accuracy by the gurus looks very much like the proverbial bell curve -- what you would expect from random outcomes. That makes it very difficult to tell if there is any skill present.
The highest accuracy score was 68 percent and the lowest was 22 percent.

There were many well-known forecasters among the "contestants." I've highlighted 10 of the more famous, most of whom I'm sure you'll recognize, along with their forecasting score.

James Dines, founder of The Dines Letter. According to his Website, "he is truly a living legend... one of the most-accurate and highly regarded Security Investment Analysts today." His forecasting accuracy score was 50 percent. Not quite the stuff of which legends are made.

Ben Zacks, a co-founder of well-known Zacks Investment Research and senior strategist and portfolio manager at Zacks Wealth Management Group. His score was 50 percent.
Nuff said

Jim Cramer, CNBC superstar. His score was 47 percent. :D
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Re: Zacks says sell Wellesley!?

Post by donaldfair71 »

livesoft wrote:Quite a lot of emotions come to the fore whenever discussing Wellesley and Wellington.
It does. I don't hold either but wouldn't mind holding them.

Back to discussion... Wouldn't Wellesly's lag of the LS fund be as much about international allocation as it is the bond composition? Even though I am a fan of both, I just assumed that when international upticked into outperforming domestic, W/W would begin to lag. Wellesely is only 6% internations, LS is at 17%.

Serious question: Is it safe to assume that in years foreign stocks outperform domestic, LS funds will outperform W/W of the same stock/bond makeup? 60/40 Lifestrategy is showing ~1.5% greater return than Wellington this year as well.
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Re: Zacks says sell Wellesley!?

Post by xjz »

BogleMelon wrote:I would never listen to someone who has a list of suggested funds to buy (Strong buy according to their classification), among which (the #1 fund) a fund with ER 2.78%!

https://www.zacks.com/funds/top-ranked- ... uoteribbon

http://www.morningstar.com/funds/XNAS/WCPSX/quote.html
Holy cow, am I reading this correctly? It looks like their peak-to-trough drawdown in the 2007-2008 recession was -96%...

I'm a fan of staying the course and all that, but I don't think I can even begin to imagine what my emotions would be if I watched a $100k investment become $4k in less than two years...
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Re: Zacks says sell Wellesley!?

Post by dwickenh »

livesoft wrote:
dwickenh wrote:Selling now would be performance chasing in livesoft's example of lifestrategy with it's foreign stock component.
Or maybe it is just about rebalancing? In 2016, Wellesley returned 8.16% while LifeStrategy Conservative Growth returned 5.96%. If one was only looking at 2016, then staying in Wellesley could be called performance chasing, couldn't it? :twisted:
No, it couldn't. It would be called "staying the course". Re-balancing between 2 balanced funds for a 3% difference would be costly with no real benefit. Even in a tax deferred fund, I don't see the benefit.

Opinions differ, but I respect your knowledge and willingness to help others.

Dan
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Re: Zacks says sell Wellesley!?

Post by dwickenh »

dbr wrote:If Wellesley were really such a great fund people would not keep asking whether or not they should be invested in it.
I hear the same questions about the 3 fund portfolio, but I think we all agree it is a good choice.

Best to you,

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Re: Zacks says sell Wellesley!?

Post by David Jay »

^^^ That title is the BH equivalent of click-bait. :happy
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Re: Zacks says sell Wellesley!?

Post by Levett »

Kinda surprising--click bait or not--that Wellesley's benchmarks have been overlooked. Benchmarks seem a basis for rational discussion. ;-)

So, without further ado, here's Vanguard:

**Weighted 65% bonds and 35% stocks. For bonds: Lehman U.S. Long Credit AA or Better Bond Index through March 31, 2000, and Bloomberg Barclays U.S. Credit A or Better Bond Index thereafter. For stocks: 26% S&P 500/Barra Value Index and 9% S&P Utilities Index through June 30, 1996, when the utilities component was split into the S&P Utilities Index (4.5%) and the S&P Telephone Index (4.5%); as of January 1, 2002, the S&P Telephone Index was replaced by the S&P Integrated Telecommunication Services Index; as of July 1, 2006, the S&P 500/Barra Value Index was replaced by the S&P 500/Citigroup Value Index; as of August 1, 2007, the three stock indexes were replaced by the FTSE High Dividend Yield Index

Wellesley continues to do what it's designed to do--and then some.

Lev
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Re: Zacks says sell Wellesley!?

Post by livesoft »

donaldfair71 wrote:Back to discussion... Wouldn't Wellesly's lag of the LS fund be as much about international allocation as it is the bond composition? Even though I am a fan of both, I just assumed that when international upticked into outperforming domestic, W/W would begin to lag. Wellesely is only 6% internations, LS is at 17%.

Serious question: Is it safe to assume that in years foreign stocks outperform domestic, LS funds will outperform W/W of the same stock/bond makeup? 60/40 Lifestrategy is showing ~1.5% greater return than Wellington this year as well.
Yes, foreign equities have made a difference so far this year. Whether it is safe to make the assumption you stated is another matter since the bonds that Wellesley uses could outperform the bonds that LS uses.

The 1.5% difference in YTD performance between Wellesley and LifeStrategy Conservative Growth just demonstrates that there are nuances in the same stocks:bonds asset allocation.

It also shows that one cannot predict the future. 2016 was better for Wellesley, but 2017 so far has been better for LifeStrategy CG.

Furthermore, think about that 1.5% difference. How else might that occur for a portfolio? One could have a 5% allocation to something that went up 30% more than the rest of the portfolio, or a 10% allocation to something that went up 15% more than the rest of the portfolio. For folks who have a little "play" account on the side, I cannot imagine that they get these extra gains of 15% to 30%. That might give one an idea on how significant a 1.5% difference really is.

It might also give folks paying 1% or more to advisors plus extra for expense ratios along with the added taxes something to think about.
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Re: Zacks says sell Wellesley!?

Post by whodidntante »

Shouldn't we all buy active funds then? Or is it just the W funds from Vanguard?
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Re: Zacks says sell Wellesley!?

Post by LK2012 »

Very happy with Wellesley in a portion of my retirement investments. Very reliable over the long haul.
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Re: Zacks says sell Wellesley!?

Post by willthrill81 »

dbr wrote:If Wellesley were really such a great fund people would not keep asking whether or not they should be invested in it.
So then owning the S&P 500 isn't so great since so many people have been coming here to ask whether they should sell it?
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Re: Zacks says sell Wellesley!?

Post by willthrill81 »

livesoft wrote:Look at this year's performance and the performance of the long bonds that it holds. It has really cost folks money this year with the FOMC raising the FFR. This is expected to continue.
Over the last ~23 years, there's only been a .29 correlation between Wellesley and Vanguard's Long-term Bond Index fund (VBLTX). That's hardly earth shattering. And digging back into the historical data, rising rates do not seem to have had a robustly negative impact on Wellesley's performance.

Of course Wellington will outperform Wellesley over the long-term due to its higher allocation to stocks. It's come at the price of higher variability as well. Besides a higher std. dev., Wellington lost 22.3% in 2008 vs. 9.84% for Wellesley.

Part of my EF is in Wellesley, and I've been very happy with it. I'm also investing about half of my HSA in Wellesley until the balance is enough to cover at least two years of our out-of-pocket maximum for health insurance.
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Re: Zacks says sell Wellesley!?

Post by jimb_fromATL »

dbr wrote:If Wellesley were really such a great fund people would not keep asking whether or not they should be invested in it.
They might if they were gullible enough to believe "experts" like Zack, whose track record according to some stats is not as good as flipping a coin, and who sounds convincing enough that he can have you pay him good money to guide you into a fund that has lost more than 90% in a single year. :(

jimb
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