Vanguard's Wellesley Income fund is incredible

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Wanderingwheelz
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Re: Vanguard's Wellesley Income fund is incredible

Post by Wanderingwheelz » Mon Jan 13, 2020 11:01 pm

Monster99 wrote:
Mon Nov 25, 2019 1:23 pm
TheDDC wrote:
Mon Nov 25, 2019 9:49 am
Do I dare ask: Does anyone keep Wellesley in their taxable account?

-TheDDC
Yes - Way back in the early days, it was a low cost no load fund. Now the capital gains prevent total liquidation and moving proceeds to total stock and total bond funds. I am retired so the dividends get directed to Prime then spent or reinvested according to my AA. There was limited choices for low cost funds back in the late 80's.....
That’s exactly the convo we had with my dad at dinner tonight. He regrets in a way the way his portfolio kicks off capital gains he doesn’t need, but as you said it was a different world in the 80s.

I gently told him my wife and I have 0 cap gains with BND and VTI. He was glad we won’t find ourselves where he is now.

columbia
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Re: Vanguard's Wellesley Income fund is incredible

Post by columbia » Mon Jan 13, 2020 11:05 pm

Wanderingwheelz wrote:
Mon Jan 13, 2020 11:01 pm
Monster99 wrote:
Mon Nov 25, 2019 1:23 pm
TheDDC wrote:
Mon Nov 25, 2019 9:49 am
Do I dare ask: Does anyone keep Wellesley in their taxable account?

-TheDDC
Yes - Way back in the early days, it was a low cost no load fund. Now the capital gains prevent total liquidation and moving proceeds to total stock and total bond funds. I am retired so the dividends get directed to Prime then spent or reinvested according to my AA. There was limited choices for low cost funds back in the late 80's.....
That’s exactly the convo we had with my dad at dinner tonight. He regrets in a way the way his portfolio kicks off capital gains he doesn’t need, but as you said it was a different world in the 80s.

I gently told him my wife and I have 0 cap gains with BND and VTI. He was glad we won’t find ourselves where he is now.
My parents are 83 and 84 and all of their investments are in IRAs; they are 100% Wellesley.

It works for them. 👍🏻

DB2
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Re: Vanguard's Wellesley Income fund is incredible

Post by DB2 » Tue Jan 14, 2020 9:19 am

Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.

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Bluce
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Re: Vanguard's Wellesley Income fund is incredible

Post by Bluce » Tue Jan 14, 2020 9:49 am

DB2 wrote:
Tue Jan 14, 2020 9:19 am
Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.
Since inception in 1970 it has done basically as well as the SnP with much less risk. A managed fund I'm hanging on to! :shock:

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AerialWombat
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Re: Vanguard's Wellesley Income fund is incredible

Post by AerialWombat » Tue Jan 14, 2020 10:26 am

My solo 401k is now 100% Wellesley.

I will run out of tax advantaged space for the year within a few months, and may even start using Wellesley in taxable.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

DB2
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Re: Vanguard's Wellesley Income fund is incredible

Post by DB2 » Tue Jan 14, 2020 10:34 am

Bluce wrote:
Tue Jan 14, 2020 9:49 am
DB2 wrote:
Tue Jan 14, 2020 9:19 am
Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.
Since inception in 1970 it has done basically as well as the SnP with much less risk. A managed fund I'm hanging on to! :shock:
How has Wellesley done compared to Wellington since 1970? I couldn't go back that far with Portfolio Analyzer.

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Bluce
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Re: Vanguard's Wellesley Income fund is incredible

Post by Bluce » Tue Jan 14, 2020 10:53 am

DB2 wrote:
Tue Jan 14, 2020 10:34 am
Bluce wrote:
Tue Jan 14, 2020 9:49 am
DB2 wrote:
Tue Jan 14, 2020 9:19 am
Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.
Since inception in 1970 it has done basically as well as the SnP with much less risk. A managed fund I'm hanging on to! :shock:
How has Wellesley done compared to Wellington since 1970? I couldn't go back that far with Portfolio Analyzer.
You should be able to find Wellington's on VG's website.

Wanderingwheelz
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Re: Vanguard's Wellesley Income fund is incredible

Post by Wanderingwheelz » Tue Jan 14, 2020 11:10 am

columbia wrote:
Mon Jan 13, 2020 11:05 pm
Wanderingwheelz wrote:
Mon Jan 13, 2020 11:01 pm
Monster99 wrote:
Mon Nov 25, 2019 1:23 pm
TheDDC wrote:
Mon Nov 25, 2019 9:49 am
Do I dare ask: Does anyone keep Wellesley in their taxable account?

-TheDDC
Yes - Way back in the early days, it was a low cost no load fund. Now the capital gains prevent total liquidation and moving proceeds to total stock and total bond funds. I am retired so the dividends get directed to Prime then spent or reinvested according to my AA. There was limited choices for low cost funds back in the late 80's.....
That’s exactly the convo we had with my dad at dinner tonight. He regrets in a way the way his portfolio kicks off capital gains he doesn’t need, but as you said it was a different world in the 80s.

I gently told him my wife and I have 0 cap gains with BND and VTI. He was glad we won’t find ourselves where he is now.
My parents are 83 and 84 and all of their investments are in IRAs; they are 100% Wellesley.

It works for them. 👍🏻
Good for them because it’s not the best fund to own in a taxable account. This is especially true if the gains and dividends are not being reinvested.

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willthrill81
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Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 » Tue Jan 14, 2020 11:15 am

DB2 wrote:
Tue Jan 14, 2020 10:34 am
Bluce wrote:
Tue Jan 14, 2020 9:49 am
DB2 wrote:
Tue Jan 14, 2020 9:19 am
Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.
Since inception in 1970 it has done basically as well as the SnP with much less risk. A managed fund I'm hanging on to! :shock:
How has Wellesley done compared to Wellington since 1970? I couldn't go back that far with Portfolio Analyzer.
Morningstar has those data. Basically, the two funds have gone back and forth for the last 50 years in terms of returns. As of early 2013, they were in a dead heat after 43 years of performance. Since then, Wellington has pulled ahead.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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willthrill81
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Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 » Tue Jan 14, 2020 11:19 am

Bluce wrote:
Tue Jan 14, 2020 9:49 am
DB2 wrote:
Tue Jan 14, 2020 9:19 am
Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.
Since inception in 1970 it has done basically as well as the SnP with much less risk. A managed fund I'm hanging on to! :shock:
It's been an absolutely phenomenal fund for retirees in particular. A year 2000 (the worst starting year for retirees in decades) retiree strictly implementing '4% rule of thumb' withdrawals would now have 40% more inflation-adjusted starting capital than they started with.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

DB2
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Re: Vanguard's Wellesley Income fund is incredible

Post by DB2 » Tue Jan 14, 2020 11:22 am

willthrill81 wrote:
Tue Jan 14, 2020 11:15 am
DB2 wrote:
Tue Jan 14, 2020 10:34 am
Bluce wrote:
Tue Jan 14, 2020 9:49 am
DB2 wrote:
Tue Jan 14, 2020 9:19 am
Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.
Since inception in 1970 it has done basically as well as the SnP with much less risk. A managed fund I'm hanging on to! :shock:
How has Wellesley done compared to Wellington since 1970? I couldn't go back that far with Portfolio Analyzer.
Do both pretty much hold the same equities and bonds, but just a flipped flopped AA?
Morningstar has those data. Basically, the two funds have gone back and forth for the last 50 years in terms of returns. As of early 2013, they were in a dead heat after 43 years of performance. Since then, Wellington has pulled ahead.

Independent George
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Re: Vanguard's Wellesley Income fund is incredible

Post by Independent George » Tue Jan 14, 2020 11:28 am

My Google-Fu is failing me, but I remember reading that active bond fund managers tend to do much better than active stock managers - something like 40% of bond managers will beat their benchmark after fees over a 10 year period, as compared to 7-10% for stock pickers. This makes me think that a bond-heavy active fund with a low ER (like Wellesley) is more likely to maintain its performance over long periods.

I started buying Wellesley in 2011 because I wanted a moderately-risky, low-volatility blended fund to hold for 5-10 years. I know it's not efficient to hold it in taxable, but the goal was to help finance a home renovation in an intermediate time frame, and my savings account was getting less than 1% a year. I was willing to take the risk over that medium time frame - if it tanked, I could afford to wait it out and do my renovations later. As it turns out, I'm ecstatic with the performance even after taxes (it helps that I was just barely into the 25% bracket at the time, and only recently made it into the middle of the 22% bracket). It's actually exceeded my expectations so much that I'm now hesitant to sell even though it's more than fulfilled its intended purpose...
Last edited by Independent George on Tue Jan 14, 2020 11:30 am, edited 1 time in total.

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willthrill81
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Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 » Tue Jan 14, 2020 11:29 am

DB2 wrote:
Tue Jan 14, 2020 11:22 am
willthrill81 wrote:
Tue Jan 14, 2020 11:15 am
Morningstar has those data. Basically, the two funds have gone back and forth for the last 50 years in terms of returns. As of early 2013, they were in a dead heat after 43 years of performance. Since then, Wellington has pulled ahead.
Do both pretty much hold the same equities and bonds, but just a flipped flopped AA?
I'm not sure, but I suspect that is largely the case. You could dig into the funds' prospectuses to find out.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

DB2
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Re: Vanguard's Wellesley Income fund is incredible

Post by DB2 » Tue Jan 14, 2020 11:33 am

Just did a quick compare on Vanguard's site. Some similarities, but differences as well. But makes sense given the different intent of both funds.

https://personal.vanguard.com/us/funds/ ... tingFrom=6

dkturner
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Re: Vanguard's Wellesley Income fund is incredible

Post by dkturner » Tue Jan 14, 2020 11:41 am

DB2 wrote:
Tue Jan 14, 2020 10:34 am
Bluce wrote:
Tue Jan 14, 2020 9:49 am
DB2 wrote:
Tue Jan 14, 2020 9:19 am
Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.
Since inception in 1970 it has done basically as well as the SnP with much less risk. A managed fund I'm hanging on to! :shock:
How has Wellesley done compared to Wellington since 1970? I couldn't go back that far with Portfolio Analyzer.
9.7% annualized vs. 10.1%

TheDDC
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Re: Vanguard's Wellesley Income fund is incredible

Post by TheDDC » Tue Jan 14, 2020 12:43 pm

dkturner wrote:
Tue Jan 14, 2020 11:41 am
DB2 wrote:
Tue Jan 14, 2020 10:34 am
Bluce wrote:
Tue Jan 14, 2020 9:49 am
DB2 wrote:
Tue Jan 14, 2020 9:19 am
Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.
Since inception in 1970 it has done basically as well as the SnP with much less risk. A managed fund I'm hanging on to! :shock:
How has Wellesley done compared to Wellington since 1970? I couldn't go back that far with Portfolio Analyzer.
9.7% annualized vs. 10.1%
That seems impressive for Wellesley considering you are taking on 20% less risk than Wellington at a loss of less than 0.5%

-TheDDC
Refreshingly, a double barrel shotgun blast of truth... | Rules to wealth building: 100% VTSAX piled high and deep, 0% given away to banks, minimize amount given to health care industrial complex

DB2
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Re: Vanguard's Wellesley Income fund is incredible

Post by DB2 » Tue Jan 14, 2020 1:21 pm

Yes, amazing really.

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Re: Vanguard's Wellesley Income fund is incredible

Post by Grt2bOutdoors » Tue Jan 14, 2020 1:25 pm

TheDDC wrote:
Tue Jan 14, 2020 12:43 pm
dkturner wrote:
Tue Jan 14, 2020 11:41 am
DB2 wrote:
Tue Jan 14, 2020 10:34 am
Bluce wrote:
Tue Jan 14, 2020 9:49 am
DB2 wrote:
Tue Jan 14, 2020 9:19 am
Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.
Since inception in 1970 it has done basically as well as the SnP with much less risk. A managed fund I'm hanging on to! :shock:
How has Wellesley done compared to Wellington since 1970? I couldn't go back that far with Portfolio Analyzer.
9.7% annualized vs. 10.1%
That seems impressive for Wellesley considering you are taking on 20% less risk than Wellington at a loss of less than 0.5%

-TheDDC
The management for both Wellesley and Wellington are the same. Equities are more risky but falling interest rates may have something to do with that level of performance.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

dkturner
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Re: Vanguard's Wellesley Income fund is incredible

Post by dkturner » Tue Jan 14, 2020 1:45 pm

TheDDC wrote:
Tue Jan 14, 2020 12:43 pm
dkturner wrote:
Tue Jan 14, 2020 11:41 am
DB2 wrote:
Tue Jan 14, 2020 10:34 am
Bluce wrote:
Tue Jan 14, 2020 9:49 am
DB2 wrote:
Tue Jan 14, 2020 9:19 am
Looking back at the history of this fund, it's almost hard to find years it lost money or at least anything of significance. Some years it's done shockingly well with less risk at the same time.
Since inception in 1970 it has done basically as well as the SnP with much less risk. A managed fund I'm hanging on to! :shock:
How has Wellesley done compared to Wellington since 1970? I couldn't go back that far with Portfolio Analyzer.
9.7% annualized vs. 10.1%
That seems impressive for Wellesley considering you are taking on 20% less risk than Wellington at a loss of less than 0.5%

-TheDDC
The 1971-2019 period included the great 1982-2019 bond bull market, so the spread in bond vs. equity total returns was not as great as it was for the previous 37 years.

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Leif
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Re: Vanguard's Wellesley Income fund is incredible

Post by Leif » Tue Jan 14, 2020 1:47 pm

The first issue I have with a balance fund is asset location. I put my bonds in my tIRA, my REITs and ISV in my Roth, and tax efficient index funds in taxable. Depending on your marginal rate this may or may not be a problem.

The second issue is Wellesley's tax efficiency related to distributions. Checking the Vanguard website I see in 2018 Wellesley had a LTCG of 380 basis points ($2.5215/share).

The third issue is for withdrawal in retirement. If the equity market is down, and you make a withdrawal, part of the withdrawal is the lower equity. This has an impact regardless of tax bracket. I've read Christine Benz of Morningstar stated the same point.
Last edited by Leif on Tue Jan 14, 2020 1:58 pm, edited 1 time in total.

DB2
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Re: Vanguard's Wellesley Income fund is incredible

Post by DB2 » Tue Jan 14, 2020 1:52 pm

Leif wrote:
Tue Jan 14, 2020 1:47 pm

The third issue is for withdrawal in retirement. If the equity market is down, and you make a withdrawal, part of the withdrawal is the lower equity. This has an impact regardless of tax bracket. I've read Christine Benz of Morningstar stated the same point.
More reason for a bucket approach although timing could be an issue.

Grt2bOutdoors
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Re: Vanguard's Wellesley Income fund is incredible

Post by Grt2bOutdoors » Tue Jan 14, 2020 2:02 pm

DB2 wrote:
Tue Jan 14, 2020 1:52 pm
Leif wrote:
Tue Jan 14, 2020 1:47 pm

The third issue is for withdrawal in retirement. If the equity market is down, and you make a withdrawal, part of the withdrawal is the lower equity. This has an impact regardless of tax bracket. I've read Christine Benz of Morningstar stated the same point.
More reason for a bucket approach although timing could be an issue.
It's semantics, your asset allocation is how you control for risk. Buckets is another way for mental accounting.
If you hold a portfolio with 60% equity and 40% bonds, withdraw from bonds during the market downturns, you will be still be selling equities to refill bonds. Though I thought I read in the podcast transcript that she refilled the fixed income allocation when equities began to recover again. If you sell fixed via the bucket/portfolio and don't rebalance then you are increasing your equity allocation. The simplicity of a fund like Wellington or Wellesley is the manager takes care of this for you automatically while reducing risk and selecting a fund with the asset allocation you can sleep with at night is more important.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Triple digit golfer
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Re: Vanguard's Wellesley Income fund is incredible

Post by Triple digit golfer » Tue Jan 14, 2020 2:17 pm

Why are so many Bogleheads fascinated enough to invest in an actively managed fund?

Why do Wellesley and Wellington seemingly get a free pass, where past performance DOES matter?

Imagine the responses if someone started a thread, "[Any other actively managed fund] is incredible."

What happened to Jack Bogle's warning about chasing the winners?

What about one of the Bogleheads philosophies, "Use index funds when possible?"

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."

If you want 40% large cap value and 60% bonds, why not invest 40% in Value Index and 40% in Total Bond Index?

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Electron
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Re: Vanguard's Wellesley Income fund is incredible

Post by Electron » Tue Jan 14, 2020 2:21 pm

DB2 wrote:
Tue Jan 14, 2020 10:34 am
How has Wellesley done compared to Wellington since 1970? I couldn't go back that far with Portfolio Analyzer.
Here is a Morningstar chart showing the full history of Wellesley Income Fund along with Wellington and the S&P 500 Total Return Index. The start date is 7-01-70.

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

You can change the dates to see other time frames.
Electron

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willthrill81
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Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 » Tue Jan 14, 2020 3:31 pm

Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm
Why are so many Bogleheads fascinated enough to invest in an actively managed fund?

Why do Wellesley and Wellington seemingly get a free pass, where past performance DOES matter?

Imagine the responses if someone started a thread, "[Any other actively managed fund] is incredible."

What happened to Jack Bogle's warning about chasing the winners?

What about one of the Bogleheads philosophies, "Use index funds when possible?"

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."

If you want 40% large cap value and 60% bonds, why not invest 40% in Value Index and 40% in Total Bond Index?
As noted earlier in this thread, the likelihood that Wellesley Income's outperformance of similar funds, including indexes, is over 2,000 to 1.

So you can either believe that the fund's performance is mere survivor bias and lots of luck, or you can believe that their management has been able to keep costs down low enough that, combined with good allocation decisions, they've been able to generate some alpha.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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willthrill81
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Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 » Tue Jan 14, 2020 3:33 pm

Leif wrote:
Tue Jan 14, 2020 1:47 pm
The third issue is for withdrawal in retirement. If the equity market is down, and you make a withdrawal, part of the withdrawal is the lower equity.
It depends on how much stocks dropped. But if you maintain a fixed AA as Wellesley Income does, then stocks going down means that you will be using some of your bonds to buy more stocks in order to maintain your AA.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Triple digit golfer
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Re: Vanguard's Wellesley Income fund is incredible

Post by Triple digit golfer » Tue Jan 14, 2020 3:42 pm

willthrill81 wrote:
Tue Jan 14, 2020 3:31 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm
Why are so many Bogleheads fascinated enough to invest in an actively managed fund?

Why do Wellesley and Wellington seemingly get a free pass, where past performance DOES matter?

Imagine the responses if someone started a thread, "[Any other actively managed fund] is incredible."

What happened to Jack Bogle's warning about chasing the winners?

What about one of the Bogleheads philosophies, "Use index funds when possible?"

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."

If you want 40% large cap value and 60% bonds, why not invest 40% in Value Index and 40% in Total Bond Index?
As noted earlier in this thread, the likelihood that Wellesley Income's outperformance of similar funds, including indexes, is over 2,000 to 1.

So you can either believe that the fund's performance is mere survivor bias and lots of luck, or you can believe that their management has been able to keep costs down low enough that, combined with good allocation decisions, they've been able to generate some alpha.
If we suggest that about any other actively managed fund, it's automatically deemed B.S. that managers can outperform for so long, and it's automatically attributed to luck.

Of course they've generated excess returns. We know that. In fact, that is why people here invest in the fund; because it has done well in te past. I'll gladly stay away from manager risk. I think any prudent investor should.

What people are advocating here is exactly what Bogle said and many others say not to do. That is, invest in a fund because it has done well in the past.

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Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 » Tue Jan 14, 2020 3:45 pm

Triple digit golfer wrote:
Tue Jan 14, 2020 3:42 pm
willthrill81 wrote:
Tue Jan 14, 2020 3:31 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm
Why are so many Bogleheads fascinated enough to invest in an actively managed fund?

Why do Wellesley and Wellington seemingly get a free pass, where past performance DOES matter?

Imagine the responses if someone started a thread, "[Any other actively managed fund] is incredible."

What happened to Jack Bogle's warning about chasing the winners?

What about one of the Bogleheads philosophies, "Use index funds when possible?"

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."

If you want 40% large cap value and 60% bonds, why not invest 40% in Value Index and 40% in Total Bond Index?
As noted earlier in this thread, the likelihood that Wellesley Income's outperformance of similar funds, including indexes, is over 2,000 to 1.

So you can either believe that the fund's performance is mere survivor bias and lots of luck, or you can believe that their management has been able to keep costs down low enough that, combined with good allocation decisions, they've been able to generate some alpha.
If we suggest that about any other actively managed fund, it's automatically deemed B.S. that managers can outperform for so long, and it's automatically attributed to luck.

I don't know what generating some alpha means, but I'll gladly stay away from manager risk. I think any prudent investor should.

What people are advocating here is exactly what Bogle and many others say not to do. That is, invest in a fund because it has done well.
And yet Bogle himself had a significant portion of his portfolio in Wellington.

I really think that people have taken the elements of the 'BH philosophy' to be strict rules when Bogle himself clearly did not rigidly adhere to all of them all the time.

Bogle was fine with active management as long as the costs were low (i.e. the 'cost-matters hypothesis' over the efficient-market hypothesis).

Bogle espoused diversification but only bought U.S. stock.

Bogle timed the market himself on at least one occasion.

Bogle even once recommended a 5% allocation to gold for an endowment fund.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Triple digit golfer
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Re: Vanguard's Wellesley Income fund is incredible

Post by Triple digit golfer » Tue Jan 14, 2020 3:47 pm

willthrill81 wrote:
Tue Jan 14, 2020 3:45 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 3:42 pm
willthrill81 wrote:
Tue Jan 14, 2020 3:31 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm
Why are so many Bogleheads fascinated enough to invest in an actively managed fund?

Why do Wellesley and Wellington seemingly get a free pass, where past performance DOES matter?

Imagine the responses if someone started a thread, "[Any other actively managed fund] is incredible."

What happened to Jack Bogle's warning about chasing the winners?

What about one of the Bogleheads philosophies, "Use index funds when possible?"

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."

If you want 40% large cap value and 60% bonds, why not invest 40% in Value Index and 40% in Total Bond Index?
As noted earlier in this thread, the likelihood that Wellesley Income's outperformance of similar funds, including indexes, is over 2,000 to 1.

So you can either believe that the fund's performance is mere survivor bias and lots of luck, or you can believe that their management has been able to keep costs down low enough that, combined with good allocation decisions, they've been able to generate some alpha.
If we suggest that about any other actively managed fund, it's automatically deemed B.S. that managers can outperform for so long, and it's automatically attributed to luck.

I don't know what generating some alpha means, but I'll gladly stay away from manager risk. I think any prudent investor should.

What people are advocating here is exactly what Bogle and many others say not to do. That is, invest in a fund because it has done well.
And yet Bogle himself had a significant portion of his portfolio in Wellington.

I really think that people have taken the elements of the 'BH philosophy' to be strict rules when Bogle himself clearly did not rigidly adhere to all of them all the time.

Bogle was fine with active management as long as the costs were low (i.e. the 'cost-matters hypothesis' over the efficient-market hypothesis).

Bogle espoused diversification but only bought U.S. stock.

Bogle timed the market himself on at least one occasion.

Bogle even once recommended a 5% allocation to gold for an endowment fund.
Do you think Wellesley will continue to outperform? If so, why?

barefootjan
Posts: 378
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Location: New England

Re: Vanguard's Wellesley Income fund is incredible

Post by barefootjan » Tue Jan 14, 2020 3:49 pm

Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm
Why are so many Bogleheads fascinated enough to invest in an actively managed fund?

Why do Wellesley and Wellington seemingly get a free pass, where past performance DOES matter?

Imagine the responses if someone started a thread, "[Any other actively managed fund] is incredible."

What happened to Jack Bogle's warning about chasing the winners?

What about one of the Bogleheads philosophies, "Use index funds when possible?"

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."

If you want 40% large cap value and 60% bonds, why not invest 40% in Value Index and 40% in Total Bond Index?
I can't speak for "Bogleheads" or anyone else for that matter, but I hope you'll allow me to offer my input.

I've listened to past interviews with Jack Bogle and his advice is a little more nuanced than how I've seen it presented here and elsewhere.

Much of what I've heard him say supports investing in Wellesley Income, particularly for retirees. An appropriate asset allocation that - when he went into detail - closely matches Wellesley's; consistently re-balancing to your risk level; low fees; low volatility; a solid long-term strategy that doesn't seek to be number one every year; shying away from foreign holdings in retirement; etc etc.

Don't take my word for it though. With any luck, somebody here can link us to his past interviews*, and you can judge for yourself. (*I lost all of mine when I purged a bunch of investment bookmarks.)

Best wishes,
Jan

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willthrill81
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Location: USA

Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 » Tue Jan 14, 2020 3:51 pm

Triple digit golfer wrote:
Tue Jan 14, 2020 3:47 pm
willthrill81 wrote:
Tue Jan 14, 2020 3:45 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 3:42 pm
willthrill81 wrote:
Tue Jan 14, 2020 3:31 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm
Why are so many Bogleheads fascinated enough to invest in an actively managed fund?

Why do Wellesley and Wellington seemingly get a free pass, where past performance DOES matter?

Imagine the responses if someone started a thread, "[Any other actively managed fund] is incredible."

What happened to Jack Bogle's warning about chasing the winners?

What about one of the Bogleheads philosophies, "Use index funds when possible?"

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."

If you want 40% large cap value and 60% bonds, why not invest 40% in Value Index and 40% in Total Bond Index?
As noted earlier in this thread, the likelihood that Wellesley Income's outperformance of similar funds, including indexes, is over 2,000 to 1.

So you can either believe that the fund's performance is mere survivor bias and lots of luck, or you can believe that their management has been able to keep costs down low enough that, combined with good allocation decisions, they've been able to generate some alpha.
If we suggest that about any other actively managed fund, it's automatically deemed B.S. that managers can outperform for so long, and it's automatically attributed to luck.

I don't know what generating some alpha means, but I'll gladly stay away from manager risk. I think any prudent investor should.

What people are advocating here is exactly what Bogle and many others say not to do. That is, invest in a fund because it has done well.
And yet Bogle himself had a significant portion of his portfolio in Wellington.

I really think that people have taken the elements of the 'BH philosophy' to be strict rules when Bogle himself clearly did not rigidly adhere to all of them all the time.

Bogle was fine with active management as long as the costs were low (i.e. the 'cost-matters hypothesis' over the efficient-market hypothesis).

Bogle espoused diversification but only bought U.S. stock.

Bogle timed the market himself on at least one occasion.

Bogle even once recommended a 5% allocation to gold for an endowment fund.
Do you think Wellesley will continue to outperform? If so, why?
I don't know. I'm not in the habit of making predictions about the future.

That being said, if a retiree asked me if it would be okay for them to 50% or more of their portfolio into Wellesley, I'd say that's fine.

Even if Wellesley does underperform an indexed 35/65 going forward, I have a hard time seeing that underperformance being truly meaningful.

And regarding the "automatically deemed B.S." issue, I would humbly submit that if someone is unwilling to admit the possibility that perhaps their theories of how finance should work don't match reality, they are not behaving in an entirely logical manner.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Triple digit golfer
Posts: 3875
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Re: Vanguard's Wellesley Income fund is incredible

Post by Triple digit golfer » Tue Jan 14, 2020 4:08 pm

barefootjan wrote:
Tue Jan 14, 2020 3:49 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm
Why are so many Bogleheads fascinated enough to invest in an actively managed fund?

Why do Wellesley and Wellington seemingly get a free pass, where past performance DOES matter?

Imagine the responses if someone started a thread, "[Any other actively managed fund] is incredible."

What happened to Jack Bogle's warning about chasing the winners?

What about one of the Bogleheads philosophies, "Use index funds when possible?"

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."

If you want 40% large cap value and 60% bonds, why not invest 40% in Value Index and 40% in Total Bond Index?
I can't speak for "Bogleheads" or anyone else for that matter, but I hope you'll allow me to offer my input.

I've listened to past interviews with Jack Bogle and his advice is a little more nuanced than how I've seen it presented here and elsewhere.

Much of what I've heard him say supports investing in Wellesley Income, particularly for retirees. An appropriate asset allocation that - when he went into detail - closely matches Wellesley's; consistently re-balancing to your risk level; low fees; low volatility; a solid long-term strategy that doesn't seek to be number one every year; shying away from foreign holdings in retirement; etc etc.

Don't take my word for it though. With any luck, somebody here can link us to his past interviews*, and you can judge for yourself. (*I lost all of mine when I purged a bunch of investment bookmarks.)

Best wishes,
Jan
Thanks for chiming in. Wouldn't a simple index approach accomplish those objectives: low fees, low volatility, doesn't seek to be number one, etc.?

I don't have anything against Wellesley. I just don't see why one would choose it over an index approach.

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Leif
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Re: Vanguard's Wellesley Income fund is incredible

Post by Leif » Tue Jan 14, 2020 4:11 pm

willthrill81 wrote:
Tue Jan 14, 2020 3:33 pm
Leif wrote:
Tue Jan 14, 2020 1:47 pm
The third issue is for withdrawal in retirement. If the equity market is down, and you make a withdrawal, part of the withdrawal is the lower equity.
It depends on how much stocks dropped. But if you maintain a fixed AA as Wellesley Income does, then stocks going down means that you will be using some of your bonds to buy more stocks in order to maintain your AA.
However, the effect is selling lower equities with a withdrawal. I would rather control that myself. I don't have a problem with AA bouncing around a bit since I can selling bonds in this case. As Christine joked you cannot call the fund for a withdrawal and ask them to please only sell the bond portion.

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willthrill81
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Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 » Tue Jan 14, 2020 4:19 pm

Leif wrote:
Tue Jan 14, 2020 4:11 pm
willthrill81 wrote:
Tue Jan 14, 2020 3:33 pm
Leif wrote:
Tue Jan 14, 2020 1:47 pm
The third issue is for withdrawal in retirement. If the equity market is down, and you make a withdrawal, part of the withdrawal is the lower equity.
It depends on how much stocks dropped. But if you maintain a fixed AA as Wellesley Income does, then stocks going down means that you will be using some of your bonds to buy more stocks in order to maintain your AA.
However, the effect is selling lower equities with a withdrawal. I would rather control that myself. I don't have a problem with AA bouncing around a bit since I can selling bonds in this case. As Christine joked you cannot call the fund for a withdrawal and ask them to please only sell the bond portion.
I haven't seen a compelling case for a dynamic asset allocation approach like that making a meaningful, consistent difference in most situations, but if that's would you would prefer, then you shouldn't hold all-in-one funds.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Leif
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Re: Vanguard's Wellesley Income fund is incredible

Post by Leif » Tue Jan 14, 2020 4:28 pm

willthrill81 wrote:
Tue Jan 14, 2020 4:19 pm
Leif wrote:
Tue Jan 14, 2020 4:11 pm
willthrill81 wrote:
Tue Jan 14, 2020 3:33 pm
Leif wrote:
Tue Jan 14, 2020 1:47 pm
The third issue is for withdrawal in retirement. If the equity market is down, and you make a withdrawal, part of the withdrawal is the lower equity.
It depends on how much stocks dropped. But if you maintain a fixed AA as Wellesley Income does, then stocks going down means that you will be using some of your bonds to buy more stocks in order to maintain your AA.
However, the effect is selling lower equities with a withdrawal. I would rather control that myself. I don't have a problem with AA bouncing around a bit since I can selling bonds in this case. As Christine joked you cannot call the fund for a withdrawal and ask them to please only sell the bond portion.
I haven't seen a compelling case for a dynamic asset allocation approach like that making a meaningful, consistent difference in most situations, but if that's would you would prefer, then you shouldn't hold all-in-one funds.
I don't hold an all-in-one fund for the three reasons I listed. Just responding to your question "What are you thoughts about this fund?"

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Bluce
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Location: Finger Lakes, NYS

Re: Vanguard's Wellesley Income fund is incredible

Post by Bluce » Tue Jan 14, 2020 4:35 pm

FWIW: I bought VWIAX in 2013 and it is currently about 12% of my PF. Everything has been reinvested and that will continue. When I retire I will take some or all of its distributions.

I will likely never sell any of it (it will go to my "favorite charity") unless it has 2-3 really bad consecutive years vs. a benchmark. And that seems unlikely, considering its outstanding 50-year track record.

That's my story and I'm sticking to it! (unless something changes :( )

DB2
Posts: 496
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Re: Vanguard's Wellesley Income fund is incredible

Post by DB2 » Tue Jan 14, 2020 4:40 pm

willthrill81 wrote:
Tue Jan 14, 2020 3:45 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 3:42 pm
willthrill81 wrote:
Tue Jan 14, 2020 3:31 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm
Why are so many Bogleheads fascinated enough to invest in an actively managed fund?

Why do Wellesley and Wellington seemingly get a free pass, where past performance DOES matter?

Imagine the responses if someone started a thread, "[Any other actively managed fund] is incredible."

What happened to Jack Bogle's warning about chasing the winners?

What about one of the Bogleheads philosophies, "Use index funds when possible?"

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."

If you want 40% large cap value and 60% bonds, why not invest 40% in Value Index and 40% in Total Bond Index?
As noted earlier in this thread, the likelihood that Wellesley Income's outperformance of similar funds, including indexes, is over 2,000 to 1.

So you can either believe that the fund's performance is mere survivor bias and lots of luck, or you can believe that their management has been able to keep costs down low enough that, combined with good allocation decisions, they've been able to generate some alpha.
If we suggest that about any other actively managed fund, it's automatically deemed B.S. that managers can outperform for so long, and it's automatically attributed to luck.

I don't know what generating some alpha means, but I'll gladly stay away from manager risk. I think any prudent investor should.

What people are advocating here is exactly what Bogle and many others say not to do. That is, invest in a fund because it has done well.
And yet Bogle himself had a significant portion of his portfolio in Wellington.

I really think that people have taken the elements of the 'BH philosophy' to be strict rules when Bogle himself clearly did not rigidly adhere to all of them all the time.

Bogle was fine with active management as long as the costs were low (i.e. the 'cost-matters hypothesis' over the efficient-market hypothesis).

Bogle espoused diversification but only bought U.S. stock.

Bogle timed the market himself on at least one occasion.

Bogle even once recommended a 5% allocation to gold for an endowment fund.
All true.

hoops777
Posts: 2765
Joined: Sun Apr 10, 2011 12:23 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by hoops777 » Tue Jan 14, 2020 5:13 pm

DB2 wrote:
Tue Jan 14, 2020 4:40 pm
willthrill81 wrote:
Tue Jan 14, 2020 3:45 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 3:42 pm
willthrill81 wrote:
Tue Jan 14, 2020 3:31 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm
Why are so many Bogleheads fascinated enough to invest in an actively managed fund?

Why do Wellesley and Wellington seemingly get a free pass, where past performance DOES matter?

Imagine the responses if someone started a thread, "[Any other actively managed fund] is incredible."

What happened to Jack Bogle's warning about chasing the winners?

What about one of the Bogleheads philosophies, "Use index funds when possible?"

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."

If you want 40% large cap value and 60% bonds, why not invest 40% in Value Index and 40% in Total Bond Index?
As noted earlier in this thread, the likelihood that Wellesley Income's outperformance of similar funds, including indexes, is over 2,000 to 1.

So you can either believe that the fund's performance is mere survivor bias and lots of luck, or you can believe that their management has been able to keep costs down low enough that, combined with good allocation decisions, they've been able to generate some alpha.
If we suggest that about any other actively managed fund, it's automatically deemed B.S. that managers can outperform for so long, and it's automatically attributed to luck.

I don't know what generating some alpha means, but I'll gladly stay away from manager risk. I think any prudent investor should.

What people are advocating here is exactly what Bogle and many others say not to do. That is, invest in a fund because it has done well.
And yet Bogle himself had a significant portion of his portfolio in Wellington.

I really think that people have taken the elements of the 'BH philosophy' to be strict rules when Bogle himself clearly did not rigidly adhere to all of them all the time.

Bogle was fine with active management as long as the costs were low (i.e. the 'cost-matters hypothesis' over the efficient-market hypothesis).

Bogle espoused diversification but only bought U.S. stock.

Bogle timed the market himself on at least one occasion.

Bogle even once recommended a 5% allocation to gold for an endowment fund.
All true.
Rules are meant to be broken,especially when they make you money. Nobody has all the answers and financial dogma is probably not a good thing.
K.I.S.S........so easy to say so difficult to do.

Blue456
Posts: 243
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Re: Vanguard's Wellesley Income fund is incredible

Post by Blue456 » Tue Jan 14, 2020 5:26 pm

Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."
What’s more important minimizing taxes or after tax return?

voodoo72
Posts: 74
Joined: Wed Nov 15, 2017 1:20 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by voodoo72 » Tue Jan 14, 2020 6:12 pm

I actually do have a question, I currently have all my holdings in Fidelity, I saw I could actually purchase Wellesley from Fido for 75 bucks, can anyone tell me if there is any sort of difference in buying it thru Fido and having it there versus having to open an account thru Vanguard just to purchase this fund?

I have a quasi emergency fund that is too much cash to sit around only earing 1.7% at Amex.

Thanks in advance for your help

RetireBy55
Posts: 186
Joined: Wed Nov 30, 2016 6:20 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by RetireBy55 » Tue Jan 14, 2020 6:21 pm

voodoo72 wrote:
Tue Jan 14, 2020 6:12 pm
I actually do have a question, I currently have all my holdings in Fidelity, I saw I could actually purchase Wellesley from Fido for 75 bucks, can anyone tell me if there is any sort of difference in buying it thru Fido and having it there versus having to open an account thru Vanguard just to purchase this fund?

I have a quasi emergency fund that is too much cash to sit around only earing 1.7% at Amex.

Thanks in advance for your help
Far as I know, you can only get Investor class (VWINX) shares through Fido or any other broker - no Admiral class (lower ER - VWIAX) shares outside of opening an account with VG directly.

I'm a huge fan of Wellesley (basically my absolute favorite fund as both DW and I are in ER) and have a good chunk of $$ in it, and it's candidly one of the main reasons I don't move all of our assets to Schwab, Fido, or another brokerage that undoubtedly has better service and systems infrastructure than VG..

voodoo72
Posts: 74
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Re: Vanguard's Wellesley Income fund is incredible

Post by voodoo72 » Tue Jan 14, 2020 6:33 pm

RetireBy55 wrote:
Tue Jan 14, 2020 6:21 pm
voodoo72 wrote:
Tue Jan 14, 2020 6:12 pm
I actually do have a question, I currently have all my holdings in Fidelity, I saw I could actually purchase Wellesley from Fido for 75 bucks, can anyone tell me if there is any sort of difference in buying it thru Fido and having it there versus having to open an account thru Vanguard just to purchase this fund?

I have a quasi emergency fund that is too much cash to sit around only earing 1.7% at Amex.

Thanks in advance for your help
Far as I know, you can only get Investor class (VWINX) shares through Fido or any other broker - no Admiral class (lower ER - VWIAX) shares outside of opening an account with VG directly.

I'm a huge fan of Wellesley (basically my absolute favorite fund as both DW and I are in ER) and have a good chunk of $$ in it, and it's candidly one of the main reasons I don't move all of our assets to Schwab, Fido, or another brokerage that undoubtedly has better service and systems infrastructure than VG..
ahhhhh, gotcha that makes sense, but other than not being able to get Admiral shares there should be no difference correct? Sorry I know Im overthinking this just want to make sure.

Triple digit golfer
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Joined: Mon May 18, 2009 5:57 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by Triple digit golfer » Tue Jan 14, 2020 6:48 pm

Blue456 wrote:
Tue Jan 14, 2020 5:26 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."
What’s more important minimizing taxes or after tax return?
After tax returns.

Relevance to the discussion?

Blue456
Posts: 243
Joined: Tue Jun 04, 2019 5:46 am

Re: Vanguard's Wellesley Income fund is incredible

Post by Blue456 » Tue Jan 14, 2020 6:52 pm

Triple digit golfer wrote:
Tue Jan 14, 2020 6:48 pm
Blue456 wrote:
Tue Jan 14, 2020 5:26 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."
What’s more important minimizing taxes or after tax return?
After tax returns.

Relevance to the discussion?
Relevance about Wellesley being in taxable and not tax efficient thus going against Jack Bogle.

Blue456
Posts: 243
Joined: Tue Jun 04, 2019 5:46 am

Re: Vanguard's Wellesley Income fund is incredible

Post by Blue456 » Tue Jan 14, 2020 7:24 pm

Triple digit golfer wrote:
Tue Jan 14, 2020 6:48 pm
Blue456 wrote:
Tue Jan 14, 2020 5:26 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."
What’s more important minimizing taxes or after tax return?
After tax returns.
Wellesley after tax return despite being "tax inefficient" beats Vanguard Life Strategy Moderate Growth and Target Retirement Income Fund.
https://investor.vanguard.com/mutual-fu ... ance/vsmgx
https://personal.vanguard.com/us/funds/ ... =INT#tab=1
https://personal.vanguard.com/us/funds/ ... true#tab=1
There is no point of minimizing taxes and giving up returns.

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willthrill81
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Location: USA

Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 » Tue Jan 14, 2020 7:25 pm

Blue456 wrote:
Tue Jan 14, 2020 7:24 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 6:48 pm
Blue456 wrote:
Tue Jan 14, 2020 5:26 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."
What’s more important minimizing taxes or after tax return?
After tax returns.
Wellesley after tax return despite being "tax inefficient" beats Vanguard Life Strategy Moderate Growth and Target Retirement Income Fund.
https://investor.vanguard.com/mutual-fu ... ance/vsmgx
https://personal.vanguard.com/us/funds/ ... =INT#tab=1
https://personal.vanguard.com/us/funds/ ... true#tab=1
There is no point of minimizing taxes and giving up returns.
Never let the tax tail wag the investment dog.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Blue456
Posts: 243
Joined: Tue Jun 04, 2019 5:46 am

Re: Vanguard's Wellesley Income fund is incredible

Post by Blue456 » Tue Jan 14, 2020 7:30 pm

willthrill81 wrote:
Tue Jan 14, 2020 7:25 pm
Blue456 wrote:
Tue Jan 14, 2020 7:24 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 6:48 pm
Blue456 wrote:
Tue Jan 14, 2020 5:26 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 2:17 pm

I see many using it in taxable accounts. Again, Bogleheads philosophy, "Minimize taxes."
What’s more important minimizing taxes or after tax return?
After tax returns.
Wellesley after tax return despite being "tax inefficient" beats Vanguard Life Strategy Moderate Growth and Target Retirement Income Fund.
https://investor.vanguard.com/mutual-fu ... ance/vsmgx
https://personal.vanguard.com/us/funds/ ... =INT#tab=1
https://personal.vanguard.com/us/funds/ ... true#tab=1
There is no point of minimizing taxes and giving up returns.
Never let the tax tail wag the investment dog.
So why do people in here often strongly discouraged use of Wellesley in taxable and instead recommend Life Strategy or Target Retirement Fund despite the other two having lower return?

dbr
Posts: 31167
Joined: Sun Mar 04, 2007 9:50 am

Re: Vanguard's Wellesley Income fund is incredible

Post by dbr » Tue Jan 14, 2020 7:35 pm

Blue456 wrote:
Tue Jan 14, 2020 7:30 pm

So why do people in here often strongly discouraged use of Wellesley in taxable and instead recommend Life Strategy or Target Retirement Fund despite the other two having lower return?
People don't generally recommend LS or TR funds in taxable any more than Wellesley for the same reason.

Also a note is that Mr. Bogle has mentioned that he did not get out of Wellesley in taxable mainly because his unrealized gains had become so large it would be too expensive to make the move. The point is that investment choices in taxable accounts have to be made with care because they can be expensive to undo after time.

Triple digit golfer
Posts: 3875
Joined: Mon May 18, 2009 5:57 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by Triple digit golfer » Tue Jan 14, 2020 7:41 pm

Blue456 wrote:
Tue Jan 14, 2020 7:30 pm
willthrill81 wrote:
Tue Jan 14, 2020 7:25 pm
Blue456 wrote:
Tue Jan 14, 2020 7:24 pm
Triple digit golfer wrote:
Tue Jan 14, 2020 6:48 pm
Blue456 wrote:
Tue Jan 14, 2020 5:26 pm


What’s more important minimizing taxes or after tax return?
After tax returns.
Wellesley after tax return despite being "tax inefficient" beats Vanguard Life Strategy Moderate Growth and Target Retirement Income Fund.
https://investor.vanguard.com/mutual-fu ... ance/vsmgx
https://personal.vanguard.com/us/funds/ ... =INT#tab=1
https://personal.vanguard.com/us/funds/ ... true#tab=1
There is no point of minimizing taxes and giving up returns.
Never let the tax tail wag the investment dog.
So why do people in here often strongly discouraged use of Wellesley in taxable and instead recommend Life Strategy or Target Retirement Fund despite the other two having lower return?
HAD. better returns. Not better future returns. That is unknown. The only thing you can control is tax efficiency. I wouldn't pay more taxes unless the increased return was guaranteed. I wouldn't use any of those funds in a taxable account.

lassevirensghost
Posts: 97
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Re: Vanguard's Wellesley Income fund is incredible

Post by lassevirensghost » Tue Jan 14, 2020 7:49 pm

RetireBy55 wrote:
Tue Jan 14, 2020 6:21 pm
voodoo72 wrote:
Tue Jan 14, 2020 6:12 pm
I actually do have a question, I currently have all my holdings in Fidelity, I saw I could actually purchase Wellesley from Fido for 75 bucks, can anyone tell me if there is any sort of difference in buying it thru Fido and having it there versus having to open an account thru Vanguard just to purchase this fund?

I have a quasi emergency fund that is too much cash to sit around only earing 1.7% at Amex.

Thanks in advance for your help
Far as I know, you can only get Investor class (VWINX) shares through Fido or any other broker - no Admiral class (lower ER - VWIAX) shares outside of opening an account with VG directly.

I'm a huge fan of Wellesley (basically my absolute favorite fund as both DW and I are in ER) and have a good chunk of $$ in it, and it's candidly one of the main reasons I don't move all of our assets to Schwab, Fido, or another brokerage that undoubtedly has better service and systems infrastructure than VG..
Is the $75 for the initial purchase or do you pay that much each time you add to the position?
“Groucho, how do you invest your money?” | “All in bonds.” | “But Groucho, they don’t pay much return.” | “They do when you have a lot of em!”

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