Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

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azanon
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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by azanon » Wed Oct 18, 2017 3:33 am

I wish they had announced what percent of the stocks/bonds would be foreign, and also whether they are going to currency hedge the foreign bonds.

(edit) I see in the strategy and policy that it states that the funds "will also invest in local currency bonds.", however in the summary prospectus it seems to imply that the fund will attempt to hedge the local currency.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by bowest » Wed Oct 18, 2017 1:49 pm

does anyone have a view or has anyone seen research on how tax efficient (or not) new balanced funds are as they accumulate assets?

Barring a sharp correction or crisis I'd think it should would be fairly efficient ex-dividends (certainly more so than Wellington) for quite a while as rebalancing can largely be managed by incoming fund flows given the smaller asset base. You're also not acquiring significant unrealized gains upon purchase.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by mevans154 » Wed Oct 18, 2017 2:22 pm

How will Global Wellington significantly differ from a Target Date fund like the Vanguard Target Retirement 2025 Fund which is currently 65% stocks and 35% bonds? Other than the Target Date Fund will shift allocation more conservative as time goes on do you think Global Wellington will be worth the extra 0.29% is expense fees?

Currently the Target Retirement 2025 Fund's allocation is:
Vanguard Total Stock Market Index Fund Investor Shares = 38.7%
Vanguard Total International Stock Index Fund Investor Shares = 25.6%
Vanguard Total Bond Market II Index Fund Investor Shares = 25.2%
Vanguard Total International Bond Index Fund Investor Shares = 10.5%
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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by Mr.BB » Wed Oct 18, 2017 2:32 pm

I just saw the funds when I logged on to Vanguard. I just don't understand investing in a product before the put what stock/bonds and percent's specifically are in the portfolios?
Last edited by Mr.BB on Wed Oct 18, 2017 2:43 pm, edited 1 time in total.
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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by garlandwhizzer » Wed Oct 18, 2017 2:33 pm

Both Vanguard W funds have long term impressive performance records for the niches in which they operate. I believe they have effectively selected attractive risk/reward tradeoffs with a conservative slant. Presumably their global funds will pursue the same strategies with a diversified global portfolio. For investors whose risk tolerance and preference for income aligns with their goals, they seem like reasonable choices particularly if you prefer one stop shopping choices. Their long record of success suggests that in this case, active management may be a rational choice for some investors.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by thelimocat » Wed Oct 18, 2017 3:38 pm

SO if one were to move into either one of these Globals would it cause you to get out of other international funds or reduce your exposure or just add for diversity? I am considering making one of these my international position for the future inside an IRA.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by azanon » Wed Oct 18, 2017 4:39 pm

Mr.BB wrote:
Wed Oct 18, 2017 2:32 pm
I just saw the funds when I logged on to Vanguard. I just don't understand investing in a product before the put what stock/bonds and percent's specifically are in the portfolios?
It's 65/35 for global wellington - global mix of both stocks and bonds, and 35/65 for global wellesley - also a global mix of stocks and bonds. Both will be actively managed by Wellington. I'm relatively sure the foreign stocks won't be hedged, but the foreign bonds will. They're probably going to reserve the right to change the % US allocation, but it'll be interesting to see what they start out with. Also, will be interesting to see what % of foreign will be in emerging market.

The guardrails are +/-5% though for those ratios.

The whole idea of active is so you don't have to worry about it more precisely than that. You pay them to worry about the tweaks.
Last edited by azanon on Wed Oct 18, 2017 4:42 pm, edited 1 time in total.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by Mr.BB » Wed Oct 18, 2017 4:42 pm

I would like to know more detail (I.e) what percent is in emerging markets, Asia or Europe, small or large cap..etc
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by Mr.BB » Wed Oct 18, 2017 4:42 pm

azanon wrote:
Wed Oct 18, 2017 4:39 pm
Mr.BB wrote:
Wed Oct 18, 2017 2:32 pm
I just saw the funds when I logged on to Vanguard. I just don't understand investing in a product before the put what stock/bonds and percent's specifically are in the portfolios?
It's 65/35 for global wellington - global mix of both stocks and bonds, and 35/65 for global wellesley - also a global mix of stocks and bonds. Both will be actively managed by Wellington. I'm relatively sure the foreign stocks won't be hedged, but the foreign bonds will. They're probably going to reserve the right to change the % US allocation, but it'll be interesting to see what they start out with.

The guardrails are +/-5% though for those ratios.

The whole idea of active is so you don't have to worry about it more precisely than that. You pay them to worry about the tweaks.
Last edited by Mr.BB on Wed Oct 18, 2017 4:45 pm, edited 1 time in total.
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azanon
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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by azanon » Wed Oct 18, 2017 4:44 pm

Mr.BB wrote:
Wed Oct 18, 2017 4:42 pm
I would like to know more detail (I.e) what percent is in emerging markets, Asia or Europe, small or large cap..etc
No small cap. Wellington/Wellesley is traditionally large cap value. Bonds are investment grade mostly (maybe a tad of treasury/agency, like the US version of Wellesley/Wellington)

No definites yet on % Europe/Asia/EM - I'm guessing they'll use market cap weighting similar to Global Equity. But my point earlier though is if you buy based upon an initial mix, and then expect that not to change, I'd probably recommend against doing that since that's more of an indexing mentality.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by thangngo » Wed Oct 18, 2017 5:22 pm

It's too expensive? If you already have 3 index fund portfolio, you can add large cap/small cap/value tilt if you want for a lot cheaper.

https://investornews.vanguard/2-new-fun ... INH%3A0323

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by azanon » Wed Oct 18, 2017 5:44 pm

thangngo wrote:
Wed Oct 18, 2017 5:22 pm
It's too expensive? If you already have 3 index fund portfolio, you can add large cap/small cap/value tilt if you want for a lot cheaper.

https://investornews.vanguard/2-new-fun ... INH%3A0323
What do you think would be a fair price for active management? Compared to life strategy (comparing admirals), it's an extra 18bp for global wellington, and 15bp for global wellesley. Just how cheap do you expect active management to be? But that's its competition at Vanguard, IMO.

Totally doing it yourself, is in another whole category, IMO. Now only is that indexing, but also add in there managing multiple funds, rebalancing when appropriate, and also additional behavioral investment risk. And then if you get that all right, you still might not beat it. Doesn't the US version of Wellington/Wellesley compare favorably vs. a do-it-yourself at portfoliovisualizer? It's been a while since I did this, but I think one time I actually tried to reverse engineer a similar index mix vs. those two funds, and I wasn't able to outperform them even if I could hand-pick the funds.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by thangngo » Wed Oct 18, 2017 6:04 pm

azanon wrote:
Wed Oct 18, 2017 5:44 pm
What do you think would be a fair price for active management? Compared to life strategy (comparing admirals), it's an extra 18bp for global wellington, and 15bp for global wellesley. Just how cheap do you expect active management to be? But that's its competition at Vanguard, IMO.

Totally doing it yourself, is in another whole category, IMO. Now only is that indexing, but also add in there managing multiple funds, rebalancing when appropriate, and also additional behavioral investment risk. And then if you get that all right, you still might not beat it. Doesn't the US version of Wellington/Wellesley compare favorably vs. a do-it-yourself at portfoliovisualizer? It's been a while since I did this, but I think one time I actually tried to reverse engineer a similar index mix vs. those two funds, and I wasn't able to outperform them even if I could hand-pick the funds.
I expect their cost would be the same for the old Wellington/Wellesley funds. I'm used to 4bp total stock funds and 7-12bp international ETF.

The issue about picking stocks is that you'll run into period that active management will be under-performing. This year, Wellington has been a disappointment so far. Combined with higher fund expense, one would kinda wish he owns low cost index fund.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by azanon » Wed Oct 18, 2017 6:18 pm

thangngo wrote:
Wed Oct 18, 2017 6:04 pm
azanon wrote:
Wed Oct 18, 2017 5:44 pm
What do you think would be a fair price for active management? Compared to life strategy (comparing admirals), it's an extra 18bp for global wellington, and 15bp for global wellesley. Just how cheap do you expect active management to be? But that's its competition at Vanguard, IMO.

Totally doing it yourself, is in another whole category, IMO. Now only is that indexing, but also add in there managing multiple funds, rebalancing when appropriate, and also additional behavioral investment risk. And then if you get that all right, you still might not beat it. Doesn't the US version of Wellington/Wellesley compare favorably vs. a do-it-yourself at portfoliovisualizer? It's been a while since I did this, but I think one time I actually tried to reverse engineer a similar index mix vs. those two funds, and I wasn't able to outperform them even if I could hand-pick the funds.
I expect their cost would be the same for the old Wellington/Wellesley funds. I'm used to 4bp total stock funds and 7-12bp international ETF.

The issue about picking stocks is that you'll run into period that active management will be under-performing. This year, Wellington has been a disappointment so far. Combined with higher fund expense, one would kinda wish he owns low cost index fund.
Oh yeah, you probably shouldn't have expected them to be the same. VG international bond fund is clearly more expensive than US counterparts, and I see even you're saying International stocks is more expensive. I'd have been shocked if they were the same.

There's probably the right thread for active vs. indexing debate here somewhere. Is this really the right one? As for underperformance this year, it's been documented than in late stage bull markets, growth stocks tend to outperform. That trend continues. For comparison, go back and explore how well large cap value did in the late 90s - then do the same examination once the 2000+ bear market started :beer

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by azanon » Wed Oct 18, 2017 7:10 pm

I find it interesting how they are doing the subscription period described at the bottom here: https://investornews.vanguard/2-new-fun ... rformance/

If the share price stays at $20/share and you buy a specific amount/# of shares, then how would you reap any of the returns in the money market funds that they say they are investing in during this period? Or will they just pay interest/dividends on the last day? I wish they would clearly state that, otherwise I might just wait until Nov 1 to invest.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by azanon » Wed Oct 18, 2017 10:23 pm

If you're interested, here's a link to a brief youtube video with Global Wellington's new fund manager, or manager of the equity component: https://www.youtube.com/watch?v=NasJfrBu4Xk

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by beardsworth » Wed Oct 18, 2017 10:46 pm

mevans154 wrote:
Wed Oct 18, 2017 2:22 pm
How will Global Wellington significantly differ from a Target Date fund like the Vanguard Target Retirement 2025 Fund which is currently 65% stocks and 35% bonds? Other than the Target Date Fund will shift allocation more conservative as time goes on do you think Global Wellington will be worth the extra 0.29% is expense fees?

Currently the Target Retirement 2025 Fund's allocation is:
Vanguard Total Stock Market Index Fund Investor Shares = 38.7%
Vanguard Total International Stock Index Fund Investor Shares = 25.6%
Vanguard Total Bond Market II Index Fund Investor Shares = 25.2%
Vanguard Total International Bond Index Fund Investor Shares = 10.5%
Assuming that Global Wellington follows the same bond profile as the long-running "domestic" Wellington, its bond holdings will consist heavily of corporates and only a smattering of Treasury issues.

The main bond component of the Target funds, as you've noted, is Total Bond Market Index, which, reflecting the U.S. bond market, has very large holdings in Treasury and federal agency bonds. Total International Bond Index likewise has large holdings in foreign government bonds, although they're perhaps not as solid in credit quality as the U.S. government holdings in Total Bond Market.

In any case, if Global Wellington follows the general profile of domestic Wellington, its overall credit quality will be somewhat lower than the credit quality of the corresponding Vanguard Target funds, and also lower than the Vanguard LifeStrategy funds, which also use the same total bond market index funds.

Prospective buyers of the new Global Wellington/Wellesley will, of course, have to decide how much this matters to them.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by azanon » Wed Oct 18, 2017 10:50 pm

For me, a vs. comparison to Lifestrategy is less about the credit quality of the bonds. I'm fairly neutral on that, since the pros and cons are pretty close. The bigger sell point of a Wellesley/Wellington, I think, is the value tilt of the stocks, particularly some 8+ years into a bull market.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by GaryA505 » Thu Oct 19, 2017 12:33 am

azanon wrote:
Wed Oct 18, 2017 5:44 pm
thangngo wrote:
Wed Oct 18, 2017 5:22 pm
It's too expensive? If you already have 3 index fund portfolio, you can add large cap/small cap/value tilt if you want for a lot cheaper.

https://investornews.vanguard/2-new-fun ... INH%3A0323
What do you think would be a fair price for active management? Compared to life strategy (comparing admirals), it's an extra 18bp for global wellington, and 15bp for global wellesley. Just how cheap do you expect active management to be? But that's its competition at Vanguard, IMO.

Totally doing it yourself, is in another whole category, IMO. Now only is that indexing, but also add in there managing multiple funds, rebalancing when appropriate, and also additional behavioral investment risk. And then if you get that all right, you still might not beat it. Doesn't the US version of Wellington/Wellesley compare favorably vs. a do-it-yourself at portfoliovisualizer? It's been a while since I did this, but I think one time I actually tried to reverse engineer a similar index mix vs. those two funds, and I wasn't able to outperform them even if I could hand-pick the funds.
Using PV, I found that this produced very similar results:

Wellesley Income
38% VTSMX
62% VBIIX

Wellington
62% VTSMX
38% VBIIX

The Wellington vs 62/38 VTSMX/VBIIX was the closest. These were both so close that I dumped my W&W for a mix of VTSMX & VBIIX to give me the AA I wanted.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by starry_night_s » Thu Oct 19, 2017 2:37 am

GaryA505 wrote:
Thu Oct 19, 2017 12:33 am
azanon wrote:
Wed Oct 18, 2017 5:44 pm
thangngo wrote:
Wed Oct 18, 2017 5:22 pm
It's too expensive? If you already have 3 index fund portfolio, you can add large cap/small cap/value tilt if you want for a lot cheaper.

https://investornews.vanguard/2-new-fun ... INH%3A0323
What do you think would be a fair price for active management? Compared to life strategy (comparing admirals), it's an extra 18bp for global wellington, and 15bp for global wellesley. Just how cheap do you expect active management to be? But that's its competition at Vanguard, IMO.

Totally doing it yourself, is in another whole category, IMO. Now only is that indexing, but also add in there managing multiple funds, rebalancing when appropriate, and also additional behavioral investment risk. And then if you get that all right, you still might not beat it. Doesn't the US version of Wellington/Wellesley compare favorably vs. a do-it-yourself at portfoliovisualizer? It's been a while since I did this, but I think one time I actually tried to reverse engineer a similar index mix vs. those two funds, and I wasn't able to outperform them even if I could hand-pick the funds.
Using PV, I found that this produced very similar results:

Wellesley Income
38% VTSMX
62% VBIIX

Wellington
62% VTSMX
38% VBIIX

The Wellington vs 62/38 VTSMX/VBIIX was the closest. These were both so close that I dumped my W&W for a mix of VTSMX & VBIIX to give me the AA I wanted.
Did some test using a portfolio visualizer. Compound annual growth during 1995-2017 (VBIIX started in 1994) with quarterly re-balance:

VWINX group
VWINX: 8.62%
VTSMX (38%) + VBIIX (62%): 8.10%

VWELX group
VWELX: 9.81%
VTSMX (62%) + VBIIX (38%): 8.95%

Even if the higher management fees were factored in, VWINX and VWELX appear to have an edge during this specific period. Admittedly, the edge of VWINX is quite small, with a chance of being statistically insignificant. But the edge of VWELX is larger and clearer, suggesting better returns brought by the management.

History doesn't guarantee future performance in different market environments. Yet compared with the US market, the Global market is likely less efficient and probably has more pitfalls & opportunities. A great management team should outperform in such an environment.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration

Post by azanon » Thu Oct 19, 2017 7:21 am

You'd call a 52 basis point advantage (even after the fees) over a measured 22 years, small? That amounted to a $5500 advantage over the measured period from just a 10K investment. Further, not mentioned is that Wellesley also had 1. lower SD 2. lower worst year 3. Higher Sharpe and 4. Higher Sortino ratios in that comparison.

And as you say, the gaps even wider for the Wellington comparison.

Thanks though for confirming wellesley/wellingtons outperformance despite a composite lower risk level (as measured by SD, Sharpe, Sortino, lowest worst year). Let's hope the global versions can pull off the same feat.

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Vanguard has 2 new funds

Post by jafcorrea » Thu Oct 19, 2017 6:30 pm

Vanguard Global Wellesley Income Fund Admiral Shares (VGYAX)

Vanguard Global Wellington Fund Admiral Shares (VGWAX)

[merged jafcorrea's thread into this existing thread - moderator prudent]
Thanks JC

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by mespap » Thu Oct 19, 2017 11:44 pm

I welcome this and am excited. I cannot wait. I have Wellington right now. :sharebeer

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by jdb » Fri Oct 20, 2017 8:02 am

OK, I’m in during the subscription period, at least enough for Admiral shares of both funds, exchanges from Wellesley account in IRA. Liked the video of the manager, she is a former mechanical engineer, and at Boglehead conference yesterday a Vanguard executive responding to an audience question gave strong support for the new funds, though since he apparently had overall responsibility for the funds not surprising. Anyway, Wellesley and Wellington long have been mainstays of my retirement accounts and willing to give them a try on the global stage.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by Castanea_d. » Fri Oct 20, 2017 11:23 am

If one invests now, during the subscription period, what happens when the fund goes "active" in a few weeks? My presumption is that there wouldn't be any significant "bumps" at the beginning unrelated to changes in the underlying securities that they purchase. I would hope that it is not like an equity IPO, which can have a lot of volatility on opening day.

It will be interesting to see how it goes.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by jjface » Fri Oct 20, 2017 11:39 am

Sorry if it is posted somewhere already but does anyone know the expected split between US and foreign holdings?

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by azanon » Fri Oct 20, 2017 11:51 am

Castanea_d. wrote:
Fri Oct 20, 2017 11:23 am
If one invests now, during the subscription period, what happens when the fund goes "active" in a few weeks? My presumption is that there wouldn't be any significant "bumps" at the beginning unrelated to changes in the underlying securities that they purchase. I would hope that it is not like an equity IPO, which can have a lot of volatility on opening day.
My understand is that once it goes live (Nov 2 I think), then they immediately begin purchasing stocks/bonds in the proportions to the fund's intentions. What I don't know is how fast do they plan to do it - will it be all on Nov 2, or will it take them a week or two to get fully invested. Also, I would assume they'd have to pay their portion of the spread for each security so there'd be that added extra cost vs. a fund that's already invested.

But I don't see any reason why I'd be volatile on the first day. If anything it'd be less volatile until fully invested.
Last edited by azanon on Fri Oct 20, 2017 11:53 am, edited 1 time in total.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by azanon » Fri Oct 20, 2017 11:52 am

jjface wrote:
Fri Oct 20, 2017 11:39 am
Sorry if it is posted somewhere already but does anyone know the expected split between US and foreign holdings?
I don't think anyone knows. I've tried to follow this fund's development closely, and I haven't seen this information released. Also they haven't said what proportion would be in emerging markets.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by columbia » Fri Oct 20, 2017 12:49 pm

I'm pretty interested in at least seeing the stock side of this. I assume that will include Novartis, Shell, BP, TOTAL SA, Panasonic, etc.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by thelimocat » Fri Oct 20, 2017 1:04 pm

azanon wrote:
Fri Oct 20, 2017 11:52 am
jjface wrote:
Fri Oct 20, 2017 11:39 am
Sorry if it is posted somewhere already but does anyone know the expected split between US and foreign holdings?
I don't think anyone knows. I've tried to follow this fund's development closely, and I haven't seen this information released. Also they haven't said what proportion would be in emerging markets.
All,
My guess is that it will be a couple of weeks before this thing really shakes out as they continue to purchase bonds/securities as money flows in. I am hoping they would use this as a vehicle into China markets if and when they are fully open. I hope they dial back on US holding if any as I can get those in Wellington now.

thelimocat

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by tj » Fri Oct 20, 2017 2:11 pm

thelimocat wrote:
Fri Oct 20, 2017 1:04 pm
azanon wrote:
Fri Oct 20, 2017 11:52 am
jjface wrote:
Fri Oct 20, 2017 11:39 am
Sorry if it is posted somewhere already but does anyone know the expected split between US and foreign holdings?
I don't think anyone knows. I've tried to follow this fund's development closely, and I haven't seen this information released. Also they haven't said what proportion would be in emerging markets.
All,
My guess is that it will be a couple of weeks before this thing really shakes out as they continue to purchase bonds/securities as money flows in. I am hoping they would use this as a vehicle into China markets if and when they are fully open. I hope they dial back on US holding if any as I can get those in Wellington now.

thelimocat
Its a global fund, not international, so I would expect a healthy amount of US.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by Happy2BeFree » Fri Oct 20, 2017 2:44 pm

If you check out VG's institutional site, there's more info, including benchmarks, which might help with the domestic/international split.

Click on each fund's link in the first paragraph, then click on the Fact Sheet in the right-hand column.

https://institutional.vanguard.com/VGAp ... ancedFunds

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by rj49 » Fri Oct 20, 2017 2:58 pm

--For those looking for income, the new funds might lower the already-low current yields, since the international corporate bond index currently yields 1.62%, versus 3.13% for the US investment grade bond index. Both current funds capture some of the biggest foreign yielding stocks, and both have some exposure to foreign bonds already.

--With a 36-yr-old bond bear market making Wellesley/Wellington historical returns look impressive and both the Fed and ECB committed to unwinding QE, I'd be reluctant to have my bonds locked into one fund with equities as a retiree in distribution mode, since bonds could prove to be a drag on returns instead of an enhancement, as they've been for decades. Conversely, if the stock market crashes and you need to sell, it would be easier if you had a separate bond fund, so you're not selling stocks low.

--It seems like performance/trend chasing, just as VG increased international allocations to TR and LS funds when international was doing well, and everyone from Malkiel to Swenson recommended a high allocation to REITs when they were outperforming everyone else and had a tempting yield.

--Both current funds have Microsoft as their biggest stock, which seems a misguided place for large part of one's wealth, and the current Wellesley only has 63 stocks, which also seems risky, without much reward, since the income in both funds doesn't significantly outperform that of total markets. Wellington has become an unwieldy behemoth that threw in the value towel to invest in Alphabet, Apple, and other growth stocks and seems like a closet index fund (while underperforming its relevant index for the past 5 years). To return to the good old days of 5% Wellesley yields, both stock and bond values would have to fall significantly. Then with the new funds you add currency risk, country risk, ECB decision risk, manager risk (trying to find value and profits in a world where everything is expensive, and the incredible pressure of untested managers trying to compete with two of the most venerable active funds in existence).

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by garlandwhizzer » Fri Oct 20, 2017 3:23 pm

The equity side of both funds concentrates on large cap quality stocks but only purchases them when they are perceived to be undervalued. LC VAL/QUAL, precisely the strategy that Buffett uses. In periods when growth outperforms value as in recent years, this strategy underperforms, but typically over long time frames and multiple market cycles it gets the last laugh. LC QUAL stocks tend to drop less in bear markets due to more consistent earnings and persistent dividend payouts. They tend to be less volatile than the market as a whole and less volatile than LC VAL alone. These new Vanguard funds may fit well into the portfolios of those who believe in INTL diversification, have a preference for income, and wish to dampen equity volatility. Wellington Management has demonstrated for decades that they know what they're doing. Although the future is unknown, my guess is that their success will continue into the future.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by azanon » Fri Oct 20, 2017 3:24 pm

rj,

> If this were an index fund, I'd be concerned about lower global bond yields. With a "3 man" team that's going to be hand-selecting the bonds, I trust that they will make good selections with less restraints afforded by a global fund, vs. a US centric one.

> I don't see how pointing out a 30-yr bond bull market has any special relevance to Wellesley/Wellington as compared to any other balanced fund. Their bonds are in the intermediate term duration category, so they're comparable enough to alternatives such as Lifestrategy or even Total Bond fund. Also, I think there's nothing to fear from low rates that might possibly rise as long as your average bond duration is shorter than your time horizon. In fact, if you know your time horizon is longer, you actually want the rates to go up. In the end, you'd have more $$. Also, regardless of whether stocks go up/down, or bonds go up/down, the whole great thing about any balanced fund is that it constantly buys low and sells high to keep the ratios the same.

> I totally disagree on the performance chasing comment. Performance chasers are clearly holding one specific asset class: US stocks. We're going on 8+ years of bull market in the US. International only just started to show a little sign of life. We'd need at least 2+ more good years in overseas stocks before we could even begin to call someone holding those performance chasers.

> The only thing i'd say about your last comment is, if one is going to be the kind of investor that's going to nit-pick individual security holdings, then an active fund is probably the last thing you should be buying. Instead, buy an index so you hold everything, or better yet, buy individual stocks and get exactly what you think is best since you know better than the active fund manager. You might be too knowledgeable about individual stocks for it to be worth it for you to pay someone to pick them.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by garlandwhizzer » Fri Oct 20, 2017 3:50 pm

rj49 wrote:
Wellington has become an unwieldy behemoth that threw in the value towel to invest in Alphabet, Apple, and other growth stocks and seems like a closet index fund (while underperforming its relevant index for the past 5 years). To return to the good old days of 5% Wellesley yields, both stock and bond values would have to fall significantly. Then with the new funds you add currency risk, country risk, ECB decision risk, manager risk (trying to find value and profits in a world where everything is expensive, and the incredible pressure of untested managers trying to compete with two of the most venerable active funds in existence).
I beg to differ. LT tech stocks including the ones you mention often have billions in cash on the balance sheet, consistently high levels of cash flow, wide moats around their business models and/or the cash to buy smaller firms that threaten their moats, plus robust and increasing divided payouts. The idea that AAPL whose current PE is 17.7 (lower by about 50% than the S&P 500) and has $ 256.8 billon in cash sitting on its balance sheet is a fly-by-night growth stock is laughable. Its strengths are the classic hallmarks of QUAL: consistent and growing earnings, increasing dividends, balance sheet strength, dominance in their industry, wide moat, etc.. Warren Buffett recognizes a quality/value stock when he sees one, and he currently owns well over 20 billion dollars of AAPL in Berkshire.

Our economy has changed and Wellington has responded. It may not be your father's idea of value, but the fact that they change as the economy does is in their favor IMO. They have navigated well through the Great Depression, massive inflation in the 1970s and 1980s, the Great Recession, the tech collapse, and multiple over recessions. Very few can claim that history. Part of the reason for that may be that they are capable of thinking out of the traditional box. IMO their track record earns them the benefit of the doubt.

Garland Whizzer

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by jjface » Fri Oct 20, 2017 6:39 pm

Happy2BeFree wrote:
Fri Oct 20, 2017 2:44 pm
If you check out VG's institutional site, there's more info, including benchmarks, which might help with the domestic/international split.

Click on each fund's link in the first paragraph, then click on the Fact Sheet in the right-hand column.

https://institutional.vanguard.com/VGAp ... ancedFunds
Thanks - that had some general info I hadn't seen.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by bob_m10 » Sat Oct 21, 2017 9:40 am

The target equity regional allocation for the Vanguard Global Wellington Fund is 57.0% North America, 30.9% Europe, 12.1% Pacific, and 0% Emerging Markets.

The target equity allocation for the Vanguard Global Wellesley Income Fund is 45.4% North America, 42.9% Europe, 6.2% Pacific, and 5.5% Emerging Markets.

https://seekingalpha.com/article/411478 ... sley-funds

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by azanon » Sat Oct 21, 2017 11:15 am

I'm not real crazy about the Wellington's chosen stock asset allocation. No emerging markets (wouldn't global include at least some?), and no preference for underweighting US, or overweighting Europe due to low CAPE values. Wellesley's manager is clearly preferring lower CAPE regions.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by discman017 » Sat Oct 21, 2017 2:15 pm

bob_m10 wrote:
Sat Oct 21, 2017 9:40 am
The target equity regional allocation for the Vanguard Global Wellington Fund is 57.0% North America, 30.9% Europe, 12.1% Pacific, and 0% Emerging Markets.

The target equity allocation for the Vanguard Global Wellesley Income Fund is 45.4% North America, 42.9% Europe, 6.2% Pacific, and 5.5% Emerging Markets.

https://seekingalpha.com/article/411478 ... sley-funds
Thanks for posting this. I would think the target equity allocation would be the same for both funds. I wonder why the substantial difference (more US and Pacific in Wellington, more Europe and EM in Wellesley). No EM in Global Wellington is especially surprising.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by thelimocat » Sat Oct 21, 2017 3:14 pm

bob_m10 wrote:
Sat Oct 21, 2017 9:40 am
The target equity regional allocation for the Vanguard Global Wellington Fund is 57.0% North America, 30.9% Europe, 12.1% Pacific, and 0% Emerging Markets.

The target equity allocation for the Vanguard Global Wellesley Income Fund is 45.4% North America, 42.9% Europe, 6.2% Pacific, and 5.5% Emerging Markets.

https://seekingalpha.com/article/411478 ... sley-funds
bob_m10,
Great info but I would really like to know where in the VG info this came from. I have scoured the docs and can find nothing to support these numbers. Do they indicate where they came from, SEC filings maybe? I am not a SA member so I can't drill down on the article.

Edited Post 3:38 pm : SA has written VG and received the numbers in their response to the request.

Edited Post Monday 1:30 pm
VG in response to that question from me to their Flagship Rep.

"At this time, the fund's allocation is not available to be viewed. I would
suggest that you keep checking back on the vanguard.com website as any
information that we receive will be posted."

They won't even give their Flagship customers info.
thelimocat

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by azanon » Mon Oct 23, 2017 9:01 pm

I thought I would share one thing I learned tonight playing around with the tools available at portfoliovisualizer.com. In short, for me to match the "risk" (measured by SD, drawdowns, worst year, etc.) of the approximate Global Wellesley fund (I used 1/2 proportions of large value and blend for both US/Foreign stock since that's where the US Wellesley falls in Morningstar box, and 1/2 hedged foreign bond, and 1/2 70% corporate/30%total bond for US bonds since that's US Wellesley's approximate breakdown), you'd need a 45/55 portfolio of non-value tilted Global stock, US total bond to match. And the 45/55 still didn't quite match the returns of the 35/65 proxy Global wellesley.

I just thought I'd mention that if you're considering these. So I'd say Global wellesley is approximately a 45/55 return/risk non-tilted, "total bond" portfolio, and Global Wellington is likely more 75/25 risk/return vs. a non-tilted/higher bond rated portfolio (though I didn't benchmark this to confirm). Does that make sense?

That all being the case, I'm personally opting for Global Wellesley. A proxy 45/55 is about global market weightings/risk, so I see no reason to try to make my portfolio work harder than a global portfolio. I'd rather just save more if I need more $$$.

If you've read Black Swans by Larry Swedroe, basically this same effect should occur to a lesser extent with these two funds. You don't need as much equity to match the expected risk/return of a non-tilted, higher quality bond portfolio.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by ps56k » Wed Oct 25, 2017 12:30 am

I just happen to stumble across these on my smartphone Vanguard App and reading the "news" section.

Here is
- the Global Wellington - https://personal.vanguard.com/us/funds/ ... IntExt=INT
- the Global Wellesley - https://personal.vanguard.com/us/funds/ ... IntExt=INT

I currently have Vanguard Wellesley, and some of the Vanguard International Stock Index and Vanguard International Bond Index -
Will have to look and compare, to see if it makes any sense to totally consolidate into the Global Wellesley Fund -

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by azanon » Wed Oct 25, 2017 6:58 am

ps56k wrote:
Wed Oct 25, 2017 12:30 am
I currently have Vanguard Wellesley, and some of the Vanguard International Stock Index and Vanguard International Bond Index - Will have to look and compare, to see if it makes any sense to totally consolidate into the Global Wellesley Fund -
If the allocations are reasonably close, I'd be all over just combining that via the applicable Global Wellington/wellesley fund and making your life a lot easier.

Those missing international pieces have always been the only thing holding me back from US wellington/wellesley funds. But now that they've added it, it should be adequately diversified. As I described above, Global wellesley should carry approximately the same risk/reward as a vanilla 45/55, which is right where I want to be on the risk/reward scale. I guess I mainly like that it matches, in approximation, a global market portfolio weighting/risk level.

Wellington is clearly stock tilted compared to a global portfolio, and I just don't see any reason to try to amp up return. I think it's better to just save more if you need more.
Last edited by azanon on Wed Oct 25, 2017 12:43 pm, edited 1 time in total.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by ps56k » Wed Oct 25, 2017 11:45 am

azanon wrote:
Wed Oct 25, 2017 6:58 am
If the allocations are reasonably close, I'd be all over just combining that via the applicable Global Wellington/wellesley fund and making your life a lot easier.
The other thing I forgot about - the logistics - I would have to SELL my existing funds and transfer into the new Global fund.
The Cap Gains might not make the ordeal worth it -

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by azanon » Wed Oct 25, 2017 12:42 pm

ps56k wrote:
Wed Oct 25, 2017 11:45 am
azanon wrote:
Wed Oct 25, 2017 6:58 am
If the allocations are reasonably close, I'd be all over just combining that via the applicable Global Wellington/wellesley fund and making your life a lot easier.
The other thing I forgot about - the logistics - I would have to SELL my existing funds and transfer into the new Global fund.
The Cap Gains might not make the ordeal worth it -
Oh so you're dealing with taxables. I know that's a whole other animal. I'm 90+% tax-advantaged accounts so I've always bought and sold at will.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by Eric76 » Wed Oct 25, 2017 12:52 pm

Naming the funds "Wellesley" and "Wellington" strikes me as a cheap marketing gimmick; as does splashing them all over the VG website when I log in and log out.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by azanon » Wed Oct 25, 2017 3:36 pm

How do you figure that, Eric? It will use the same investing philosophy on both the stock and bond side, AND will be managed by Wellington. In principle, the only deviation is that they will extend the stock and bond purchases globally. In fact, I believe somewhere I recall seeing or hearing that it is reasonable to expect considerable overlap (I'm paraphrasing) with the holdings of the US and Global variants of Wellington and Wellesley.

So I would say it would be deceptive had they use the same philosophy except just adding global investing, but to have outright changed the names.

Now don't get me wrong, I'm not saying there's not a marketing advantage to having that name though. As well as the US versions have performed, there's just no way around that!

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by azanon » Wed Nov 01, 2017 10:04 am

Well, the launch for both of these is tomorrow. I'll be curious to see how much money both attracted for the initial launch, and also how long it takes for the funds to get fully invested.

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Re: Vanguard's Global Wellesley Income and Global Wellington Funds in registration [now available]

Post by SirRunsabit » Wed Nov 01, 2017 8:33 pm

Can’t wait.
Hi!

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