60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

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tigerp
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60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by tigerp »

I just compared the total return for Vanguard balanced funds - VBIAX (balanced index fund - 60/40), VWELX (Wellington - 66/36) and VFORX (Vanguard Target Retirement 2040 Inv - 82/16)

The YTD performance of VWELX and VFROX is lagging by more than 4.4% compared to VBIAX even though VBIAX has the least % stock portfolio among all 3 funds. Seems Balanced fund are really DEAD ! see performance data for 3 funds in that order below. Thoughts ?

VG-Balanced-fund.jpg (776×183)

[link formatted by admin LadyGeek]
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sergeant
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by sergeant »

You are basing your statement on nine months of performance and comparing unlike things.
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CWhea1775
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by CWhea1775 »

Actually;

VBIAX 1 year 12.54%; 3 year 9.52%; 5 year 10.11%; 10 year 9.73%

vs.

VWELX 1 year 7.55%; 3 year 8.13%; 5 year 9.90%; 10 year 9.61%

I noticed the underperformance of Wellington vs. Balanced a while ago and sold out and into Balanced. Another active fund (albeit a great one) bites the dust.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by ruralavalon »

tigerp wrote: Sun Oct 04, 2020 1:19 pm I just compared the total return for Vanguard balanced funds - VBIAX (balanced index fund - 60/40), VWELX (Wellington - 66/36) and VFORX (Vanguard Target Retirement 2040 Inv - 82/16)

The YTD performance of VWELX and VFROX is lagging by more than 4.4% compared to VBIAX even though VBIAX has the least % stock portfolio among all 3 funds. Seems Balanced fund are really DEAD ! see performance data for 3 funds in that order below. Thoughts ?

VG-Balanced-fund.jpg (776×183)

[link formatted by admin LadyGeek]
Part of the difference is the international stock allocation.

Just 9 months of returns is not a meaningful way to compare funds.
For a more meaningful time frame see: Portfolio Visualizer, 2007-2020.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by nisiprius »

tigerp wrote: Sun Oct 04, 2020 1:19 pmSeems Balanced fund are really DEAD !
VBIAX is just as much a "balanced fund" as the others.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by LadyGeek »

tigerp - There's nothing wrong with your image, but it's pointing to a web page containing ads that are inappropriate for our younger readers. I formatted the link to point to the actual image instead of the web page containing the image.

For this site (ibb.co), right-click on the image then "Open image in new tab". Use that link instead.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by yules »

tigerp wrote: Sun Oct 04, 2020 1:19 pm I just compared the total return for Vanguard balanced funds - VBIAX (balanced index fund - 60/40), VWELX (Wellington - 66/36) and VFORX (Vanguard Target Retirement 2040 Inv - 82/16)

The YTD performance of VWELX and VFROX is lagging by more than 4.4% compared to VBIAX even though VBIAX has the least % stock portfolio among all 3 funds. Seems Balanced fund are really DEAD ! see performance data for 3 funds in that order below. Thoughts ?

VG-Balanced-fund.jpg (776×183)

[link formatted by admin LadyGeek]
The stock portion of Balanced Fund (vbiax) is total market. The stock portion of Wellington (vwelx) tilts value. Growth has been trouncing value this year, so vbiax, which has growth, will naturally be doing better than vwelx.

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tigerp
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by tigerp »

Thanks everyone. I think it would be a good idea to switch from Wellington to VBIAX unless Value comes back which is not happening for last 8 years
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1789
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by 1789 »

VBIAX - Imho it is a rock solid balanced index fund.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by Trader Joe »

tigerp wrote: Sun Oct 04, 2020 1:19 pm I just compared the total return for Vanguard balanced funds - VBIAX (balanced index fund - 60/40), VWELX (Wellington - 66/36) and VFORX (Vanguard Target Retirement 2040 Inv - 82/16)

The YTD performance of VWELX and VFROX is lagging by more than 4.4% compared to VBIAX even though VBIAX has the least % stock portfolio among all 3 funds. Seems Balanced fund are really DEAD ! see performance data for 3 funds in that order below. Thoughts ?

VG-Balanced-fund.jpg (776×183)

[link formatted by admin LadyGeek]
Thank you very much for your post. I really had no idea the significant differences in performance.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by sycamore »

As sergeant pointed out, that's only 9 months of performance. That's really not a good basis for deciding what funds to use. Better to decide on your Investment Policy Statement and Asset Allocation first, then pick the appropriate investments.

The image jpg in the OP is a screenshot from portfoliovisualizer.com. Here's a link to try the comparison yourself on portfoliovisualizer.com.

Change the time period to 2011-2020 and you'll see much closer race -- VBIAX is only ahead by 0.03% CAGR. Big deal :)
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by anon_investor »

1789 wrote: Sun Oct 04, 2020 7:48 pm VBIAX - Imho it is a rock solid balanced index fund.
+1.
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tigerp
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by tigerp »

+2 I agree
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tigerp
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by tigerp »

Seems VFORX has 32% international exposure but could not find international exposure for VBIAX and VWELX at Vanguard website

On similar note..what is the portfolio mix (5-6 vanguard funds) you are thinking for next 3-5 years in low interest rate, modest US equity gain expected and international may perform better.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by JnyVuko »

tigerp wrote: Sun Oct 04, 2020 9:18 pm Seems VFORX has 32% international exposure but could not find international exposure for VBIAX and VWELX at Vanguard website

On similar note..what is the portfolio mix (5-6 vanguard funds) you are thinking for next 3-5 years in low interest rate, modest US equity gain expected and international may perform better.
VTSAX, VBILX, VBTLX. and VCADX (CA state tax exempt muni). It's what I have now, have had for a while, and will continue to have. Staying the course. AA of 55/45 overall and a 1.5 year cash EF. I'm 60 and retired.I'm happy and sleep well at night......all things considered.
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tigerp
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by tigerp »

Thanks! I am 45 .equity exposure with an average risk profile. I am thinking VOO - 40%, VXUS - 20% , BND - 20%, VNQ - 10%, VYM 10%.

What are your thoughts?
Last edited by tigerp on Mon Oct 05, 2020 7:27 am, edited 1 time in total.
BalancedJCB19
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by BalancedJCB19 »

1789 wrote: Sun Oct 04, 2020 7:48 pm VBIAX - Imho it is a rock solid balanced index fund.
I agree. I just checked my account and this is what it has for my 10 year return. Rate of return
As of 09/30/2020 - 10.3%. I will hold this fund like I have in the past and ignore the noise.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by aristotelian »

I believe Vanguard Target Date and Lifestrategy funds contain substantial International allocations whereas Balanced Index does not. US Tech companies have outperformed the rest of the global market in 2020. As an active fund, I have no idea why Wellington is underperforming but I would expect any active fund to underperform at times.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by sycamore »

tigerp wrote: Sun Oct 04, 2020 9:18 pm Seems VFORX has 32% international exposure but could not find international exposure for VBIAX and VWELX at Vanguard website

On similar note..what is the portfolio mix (5-6 vanguard funds) you are thinking for next 3-5 years in low interest rate, modest US equity gain expected and international may perform better.
VBIAX is designed to invest only in US stocks and bonds.

For US vs international breakdown, use Morningstar. https://www.morningstar.com/funds/xnas/vwelx/portfolio shows Wellington as of June 30 has 53.96% in US stocks, 9.83% in ex-US stocks.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by dbr »

tigerp wrote: Sun Oct 04, 2020 9:18 pm Seems VFORX has 32% international exposure but could not find international exposure for VBIAX and VWELX at Vanguard website

On similar note..what is the portfolio mix (5-6 vanguard funds) you are thinking for next 3-5 years in low interest rate, modest US equity gain expected and international may perform better.
What it is will not be changed from what it has been the last 20 years and will be from now on. Before that there were enough changes in personal circumstances that the AA then is not relevant. Changing asset allocation according to what one thinks is happening for the next few years is probably not wise.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by arcticpineapplecorp. »

tigerp wrote: Sun Oct 04, 2020 7:44 pm Thanks everyone. I think it would be a good idea to switch from Wellington to VBIAX unless Value comes back which is not happening for last 8 years
sorry to be the grammar police, but it actually matters in investing.

so many people extrapolate from the recent past into the indefinite future.

you should have written "has not happened" rather than "is not happening".

nothing is happening. what will happen is unknown. all you know is what has happened. past is not prologue.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by midareff »

Their performance over the last ten years is virtually identical.
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tigerp
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by tigerp »

Thanks for morningstar link
.
sycamore wrote: Mon Oct 05, 2020 8:18 am
tigerp wrote: Sun Oct 04, 2020 9:18 pm Seems VFORX has 32% international exposure but could not find international exposure for VBIAX and VWELX at Vanguard website

On similar note..what is the portfolio mix (5-6 vanguard funds) you are thinking for next 3-5 years in low interest rate, modest US equity gain expected and international may perform better.
VBIAX is designed to invest only in US stocks and bonds.

For US vs international breakdown, use Morningstar. https://www.morningstar.com/funds/xnas/vwelx/portfolio shows Wellington as of June 30 has 53.96% in US stocks, 9.83% in ex-US stocks.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by tennisplyr »

I've had both Vanguard and Fidelity Balanced funds for well over 10 years and have no regrets.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by Whakamole »

tigerp wrote: Sun Oct 04, 2020 7:44 pm Thanks everyone. I think it would be a good idea to switch from Wellington to VBIAX unless Value comes back which is not happening for last 8 years
What else do you see in the crystal ball?
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by ruralavalon »

tigerp wrote: Sun Oct 04, 2020 7:44 pm Thanks everyone. I think it would be a good idea to switch from Wellington to VBIAX unless Value comes back which is not happening for last 8 years
Both are good funds. I don't know how to predict which will do better in the coming years.
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Re: 60/40 days are over? - Vanguard Balanced Fund -Inconsistent return

Post by tibbitts »

tigerp wrote: Sun Oct 04, 2020 7:44 pm Thanks everyone. I think it would be a good idea to switch from Wellington to VBIAX unless Value comes back which is not happening for last 8 years
Are you saying for the last 8 years or for at least 8 (more) years?
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