Wellesley alternative for taxable acct.?

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troubleshooter
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Wellesley alternative for taxable acct.?

Post by troubleshooter » Sun Jul 08, 2018 8:35 am

Hello everyone,
Is there an alternative option to mirror the Wellesley Income (VWIAX) that can be placed in a taxable acct.?
Is it possible to construct your own Wellesley style fund, using the Tax-Managed or Tax-Exempt bond funds, for
the 60% bond side. As for the 40% stock side I am at a loss.
Thank you

DarkHelmetII
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Re: Wellesley alternative for taxable acct.?

Post by DarkHelmetII » Sun Jul 08, 2018 8:44 am

on stock can go 40% VFIAX (S&P 500) to keep it simple. If you want to replicate the intn'l bend to Wellesley throw in some VTIAX.

update: per subsequent posts a value fund rather than blended S&P 500 would be purer / closer to true wellesley
Last edited by DarkHelmetII on Sun Jul 08, 2018 8:47 am, edited 1 time in total.

retiredjg
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Re: Wellesley alternative for taxable acct.?

Post by retiredjg » Sun Jul 08, 2018 8:45 am

You could use a Large Cap Value Index fund for most of the stocks and a total international for a little of the stocks. Whether you need tax-exempt bonds depends on your income and tax bracket. Are you sure you need them?

columbia
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Re: Wellesley alternative for taxable acct.?

Post by columbia » Sun Jul 08, 2018 8:52 am

Would the tax benefits of avoiding Wellesley outweigh the simplicity of just owning Wellesley? That’s a non-math question, of course.

Only you can answer that for yourself.

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linenfort
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Re: Wellesley alternative for taxable acct.?

Post by linenfort » Sun Jul 08, 2018 10:47 am

It is, after all, an income fund.
If you plan to spend the income, don’t let the tax tail wag the investing dog.
If you don’t plan to spend the income, you don’t want to mirror Wellesley in taxable, probably.
Is it too early for an all-bond-portfolio thread?

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grabiner
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Re: Wellesley alternative for taxable acct.?

Post by grabiner » Sun Jul 08, 2018 7:57 pm

If you want just one fund, LifeStrategy Conservative Growth has a similar allocation, and would be OK in a low tax bracket.

If you want to replicate Wellesley's value bias, use Value Index for the stock portion, and either a corporate or muni fund for the bond portion depending on your tax bracket.
Wiki David Grabiner

jjface
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Re: Wellesley alternative for taxable acct.?

Post by jjface » Sun Jul 08, 2018 8:33 pm

There are no alternatives that will give you what ever it is you are looking for in wellesley. If you want wellesley then you have to decide if the tax situation is worth it. If not then pick something else.

MJW
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Re: Wellesley alternative for taxable acct.?

Post by MJW » Mon Jul 09, 2018 11:12 am

jjface wrote:
Sun Jul 08, 2018 8:33 pm
There are no alternatives that will give you what ever it is you are looking for in wellesley. If you want wellesley then you have to decide if the tax situation is worth it. If not then pick something else.
Exactly. If one is high on Wellesley, an actively-managed fund, it should be because they believe in the strategy employed by the fund managers and have a strong conviction about the prospects of holding that fund in lieu of other options. The suggestion of using a similar stock/bond ratio without the same underlying strategy is not an "alternative" to Wellesley; it's just a different approach. If your goal is simply to have the same stock/bond ratio, that can be easily accomplished with more tax-efficient options. If your goal is to replicate the performance of Wellesley with more tax-efficient options, there are certainly no guarantees you will achieve that.

troubleshooter
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Re: Wellesley alternative for taxable acct.?

Post by troubleshooter » Mon Jul 09, 2018 12:30 pm

MJW wrote:
Mon Jul 09, 2018 11:12 am
jjface wrote:
Sun Jul 08, 2018 8:33 pm
There are no alternatives that will give you what ever it is you are looking for in wellesley. If you want wellesley then you have to decide if the tax situation is worth it. If not then pick something else.
Exactly. If one is high on Wellesley, an actively-managed fund, it should be because they believe in the strategy employed by the fund managers and have a strong conviction about the prospects of holding that fund in lieu of other options. The suggestion of using a similar stock/bond ratio without the same underlying strategy is not an "alternative" to Wellesley; it's just a different approach. If your goal is simply to have the same stock/bond ratio, that can be easily accomplished with more tax-efficient options. If your goal is to replicate the performance of Wellesley with more tax-efficient options, there are certainly no guarantees you will achieve that.
MJW,

I believe you nailed it exactly. After backtesting (with portfolio visualizer) tons of other scenarios, VG Target funds, all-in-one funds, 3-fund, individual funds, etc., Wellesley always seemed to outperform any other fund (less risk/steady returns). I just seem to feel comfortable with the 'strategy' of Wellesley (40/60). Also, it always seemed to be the only fund that had the fewest negative return years when backtested.
The challenge I am having is that after maxing out our 401k's and Roth's (no more room in tax advantaged acct's), I have a lump sum amount over $1M that has to be placed in taxable acct's. So yes, even bonds have to be in the taxable acct.
So, I am just figuring to place Wellesley (not tax-efficient) along with some other 'tax-efficient' fund options, in my taxable acct., possibly just don't reinvest the div./capital-gains pertaining to the Wellesley fund and just pay the taxes generated being in a 12% tax rate.

Thank you

troubleshooter
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Re: Wellesley alternative for taxable acct.?

Post by troubleshooter » Mon Jul 09, 2018 12:36 pm

columbia wrote:
Sun Jul 08, 2018 8:52 am
Would the tax benefits of avoiding Wellesley outweigh the simplicity of just owning Wellesley? That’s a non-math question, of course.

Only you can answer that for yourself.
Columbia,

Well said, I believe the 'simplicity' of the Wellesley fund (less risk/steady returns) to me, would probably outweigh
the tax issue I may cause myself.
Thank you

MJW
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Re: Wellesley alternative for taxable acct.?

Post by MJW » Mon Jul 09, 2018 12:43 pm

troubleshooter wrote:
Mon Jul 09, 2018 12:30 pm
MJW wrote:
Mon Jul 09, 2018 11:12 am
jjface wrote:
Sun Jul 08, 2018 8:33 pm
There are no alternatives that will give you what ever it is you are looking for in wellesley. If you want wellesley then you have to decide if the tax situation is worth it. If not then pick something else.
Exactly. If one is high on Wellesley, an actively-managed fund, it should be because they believe in the strategy employed by the fund managers and have a strong conviction about the prospects of holding that fund in lieu of other options. The suggestion of using a similar stock/bond ratio without the same underlying strategy is not an "alternative" to Wellesley; it's just a different approach. If your goal is simply to have the same stock/bond ratio, that can be easily accomplished with more tax-efficient options. If your goal is to replicate the performance of Wellesley with more tax-efficient options, there are certainly no guarantees you will achieve that.
MJW,

I believe you nailed it exactly. After backtesting (with portfolio visualizer) tons of other scenarios, VG Target funds, all-in-one funds, 3-fund, individual funds, etc., Wellesley always seemed to outperform any other fund (less risk/steady returns). I just seem to feel comfortable with the 'strategy' of Wellesley (40/60). Also, it always seemed to be the only fund that had the fewest negative return years when backtested.
The challenge I am having is that after maxing out our 401k's and Roth's (no more room in tax advantaged acct's), I have a lump sum amount over $1M that has to be placed in taxable acct's. So yes, even bonds have to be in the taxable acct.
So, I am just figuring to place Wellesley (not tax-efficient) along with some other 'tax-efficient' fund options, in my taxable acct., possibly just don't reinvest the div./capital-gains pertaining to the Wellesley fund and just pay the taxes generated being in a 12% tax rate.

Thank you
You aren't in a high tax bracket so it isn't terrible, but if you're set on Wellesley what is stopping you from holding it in your IRA?

troubleshooter
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Re: Wellesley alternative for taxable acct.?

Post by troubleshooter » Mon Jul 09, 2018 12:57 pm

grabiner wrote:
Sun Jul 08, 2018 7:57 pm
If you want just one fund, LifeStrategy Conservative Growth has a similar allocation, and would be OK in a low tax bracket.

If you want to replicate Wellesley's value bias, use Value Index for the stock portion, and either a corporate or muni fund for the bond portion depending on your tax bracket.
grabiner,

I did look into LS Conservative Growth due to the 40/60 AA, along with the Target funds, and others. However, after backtesting, the Wellesley fund always seemed to outperform the others (less risk/steady returns). With over $1M in
a lump sum that has to be placed in a taxable acct. (401k's, Roth's maxed out), and being in a 12% tax bracket, it seems
that no matter which way I go, I will be causing myself a tax issue. I guess I am just trying to 'lessen' the tax hit.

Thank you for your time.

troubleshooter
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Re: Wellesley alternative for taxable acct.?

Post by troubleshooter » Mon Jul 09, 2018 1:05 pm

MJW wrote:
Mon Jul 09, 2018 12:43 pm
troubleshooter wrote:
Mon Jul 09, 2018 12:30 pm
MJW wrote:
Mon Jul 09, 2018 11:12 am
jjface wrote:
Sun Jul 08, 2018 8:33 pm
There are no alternatives that will give you what ever it is you are looking for in wellesley. If you want wellesley then you have to decide if the tax situation is worth it. If not then pick something else.
Exactly. If one is high on Wellesley, an actively-managed fund, it should be because they believe in the strategy employed by the fund managers and have a strong conviction about the prospects of holding that fund in lieu of other options. The suggestion of using a similar stock/bond ratio without the same underlying strategy is not an "alternative" to Wellesley; it's just a different approach. If your goal is simply to have the same stock/bond ratio, that can be easily accomplished with more tax-efficient options. If your goal is to replicate the performance of Wellesley with more tax-efficient options, there are certainly no guarantees you will achieve that.
MJW,

I believe you nailed it exactly. After backtesting (with portfolio visualizer) tons of other scenarios, VG Target funds, all-in-one funds, 3-fund, individual funds, etc., Wellesley always seemed to outperform any other fund (less risk/steady returns). I just seem to feel comfortable with the 'strategy' of Wellesley (40/60). Also, it always seemed to be the only fund that had the fewest negative return years when backtested.
The challenge I am having is that after maxing out our 401k's and Roth's (no more room in tax advantaged acct's), I have a lump sum amount over $1M that has to be placed in taxable acct's. So yes, even bonds have to be in the taxable acct.
So, I am just figuring to place Wellesley (not tax-efficient) along with some other 'tax-efficient' fund options, in my taxable acct., possibly just don't reinvest the div./capital-gains pertaining to the Wellesley fund and just pay the taxes generated being in a 12% tax rate.

Thank you
You aren't in a high tax bracket so it isn't terrible, but if you're set on Wellesley what is stopping you from holding it in your IRA?
MJW,
You are correct, we did place Wellesley in both of our Roth's.

retiredjg
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Re: Wellesley alternative for taxable acct.?

Post by retiredjg » Mon Jul 09, 2018 1:29 pm

troubleshooter wrote:
Mon Jul 09, 2018 12:57 pm
I guess I am just trying to 'lessen' the tax hit.
I'm afraid the way to lessen the tax hit is to NOT put Wellesley into taxable. What's the point of getting higher performance if you are paying more in taxes?

There are things that are very tax efficient. Wellesley is definitely not one of them.

You might want to post your entire situation in a manner that people could help you with it. See the link at the bottom of this message for how to do that.

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linenfort
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Re: Wellesley alternative for taxable acct.?

Post by linenfort » Mon Jul 09, 2018 1:54 pm

retiredjg wrote:
Mon Jul 09, 2018 1:29 pm
You might want to post your entire situation in a manner that people could help you with it. See the link at the bottom of this message for how to do that.
+1, let's get the whole picture in a new thread because I have the same lump sum in taxable, plenty of corporate bonds, treasury notes and dividend-paying stocks in taxable, and no tax issues. 15% Federal bracket. (low taxable income).
Is it too early for an all-bond-portfolio thread?

FactualFran
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Re: Wellesley alternative for taxable acct.?

Post by FactualFran » Mon Jul 09, 2018 2:00 pm

troubleshooter wrote:
Sun Jul 08, 2018 8:35 am
Is there an alternative option to mirror the Wellesley Income (VWIAX) that can be placed in a taxable acct.?
Is it possible to construct your own Wellesley style fund, using the Tax-Managed or Tax-Exempt bond funds, for
the 60% bond side. As for the 40% stock side I am at a loss.
For the stock side use a combination of the Vanguard Tax-Managed Capital Appreciation and Vanguard Tax-Managed Small-Cap funds. Another possibility is to use the 50/50 stock/bond Vanguard Tax-Managed Balanced fund. If you feel strongly about having a 40/60 allocation, combine it with a tax-exempt bond fund.

The answer depends in part on exactly what you mean by a Wellesley style fund. To some, Wellesley style is not only the 40/60 allocation but the having stocks with higher than average dividend yield.

aristotelian
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Re: Wellesley alternative for taxable acct.?

Post by aristotelian » Mon Jul 09, 2018 4:06 pm

jjface wrote:
Sun Jul 08, 2018 8:33 pm
There are no alternatives that will give you what ever it is you are looking for in wellesley. If you want wellesley then you have to decide if the tax situation is worth it. If not then pick something else.
I think OP is asking what is the "something else"?

OP could consider something like 40% Vanguard Total Stock Market Index, 30% Vanguard Intermediate Tax Exempt Bond, 20% Vanguard Intermediate Treasury, and 10% Vanguard Short Term Corporate Bond.

troubleshooter
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Re: Wellesley alternative for taxable acct.?

Post by troubleshooter » Mon Jul 09, 2018 9:19 pm

FactualFran wrote:
Mon Jul 09, 2018 2:00 pm
troubleshooter wrote:
Sun Jul 08, 2018 8:35 am
Is there an alternative option to mirror the Wellesley Income (VWIAX) that can be placed in a taxable acct.?
Is it possible to construct your own Wellesley style fund, using the Tax-Managed or Tax-Exempt bond funds, for
the 60% bond side. As for the 40% stock side I am at a loss.
For the stock side use a combination of the Vanguard Tax-Managed Capital Appreciation and Vanguard Tax-Managed Small-Cap funds. Another possibility is to use the 50/50 stock/bond Vanguard Tax-Managed Balanced fund. If you feel strongly about having a 40/60 allocation, combine it with a tax-exempt bond fund.

The answer depends in part on exactly what you mean by a Wellesley style fund. To some, Wellesley style is not only the 40/60 allocation but the having stocks with higher than average dividend yield.
FactualFran,
Sorry everyone if I am not clear on my thinking, I am still a bit new to the BH arena. I just thought, looking at how the Wellesley fund has had only 4 negative return years, in over 30 years, and due to that success, someone (Vanguard) would have figured out a way to construct it's own..."tax-efficient"...Wellesley (40/60) style fund (using, I assume, a Total Stock Market along with a Tax-Exempt or Tax-Managed type of fund) that actually does mirror the Wellesley history of 'less risk and steady returns'. And thus, being "tax-efficient", this 'fund' could be placed in a taxable account.
Since, after a person has maxed out their 401k's, Roth's, etc., and they may still have more money they wish to invest, will have to put that money into a taxable acct.
Thank you for your time.

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grabiner
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Re: Wellesley alternative for taxable acct.?

Post by grabiner » Mon Jul 09, 2018 10:16 pm

aristotelian wrote:
Mon Jul 09, 2018 4:06 pm
jjface wrote:
Sun Jul 08, 2018 8:33 pm
There are no alternatives that will give you what ever it is you are looking for in wellesley. If you want wellesley then you have to decide if the tax situation is worth it. If not then pick something else.
I think OP is asking what is the "something else"?

OP could consider something like 40% Vanguard Total Stock Market Index, 30% Vanguard Intermediate Tax Exempt Bond, 20% Vanguard Intermediate Treasury, and 10% Vanguard Short Term Corporate Bond.
The OP is in too low a tax bracket for munis (12%), and should use Treasuries or even corporate bonds for the taxable bond portion.

The main issue is what to do with the stocks. Total Stock Market Index is better than the tax-managed funds in such a low tax bracket, as the lower expenses more than compensate for the tax difference. And Total International has a negative tax cost, with the foreign tax credit exceeding the tax on dividends. But as long as he stays in the 12% bracket, tax efficiency for stocks is less of an issue, as long-term capital gains will not be taxed (except for state tax and possibly making more SS taxable).
Wiki David Grabiner

retiredjg
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Re: Wellesley alternative for taxable acct.?

Post by retiredjg » Tue Jul 10, 2018 6:14 am

Troubleshooter, if you are in the 12% tax bracket, you don't really need to worry about tax-efficiency. But if you have an additional $1million to add to your portfolio, you may not longer be in the 12% tax bracket in the future and you might need to worry about tax-efficiency.

There is not nearly enough information to help you reliably.

Vanguard does have a Tax Managed Balanced Fund, which is at about 50% stock. However, it is very different from Wellesley in the type of stocks it contains (blend instead of value). In spite of the fact that you like Wellesley, I'm not sure you are actually looking for something classified as "value".

Edited to add.....it is like you have told us you want to buy a blue couch, but you don't want the fabric on the couch to have any blue in it. It would be helpful to know just what you want, not what you think you want.

FactualFran
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Re: Wellesley alternative for taxable acct.?

Post by FactualFran » Tue Jul 10, 2018 2:05 pm

troubleshooter wrote:
Mon Jul 09, 2018 9:19 pm

FactualFran,
Sorry everyone if I am not clear on my thinking, I am still a bit new to the BH arena. I just thought, looking at how the Wellesley fund has had only 4 negative return years, in over 30 years, and due to that success, someone (Vanguard) would have figured out a way to construct it's own..."tax-efficient"...Wellesley (40/60) style fund (using, I assume, a Total Stock Market along with a Tax-Exempt or Tax-Managed type of fund) that actually does mirror the Wellesley history of 'less risk and steady returns'. And thus, being "tax-efficient", this 'fund' could be placed in a taxable account.
In my opinion, a reason why the Wellesley fund has had only 4 negative return years is because of the tax-inefficient investment it uses: higher than average dividend yield stocks and higher quality taxable bonds. A combination of 80% Vanguard Tax-Managed Balanced fund and 20% Vanguard Intermediate-Term Tax-Exempt fund has a 40/60 stock/bond allocation. However, the 2008 total return of that combination would have been -14.68%, while the total return of Wellesley was -9.84%.

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grabiner
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Re: Wellesley alternative for taxable acct.?

Post by grabiner » Tue Jul 10, 2018 6:34 pm

retiredjg wrote:
Tue Jul 10, 2018 6:14 am
Vanguard does have a Tax Managed Balanced Fund, which is at about 50% stock. However, it is very different from Wellesley in the type of stocks it contains (blend instead of value). In spite of the fact that you like Wellesley, I'm not sure you are actually looking for something classified as "value".
The bonds in this fund are munis, which are not good investments in a 12% tax bracket. An investor in a low tax bracket should hold taxable bonds, which are likely to have a better after-tax return than munis of comparable risk.
Wiki David Grabiner

retiredjg
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Re: Wellesley alternative for taxable acct.?

Post by retiredjg » Tue Jul 10, 2018 6:51 pm

grabiner wrote:
Tue Jul 10, 2018 6:34 pm
retiredjg wrote:
Tue Jul 10, 2018 6:14 am
Vanguard does have a Tax Managed Balanced Fund, which is at about 50% stock. However, it is very different from Wellesley in the type of stocks it contains (blend instead of value). In spite of the fact that you like Wellesley, I'm not sure you are actually looking for something classified as "value".
The bonds in this fund are munis, which are not good investments in a 12% tax bracket. An investor in a low tax bracket should hold taxable bonds, which are likely to have a better after-tax return than munis of comparable risk.
I agree. If the poster stays in the 12% tax bracket or other low tax bracket but that is not clear at this point.

This is part of what I mean by asking for a blue couch that has no blue in it. It is hard to know exactly what our poster wants.


S/he has asked for something and has also asked for the opposite of that something. A value stock fund like Wellesley? Or a Stock fund that is tax efficient? Taxable bonds like Wellesley or munis which would be tax-efficient?

We need to see a bigger picture and we need to know what actually is important to this poster rather than what this poster thinks might be important.
Last edited by retiredjg on Wed Jul 11, 2018 6:11 am, edited 1 time in total.

MotoTrojan
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Re: Wellesley alternative for taxable acct.?

Post by MotoTrojan » Tue Jul 10, 2018 9:23 pm

Your reason to want this fund is flawed.

troubleshooter
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Re: Wellesley alternative for taxable acct.?

Post by troubleshooter » Wed Jul 11, 2018 11:48 pm

retiredjg wrote:
Tue Jul 10, 2018 6:51 pm
grabiner wrote:
Tue Jul 10, 2018 6:34 pm
retiredjg wrote:
Tue Jul 10, 2018 6:14 am
Vanguard does have a Tax Managed Balanced Fund, which is at about 50% stock. However, it is very different from Wellesley in the type of stocks it contains (blend instead of value). In spite of the fact that you like Wellesley, I'm not sure you are actually looking for something classified as "value".
The bonds in this fund are munis, which are not good investments in a 12% tax bracket. An investor in a low tax bracket should hold taxable bonds, which are likely to have a better after-tax return than munis of comparable risk.
I agree. If the poster stays in the 12% tax bracket or other low tax bracket but that is not clear at this point.

This is part of what I mean by asking for a blue couch that has no blue in it. It is hard to know exactly what our poster wants.


S/he has asked for something and has also asked for the opposite of that something. A value stock fund like Wellesley? Or a Stock fund that is tax efficient? Taxable bonds like Wellesley or munis which would be tax-efficient?

We need to see a bigger picture and we need to know what actually is important to this poster rather than what this poster thinks might be important.
retiredjg,
If I am confusing you please let me explain why I mention the Wellesley fund. I am looking for the historic "returns" of
Wellesley, since the annual "returns" (4 negative years over a 30 year period) seem to outperform most other funds.
Or as better stated by MJW above, to "replicate the performance of Wellesley with more tax-efficient options."
All the while, remembering this will be for a "taxable acct."

So, I am looking for a more "tax-efficient" fund mixture, 40/60, that I can place in my taxable acct., nothing more.
Since I could not find a 40/60 fund that historically matched the Wellesley "returns", I just thought I would 'make-my-own'
fund, with the help of the BH's.

Please see/backtest the above 40/60 example from your fellow BH; 'aristotelian'. And match/compare that
against a 100% Wellesley scenario. You will see what I am looking at; more tax-efficient while maintaining the
'less risk/steady return' that Wellesley is known for. Also, you can see how it mirrors the portfolio 'growth' graph.

If you have any 'tax-efficient' scenario's you think might work for taxable acct's., it would be great to see them.

Your knowledge on this matter is greatly welcomed,
Thank you

retiredjg
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Re: Wellesley alternative for taxable acct.?

Post by retiredjg » Thu Jul 12, 2018 9:24 am

troubleshooter wrote:
Wed Jul 11, 2018 11:48 pm
If I am confusing you please let me explain why I mention the Wellesley fund. I am looking for the historic "returns" of
Wellesley, since the annual "returns" (4 negative years over a 30 year period) seem to outperform most other funds.
Or as better stated by MJW above, to "replicate the performance of Wellesley with more tax-efficient options."
All the while, remembering this will be for a "taxable acct."
The qualities that make Wellesley what it is are the same qualities that make it not tax-efficient. They types of stocks held in Wellesely (value stocks) and the types of bond held in Wellesley (taxable bonds that throw off dividends) and the active management are what make Wellesley Wellesley. You cannot replicate Wellesley using other stuff.


So, I am looking for a more "tax-efficient" fund mixture, 40/60, that I can place in my taxable acct., nothing more.
What you can have is a 40% stock/60% bond portfolio in your taxable account though. The stocks should be as mentioned before - total stock market index. The bonds will depend on your tax bracket now that you have all this extra money - something we don't know.

Please see/backtest the above 40/60 example from your fellow BH; 'aristotelian'. And match/compare that
against a 100% Wellesley scenario. You will see what I am looking at; more tax-efficient while maintaining the
'less risk/steady return' that Wellesley is known for. Also, you can see how it mirrors the portfolio 'growth' graph.
Aristotelian's portfolio idea has some nice qualities to it. However, if you continue to stay in the 12% tax bracket, you will make less money using the tax-exempt bond fund. That one would be tax-efficient though.

Or you can make more money using taxable bonds, but it won't be very tax efficient - but it will not matter a great deal if you are still in the 12% tax bracket.

The things you need to look at are

1) What will your tax bracket be now that you have this extra $1 million?

2) Can you achieve a portfolio you want by holding your bonds in your tax-advantaged accounts? I think the answer to this is probably "no", but you have not told us enough to know.

Bottom line.....If you want to hold 60% bonds in your taxable account, you will have to choose between maximum yield or maximum tax- efficiency. You cannot have both at the same time. Maybe it is more correct to say I have not thought of a way to have both at the same time.

Aristotelian's idea splits the bonds - half taxable and have tax-exempt. You'll get a little less yield and a little more tax-efficiency. It's not a bad idea at all. But nobody can say it will perform as well long term as some other fund such as Wellesley.

PS. Consider that backtesting doesn't predict what the future will look like. It appears you are placing too much emphasis on it.

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