Vanguard's Wellesley Income fund is incredible

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
barefootjan
Posts: 452
Joined: Mon Feb 19, 2007 6:45 pm

Post by barefootjan »

Dantes wrote: Tue Oct 27, 2020 4:45 pm
barefootjan wrote: Tue Oct 27, 2020 4:18 pm Oh no. It's been a few weeks since anyone's said how wonderful Wellesley Income is. Has something bad happened? :wink:

I'm just kidding LOL. But I do have a question: is there a fairly reliable/reasonable way to estimate what the upcoming capital gains distributions might be ahead of time - say, 2 to 6 months before the distribution is declared?
Under fees and distributions https://investor.vanguard.com/mutual-fu ... ions/vgyax is shows realized capital gains and losses. As of Sept 30 it is negative 4.67%. Unrealized appreciation is only 2.71% or NAV - (which seems odd) - so a lot would have to happen to generate capital gains this year I would guess.
Thanks, the page you linked to is for VGYAX Wellesley Global but I was able to find the corresponding page for the fund I'm interested in which is VWIAX Wellesley Income https://investor.vanguard.com/mutual-fu ... ions/vwiax

It shows "realized capital gain/loss $1.21" and "unrealized appreciation/depreciation $9.06." So does that mean there will be a capital gain distribution in December, or only that there might be? - I can't remember if mutual funds are required to distribute all realized capital gains, or if they have some flexibility.
Last edited by barefootjan on Tue Feb 16, 2021 5:20 am, edited 1 time in total.
User avatar
Harry Livermore
Posts: 852
Joined: Thu Apr 04, 2019 5:32 am

Re: Vanguard's Wellesley Income fund is incredible

Post by Harry Livermore »

tibbitts wrote: Tue Oct 27, 2020 5:16 pm
Harry Livermore wrote: Sun Sep 27, 2020 3:22 pm They are very smart guys and I assume they look at many different metrics when they evaluate companies.
The problem is that every other mutual fund manager is an approximately equally smart guy (or girl.)
True, and I am not necessarily advocating for managed funds over index funds... I own both. I think in the case of Wellesley, the stock-picking side aligns with my own style of seeking quality companies to hold, not necessarily to trade, based on metrics such as sustainable dividends. Just giving them props!
Cheers
User avatar
spdoublebass
Posts: 820
Joined: Thu Apr 27, 2017 10:04 pm
Location: NY

Re: Vanguard's Wellesley Income fund is incredible

Post by spdoublebass »

I'm thinking about to put a small amount of money in this fund. Not my EF, I have that in cash in a savings account. I want the money exposed to stock, but also not part of my overall retirement savings.

When I look the annual returns, it never hit a 10% drop. The other funds I was thinking about are VTINX (Target Retirement Income) and the Life Strategy Fund is 20% stock.

I still feel weird about it being active managed, but I can't argue with the results.
I'm trying to think, but nothing happens
User avatar
Topic Author
willthrill81
Posts: 25552
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 »

spdoublebass wrote: Tue Oct 27, 2020 7:42 pm I'm thinking about to put a small amount of money in this fund. Not my EF, I have that in cash in a savings account. I want the money exposed to stock, but also not part of my overall retirement savings.
When we still had an EF, we put 2/3 of it in Wellesley, and it worked out great for us.
spdoublebass wrote: Tue Oct 27, 2020 7:42 pmWhen I look the annual returns, it never hit a 10% drop. The other funds I was thinking about are VTINX (Target Retirement Income) and the Life Strategy Fund is 20% stock.
Annual returns obscure a lot of volatility. Wellesley was down closer to -20% during the GFC on a monthly basis.
spdoublebass wrote: Tue Oct 27, 2020 7:42 pmI still feel weird about it being active managed, but I can't argue with the results.
Even Bogle was fine with active management as long as the costs were low. IIRC, he had a 40% of his portfolio in Wellington, the sister fund to Wellesley.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
User avatar
spdoublebass
Posts: 820
Joined: Thu Apr 27, 2017 10:04 pm
Location: NY

Re: Vanguard's Wellesley Income fund is incredible

Post by spdoublebass »

willthrill81 wrote: Tue Oct 27, 2020 7:58 pm
spdoublebass wrote: Tue Oct 27, 2020 7:42 pm I'm thinking about to put a small amount of money in this fund. Not my EF, I have that in cash in a savings account. I want the money exposed to stock, but also not part of my overall retirement savings.
When we still had an EF, we put 2/3 of it in Wellesley, and it worked out great for us.
spdoublebass wrote: Tue Oct 27, 2020 7:42 pmWhen I look the annual returns, it never hit a 10% drop. The other funds I was thinking about are VTINX (Target Retirement Income) and the Life Strategy Fund is 20% stock.
Annual returns obscure a lot of volatility. Wellesley was down closer to -20% during the GFC on a monthly basis.
spdoublebass wrote: Tue Oct 27, 2020 7:42 pmI still feel weird about it being active managed, but I can't argue with the results.
Even Bogle was fine with active management as long as the costs were low. IIRC, he had a 40% of his portfolio in Wellington, the sister fund to Wellesley.
Thanks for the reply.

-2/3’s sounds about right. I was just saying that I do have money for emergencies in I Bonds and Savings accounts.

-I did see that 18% max draw down.

I’ve read many threads here about EF’s. I understand how your overall portfolio can include your EF. I also understand the bucket approach. The thing is when your EF isn’t substantial, I think buckets are easier mentally (for me anyway). My long term goal is to grow everything to the point I can just view it all as one portfolio. For now though I want it separate from my retirement money.

-I had no clue Bogle had that much of his portfolio in the Wellington. Most Interesting.
I'm trying to think, but nothing happens
GoneOnTilt
Posts: 1783
Joined: Fri Sep 28, 2018 4:59 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by GoneOnTilt »

Well, one thing is for certain. The corporate bonds Wellesley uses are of above average, high quality.
tibbitts
Posts: 14960
Joined: Tue Feb 27, 2007 6:50 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by tibbitts »

GoneOnTilt wrote: Wed Aug 18, 2021 8:30 pm Well, one thing is for certain. The corporate bonds Wellesley uses are of above average, high quality.
Why is that "for certain"? Vanguard describes them as "medium" quality. I'm not sure what you're comparing those bonds to, but if they're of above-average quality (compared to the average corporate bond, I assume?) they should also yield less than average, so that's not necessarily a win.
bog007
Posts: 249
Joined: Fri Feb 28, 2020 3:27 am

Re: Vanguard's Wellesley Income fund is incredible

Post by bog007 »

Wellesley Never lost 10% in a year.

https://www.portfoliovisualizer.com/bac ... ion2_2=100
The only person that can predict the future is Nostradamus and you're no him. Simplicity | 60/40
GoneOnTilt
Posts: 1783
Joined: Fri Sep 28, 2018 4:59 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by GoneOnTilt »

tibbitts wrote: Wed Aug 18, 2021 9:45 pm
GoneOnTilt wrote: Wed Aug 18, 2021 8:30 pm Well, one thing is for certain. The corporate bonds Wellesley uses are of above average, high quality.
Why is that "for certain"? Vanguard describes them as "medium" quality. I'm not sure what you're comparing those bonds to, but if they're of above-average quality (compared to the average corporate bond, I assume?) they should also yield less than average, so that's not necessarily a win.
If you compare the percentage of BBB corporate bonds and higher in Wellesley with the percentage of BBB corporate bonds and higher in the Bloomberg Barclays Agg Index, you'll see that the quality of the corporates in Wellesley are above the index average in terms of those percentages (you have to match up Moody's ratings with S&P ratings). I meant to say "higher quality."
burritoLover
Posts: 891
Joined: Sun Jul 05, 2020 12:13 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by burritoLover »

Wellesley dropped 17% during the covid crash - not that great for a 40/60 fund.
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
GaryA505
Posts: 993
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Vanguard's Wellesley Income fund is incredible

Post by GaryA505 »

burritoLover wrote: Thu Aug 19, 2021 10:58 am Wellesley dropped 17% during the covid crash - not that great for a 40/60 fund.
According to Portfolio Visualizer, the covid drawdown for Wellesley was 8.59% and for 40/40 VFINX/VBMFX was 7.06%

I don't see any secret sauce in Wellesley.

https://www.portfoliovisualizer.com/bac ... tion3_2=60
"Get most of it right and don't make any big mistakes."
burritoLover
Posts: 891
Joined: Sun Jul 05, 2020 12:13 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by burritoLover »

GaryA505 wrote: Thu Aug 19, 2021 11:19 am
burritoLover wrote: Thu Aug 19, 2021 10:58 am Wellesley dropped 17% during the covid crash - not that great for a 40/60 fund.
According to Portfolio Visualizer, the covid drawdown for Wellesley was 8.59% and for 40/40 VFINX/VBMFX was 7.06%

I don't see any secret sauce in Wellesley.

https://www.portfoliovisualizer.com/bac ... tion3_2=60
Yeah, I think portfolio visualizer is only calculating monthly returns (start of month). If you look at the daily price action, it feel 17% over a period of about a month (in the middle of the month). That is kind of the oh' crap metric for people that might panic sell.
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
GaryA505
Posts: 993
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Vanguard's Wellesley Income fund is incredible

Post by GaryA505 »

burritoLover wrote: Thu Aug 19, 2021 11:25 am
GaryA505 wrote: Thu Aug 19, 2021 11:19 am
burritoLover wrote: Thu Aug 19, 2021 10:58 am Wellesley dropped 17% during the covid crash - not that great for a 40/60 fund.
According to Portfolio Visualizer, the covid drawdown for Wellesley was 8.59% and for 40/40 VFINX/VBMFX was 7.06%

I don't see any secret sauce in Wellesley.

https://www.portfoliovisualizer.com/bac ... tion3_2=60
Yeah, I think portfolio visualizer is only calculating monthly returns (start of month). If you look at the daily price action, it feel 17% over a period of about a month (in the middle of the month). That is kind of the oh' crap metric for people that might panic sell.
Precisely.
"Get most of it right and don't make any big mistakes."
secondopinion
Posts: 1157
Joined: Wed Dec 02, 2020 1:18 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by secondopinion »

burritoLover wrote: Thu Aug 19, 2021 11:25 am
GaryA505 wrote: Thu Aug 19, 2021 11:19 am
burritoLover wrote: Thu Aug 19, 2021 10:58 am Wellesley dropped 17% during the covid crash - not that great for a 40/60 fund.
According to Portfolio Visualizer, the covid drawdown for Wellesley was 8.59% and for 40/40 VFINX/VBMFX was 7.06%

I don't see any secret sauce in Wellesley.

https://www.portfoliovisualizer.com/bac ... tion3_2=60
Yeah, I think portfolio visualizer is only calculating monthly returns (start of month). If you look at the daily price action, it feel 17% over a period of about a month (in the middle of the month). That is kind of the oh' crap metric for people that might panic sell.
That is correct with the program; it is monthly. I have Wellesley; 17% was nothing to me when I know quality will make up for it over time. Also, Wellesley has a perpetual slant that did poorly during that crash; anything value-slanted did worse than the total market.

Granted, I bought a lot of growth stock index funds during the dip instead of Wellesley...
FactualFran
Posts: 1439
Joined: Sat Feb 21, 2015 2:29 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by FactualFran »

burritoLover wrote: Thu Aug 19, 2021 10:58 am Wellesley dropped 17% during the covid crash - not that great for a 40/60 fund.
How did other 40/60 funds do?
burritoLover
Posts: 891
Joined: Sun Jul 05, 2020 12:13 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by burritoLover »

FactualFran wrote: Thu Aug 19, 2021 12:03 pm
burritoLover wrote: Thu Aug 19, 2021 10:58 am Wellesley dropped 17% during the covid crash - not that great for a 40/60 fund.
How did other 40/60 funds do?
Vanguard 40/60 lifestrategy had a max drawdown of -15%.
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
FactualFran
Posts: 1439
Joined: Sat Feb 21, 2015 2:29 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by FactualFran »

burritoLover wrote: Thu Aug 19, 2021 12:52 pm [Vanguard 40/60 lifestrategy had a max drawdown of -15%.
That -15% has a non-standard rounding from -15.88% (between the NAV for 02/19 of 21.54 and the NAV for 18.12, there were no distributions by the fund between those dates).
burritoLover
Posts: 891
Joined: Sun Jul 05, 2020 12:13 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by burritoLover »

FactualFran wrote: Thu Aug 19, 2021 2:23 pm
burritoLover wrote: Thu Aug 19, 2021 12:52 pm [Vanguard 40/60 lifestrategy had a max drawdown of -15%.
That -15% has a non-standard rounding from -15.88% (between the NAV for 02/19 of 21.54 and the NAV for 18.12, there were no distributions by the fund between those dates).
I see 18.23 for the low point (or -15.37%), at least according to CNBC.

EDIT: looks like yahoo shows the 18.12 but CNBC doesn't.
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
FactualFran
Posts: 1439
Joined: Sat Feb 21, 2015 2:29 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by FactualFran »

burritoLover wrote: Thu Aug 19, 2021 2:53 pm I see 18.23 for the low point (or -15.37%), at least according to CNBC.

EDIT: looks like yahoo shows the 18.12 but CNBC doesn't.
Vanguard, the primary source of NAVs for its funds, shows 18.12. 18.23 was the closing NAV for the previous business day (a Friday).
bog007
Posts: 249
Joined: Fri Feb 28, 2020 3:27 am

Re: Vanguard's Wellesley Income fund is incredible

Post by bog007 »

The only person that can predict the future is Nostradamus and you're no him. Simplicity | 60/40
ScooterBob
Posts: 221
Joined: Sun Feb 15, 2015 1:21 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by ScooterBob »

Why the hate for Wellesley? I've owned it for years and have been very happy with the performance. Remember, everyone isn't 35 years old and in the accumulation stage. This fund works perfectly for a retiree or someone near retirement or for those that may be risk tolerant. Remember, perfection is not always the goal. If it is, you'll never be happy....

Bob
GaryA505
Posts: 993
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Vanguard's Wellesley Income fund is incredible

Post by GaryA505 »

ScooterBob wrote: Thu Aug 19, 2021 4:23 pm Why the hate for Wellesley? I've owned it for years and have been very happy with the performance. Remember, everyone isn't 35 years old and in the accumulation stage. This fund works perfectly for a retiree or someone near retirement or for those that may be risk tolerant. Remember, perfection is not always the goal. If it is, you'll never be happy....

Bob
I don't think too many people here hate Wellesley. It's just that when people say it's "incredible" or whatever, that's a bit of a stretch. It's a perfectly good choice for someone who wants a 40/60 US-only fund, but there's no magic in it. However, I would caution anyone who buys it based on it's past performance during the 40-year bond bull market.
"Get most of it right and don't make any big mistakes."
secondopinion
Posts: 1157
Joined: Wed Dec 02, 2020 1:18 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by secondopinion »

GaryA505 wrote: Thu Aug 19, 2021 4:30 pm
ScooterBob wrote: Thu Aug 19, 2021 4:23 pm Why the hate for Wellesley? I've owned it for years and have been very happy with the performance. Remember, everyone isn't 35 years old and in the accumulation stage. This fund works perfectly for a retiree or someone near retirement or for those that may be risk tolerant. Remember, perfection is not always the goal. If it is, you'll never be happy....

Bob
I don't think too many people here hate Wellesley. It's just that when people say it's "incredible" or whatever, that's a bit of a stretch. It's a perfectly good choice for someone who wants a 40/60 US-only fund, but there's no magic in it. However, I would caution anyone who buys it based on it's past performance during the 40-year bond bull market.
Agreed. It is a good choice, but it is not perfect. I am actually younger than 35 and I hold about 5% in this fund; partly because of slant appeal, and partly because I had to in one of my accounts (the rest of the options I do not want, and I cannot do much about it).

No major complaints; no major endorsements. It does its job.
ScooterBob
Posts: 221
Joined: Sun Feb 15, 2015 1:21 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by ScooterBob »

Incredible might be a stretch but "consistent" is not- at least for the past 20+ years or so. What will it do in the future? Who knows? I've seen folks comparing it to Vtsax... come on... that's ridiculous. For what it is and what it's meant to do it is a very good fund. Again, the future is not known.

Bob
smalliebigs
Posts: 307
Joined: Wed Jan 04, 2017 10:48 am

Re: Vanguard's Wellesley Income fund is incredible

Post by smalliebigs »

I always go back and forth on it compared to VASIX for my emergency funds. Long term, both seem to be doing fairly similar.
tibbitts
Posts: 14960
Joined: Tue Feb 27, 2007 6:50 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by tibbitts »

GoneOnTilt wrote: Thu Aug 19, 2021 10:35 am
tibbitts wrote: Wed Aug 18, 2021 9:45 pm
GoneOnTilt wrote: Wed Aug 18, 2021 8:30 pm Well, one thing is for certain. The corporate bonds Wellesley uses are of above average, high quality.
Why is that "for certain"? Vanguard describes them as "medium" quality. I'm not sure what you're comparing those bonds to, but if they're of above-average quality (compared to the average corporate bond, I assume?) they should also yield less than average, so that's not necessarily a win.
If you compare the percentage of BBB corporate bonds and higher in Wellesley with the percentage of BBB corporate bonds and higher in the Bloomberg Barclays Agg Index, you'll see that the quality of the corporates in Wellesley are above the index average in terms of those percentages (you have to match up Moody's ratings with S&P ratings). I meant to say "higher quality."
Although I invested a substantial-for-me amount in the fund for years until recently, I didn't know that. I would have guessed the opposite actually - I would have thought the fund would be a little junkier than a broad index on both the equity and bond side, in the pursuit of higher rates, and since that's a way management can add value (buying junk that proves to be less junky than the majority opinion.)
Last edited by tibbitts on Thu Aug 19, 2021 5:42 pm, edited 1 time in total.
GoneOnTilt
Posts: 1783
Joined: Fri Sep 28, 2018 4:59 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by GoneOnTilt »

tibbitts wrote: Thu Aug 19, 2021 5:36 pm
GoneOnTilt wrote: Thu Aug 19, 2021 10:35 am
tibbitts wrote: Wed Aug 18, 2021 9:45 pm
GoneOnTilt wrote: Wed Aug 18, 2021 8:30 pm Well, one thing is for certain. The corporate bonds Wellesley uses are of above average, high quality.
Why is that "for certain"? Vanguard describes them as "medium" quality. I'm not sure what you're comparing those bonds to, but if they're of above-average quality (compared to the average corporate bond, I assume?) they should also yield less than average, so that's not necessarily a win.
If you compare the percentage of BBB corporate bonds and higher in Wellesley with the percentage of BBB corporate bonds and higher in the Bloomberg Barclays Agg Index, you'll see that the quality of the corporates in Wellesley are above the index average in terms of those percentages (you have to match up Moody's ratings with S&P ratings). I meant to say "higher quality."
Although I invested a substantial-for-me amount in the fund for years until recently, I didn't know that. I would have guessed the opposite actually - I would have thought the fund would be a little junkier than a broad index on both the equity and bond side, in the pursuit of higher rates, and since that's a way management can add value (buying junk that proves be less junky than the majority opinion.)
That makes total sense. I wonder if it's the slightly longer duration than the aggregate index that juices yield a bit (8.0 years).
GoneOnTilt
Posts: 1783
Joined: Fri Sep 28, 2018 4:59 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by GoneOnTilt »

tibbitts wrote: Thu Aug 19, 2021 5:36 pm
GoneOnTilt wrote: Thu Aug 19, 2021 10:35 am
tibbitts wrote: Wed Aug 18, 2021 9:45 pm
GoneOnTilt wrote: Wed Aug 18, 2021 8:30 pm Well, one thing is for certain. The corporate bonds Wellesley uses are of above average, high quality.
Why is that "for certain"? Vanguard describes them as "medium" quality. I'm not sure what you're comparing those bonds to, but if they're of above-average quality (compared to the average corporate bond, I assume?) they should also yield less than average, so that's not necessarily a win.
If you compare the percentage of BBB corporate bonds and higher in Wellesley with the percentage of BBB corporate bonds and higher in the Bloomberg Barclays Agg Index, you'll see that the quality of the corporates in Wellesley are above the index average in terms of those percentages (you have to match up Moody's ratings with S&P ratings). I meant to say "higher quality."
Although I invested a substantial-for-me amount in the fund for years until recently, I didn't know that. I would have guessed the opposite actually - I would have thought the fund would be a little junkier than a broad index on both the equity and bond side, in the pursuit of higher rates, and since that's a way management can add value (buying junk that proves to be less junky than the majority opinion.)
And also, the equity side seeks to track the FTSE High Dividend Yield Index.
tibbitts
Posts: 14960
Joined: Tue Feb 27, 2007 6:50 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by tibbitts »

ScooterBob wrote: Thu Aug 19, 2021 4:23 pm Why the hate for Wellesley? I've owned it for years and have been very happy with the performance. Remember, everyone isn't 35 years old and in the accumulation stage. This fund works perfectly for a retiree or someone near retirement or for those that may be risk tolerant. Remember, perfection is not always the goal. If it is, you'll never be happy....

Bob
I don't think anybody "hates" it; you're just seeing some push-back to the implication that there's something magical about it.
ScooterBob
Posts: 221
Joined: Sun Feb 15, 2015 1:21 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by ScooterBob »

Nothing magical... I see a lot of younger folks ( I'm thinking they're younger by other posts) putting it down. I used to think that way- believe me- but since I retired and have been investing for 40+ years- I see alot of biased info being spread. It's never going to beat the S&P 500- it's not designed to. It's for folks that are satisfied with it's results and are more interested in living than investment perfection. My opinion...

Bob
DB2
Posts: 1314
Joined: Thu Jan 17, 2019 10:07 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by DB2 »

GaryA505 wrote: Thu Aug 19, 2021 11:19 am
burritoLover wrote: Thu Aug 19, 2021 10:58 am Wellesley dropped 17% during the covid crash - not that great for a 40/60 fund.
According to Portfolio Visualizer, the covid drawdown for Wellesley was 8.59% and for 40/40 VFINX/VBMFX was 7.06%

I don't see any secret sauce in Wellesley.

https://www.portfoliovisualizer.com/bac ... tion3_2=60
Wellesley still outperformed by around a half point which might have been notable over time and depending on how much was regularly invested. Also, the fund seems to be usually about 2-3% lower in equity at 37-38% compared to a straight 40% comparison of TSM.
User avatar
Bluce
Posts: 1158
Joined: Tue May 10, 2011 11:01 pm
Location: Finger Lakes, NYS

Re: Vanguard's Wellesley Income fund is incredible

Post by Bluce »

Image


Not too shabby for a beta of .62:


Image
"There are no new ideas, only forgotten ones." -- Amity Shlaes
GaryA505
Posts: 993
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Vanguard's Wellesley Income fund is incredible

Post by GaryA505 »

DB2 wrote: Thu Aug 19, 2021 7:15 pm
GaryA505 wrote: Thu Aug 19, 2021 11:19 am
burritoLover wrote: Thu Aug 19, 2021 10:58 am Wellesley dropped 17% during the covid crash - not that great for a 40/60 fund.
According to Portfolio Visualizer, the covid drawdown for Wellesley was 8.59% and for 40/40 VFINX/VBMFX was 7.06%

I don't see any secret sauce in Wellesley.

https://www.portfoliovisualizer.com/bac ... tion3_2=60
Wellesley still outperformed by around a half point which might have been notable over time and depending on how much was regularly invested. Also, the fund seems to be usually about 2-3% lower in equity at 37-38% compared to a straight 40% comparison of TSM.
It has outperformed 40/60 in the past. The last ten years it has not done so well.

https://www.portfoliovisualizer.com/bac ... tion3_2=60
"Get most of it right and don't make any big mistakes."
smectym
Posts: 1032
Joined: Thu May 26, 2011 5:07 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by smectym »

B. Wellington wrote: Thu Jan 16, 2020 10:06 am
dkturner wrote: Thu Jan 16, 2020 8:09 am
columbia wrote: Wed Jan 15, 2020 7:09 pm
dkturner wrote: Wed Jan 15, 2020 4:32 pm I’ve been tracking the performance of Wellesley versus the Vanguard LifeStrategy Conservative Growth Fund since 1995. For the last 25 years Wellesley has produced annualized returns of 8.55% compared to 6.99% for LifeStrategy Conservative Growth. What I find interesting is over the last 10 years, when “value” stocks trailed the performance of the broad market, Wellesley produced annualized returns of 8.05% compared to 6.61% for LifeStrategy Conservative Growth. So much for the value premium is dead theory.
International has dragged down that life strategy fund, of course.
Currently 15% of the equities in Wellesley are international - it has varied over time. Over the last 25 years there were times when LifeStrategy Conservative Growth only held 20%-30% of its equity exposure in international equities. In addition, Wellesley’s total equity exposure is usually in the 35-37% range while LifeStrategy Conservative Growth has had a fixed 40% equity allocation. I’ve read on these boards that the composition of the LifeStrategy funds was designed by the “experts” at Vanguard. Personally,
I’d rather trust the folks at Wellington Management to determine the allocation of the assets in my mutual fund. I like their mandate to move allocations around when they believe it’s in my best interests.
And there it is...Why some prefer the W/W funds. I believe it has to do more with the bond side (more) than the stock side, especially for Wellesley.

"I believe it has more to do with the bond side..."

I agree, and I would love to see a detailed analysis of the active bond strategy the Wellington Management guys are pursuing, especially now in this era of ultra-low rates. [disclosure, we're heavily into VWIAX in our retirement accounts]


I see Klangfool beat me to it. :sharebeer

Disclosure: Been investing with Wellington Management for many, many years. Along with the Balanced Index fund (which was the Vanguard Asset Allocation fund that merged with the Balanced Index I believe in 2011.
burritoLover
Posts: 891
Joined: Sun Jul 05, 2020 12:13 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by burritoLover »

One thing to keep in mind before you label the Wellesley fund as "incredible" is that it garners additional return by taking additional risk on both the equity side (value stocks) and on the bond side (81/19 corporates/treasuries vs 35/65 for total bond as well as longer duration). It gets the actively managed pass from many BHers because of performance when compared to less risky 40/60 funds. Not sure why after everything that you learn in the BH space about index funds and how successfully timing the market long-term is a fool's errand that those same BHers fall for the "actively managed is better" trap.
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
tj
Posts: 5248
Joined: Thu Dec 24, 2009 12:10 am

Re: Vanguard's Wellesley Income fund is incredible

Post by tj »

burritoLover wrote: Fri Aug 20, 2021 8:14 am One thing to keep in mind before you label the Wellesley fund as "incredible" is that it garners additional return by taking additional risk on both the equity side (value stocks) and on the bond side (81/19 corporates/treasuries vs 35/65 for total bond as well as longer duration). It gets the actively managed pass from many BHers because of performance when compared to less risky 40/60 funds. Not sure why after everything that you learn in the BH space about index funds and how successfully timing the market long-term is a fool's errand that those same BHers fall for the "actively managed is better" trap.
It's about fees, not managers. Wellesley is dirt cheap.
life in slices
Posts: 228
Joined: Mon Apr 15, 2019 6:00 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by life in slices »

For those using Wellesley for some level of their EF - are you keeping that in taxable?
If so, how has the tax drag been (dividends and interest)?
DB2
Posts: 1314
Joined: Thu Jan 17, 2019 10:07 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by DB2 »

GaryA505 wrote: Thu Aug 19, 2021 7:55 pm
DB2 wrote: Thu Aug 19, 2021 7:15 pm
GaryA505 wrote: Thu Aug 19, 2021 11:19 am
burritoLover wrote: Thu Aug 19, 2021 10:58 am Wellesley dropped 17% during the covid crash - not that great for a 40/60 fund.
According to Portfolio Visualizer, the covid drawdown for Wellesley was 8.59% and for 40/40 VFINX/VBMFX was 7.06%

I don't see any secret sauce in Wellesley.

https://www.portfoliovisualizer.com/bac ... tion3_2=60
Wellesley still outperformed by around a half point which might have been notable over time and depending on how much was regularly invested. Also, the fund seems to be usually about 2-3% lower in equity at 37-38% compared to a straight 40% comparison of TSM.
It has outperformed 40/60 in the past. The last ten years it has not done so well.

https://www.portfoliovisualizer.com/bac ... tion3_2=60
At 38/62, which matches Wellesley's AA, they are about even with Wellesley actually a fraction ahead. Not bad for a decade where Growth significantly outperformed Value, but it's a testament to the pragmatism of Wellesley's active management.
User avatar
spdoublebass
Posts: 820
Joined: Thu Apr 27, 2017 10:04 pm
Location: NY

Re: Vanguard's Wellesley Income fund is incredible

Post by spdoublebass »

life in slices wrote: Fri Aug 20, 2021 9:28 am For those using Wellesley for some level of their EF - are you keeping that in taxable?
If so, how has the tax drag been (dividends and interest)?
I can't speak for the big hitters here, but people in a low tax bracket with a smaller EF, I don't think it is bad at all.
I'm trying to think, but nothing happens
bluewater23t
Posts: 30
Joined: Tue Jan 07, 2020 9:31 am

Re: Vanguard's Wellesley Income fund is incredible

Post by bluewater23t »

spdoublebass wrote: Fri Aug 20, 2021 9:11 pm
life in slices wrote: Fri Aug 20, 2021 9:28 am For those using Wellesley for some level of their EF - are you keeping that in taxable?
If so, how has the tax drag been (dividends and interest)?
I can't speak for the big hitters here, but people in a low tax bracket with a smaller EF, I don't think it is bad at all.
It might depend if you are retired or not. I am not retired, so I don't need the distributions now. I am certainly no big hitter, but I think it is much better in a non-taxable account for me. I didn't quite understand what everyone was talking about until I held some Wellesley and Wellington in taxable accounts for at least a year. The quarterly dividends aren't so bad, but the end of year cap gains can be significant. Wellesley this past year was small, but Wellington was large. Did not enjoy that cap gains distribution. Any potential future purchases for me will be made in non-tax accounts. You can look at the distributions on Vanguard's webpage. Do the math. Your situation might be different than mine. My 2c.
User avatar
c.coyle
Posts: 187
Joined: Thu Aug 03, 2017 5:10 pm
Location: Eastern Pa.

Re: Vanguard's Wellesley Income fund is incredible

Post by c.coyle »

50-50 VTSAX / VBTLX is a pretty good balanced fund.
VTSAX - 50%, VBTLX - 50%
Bama12
Posts: 555
Joined: Fri Aug 30, 2019 11:48 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by Bama12 »

spdoublebass wrote: Fri Aug 20, 2021 9:11 pm
life in slices wrote: Fri Aug 20, 2021 9:28 am For those using Wellesley for some level of their EF - are you keeping that in taxable?
If so, how has the tax drag been (dividends and interest)?
I can't speak for the big hitters here, but people in a low tax bracket with a smaller EF, I don't think it is bad at all.
I used Wellesley as my first E-Fund many years ago.

I open my first Roth and put 13K in Wellesley over 3 years. Many years later, I still have it and it has done very well.

I never put new money after the first 13K.
GaryA505
Posts: 993
Joined: Wed Feb 08, 2017 2:59 pm
Location: New Mexico

Re: Vanguard's Wellesley Income fund is incredible

Post by GaryA505 »

c.coyle wrote: Sat Aug 21, 2021 1:11 pm 50-50 VTSAX / VBTLX is a pretty good balanced fund.
You could do a lot worse. I started a thread a while back about this - why not 50/50? It's simple, and "good enough". Scott Burns would approve!
"Get most of it right and don't make any big mistakes."
User avatar
dwickenh
Posts: 2121
Joined: Sun Jan 04, 2015 9:45 pm
Location: Illinois

Re: Vanguard's Wellesley Income fund is incredible

Post by dwickenh »

GaryA505 wrote: Sat Aug 21, 2021 6:50 pm
c.coyle wrote: Sat Aug 21, 2021 1:11 pm 50-50 VTSAX / VBTLX is a pretty good balanced fund.
You could do a lot worse. I started a thread a while back about this - why not 50/50? It's simple, and "good enough". Scott Burns would approve!
That's my 2 funder!!! Well 3 as I put 25% in VBTLX and 25% in VBILX on the bond side.

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett
GoneOnTilt
Posts: 1783
Joined: Fri Sep 28, 2018 4:59 pm

Re: Vanguard's Wellesley Income fund is incredible

Post by GoneOnTilt »

DB2 wrote: Fri Aug 20, 2021 11:12 am At 38/62, which matches Wellesley's AA, they are about even with Wellesley actually a fraction ahead. Not bad for a decade where Growth significantly outperformed Value, but it's a testament to the pragmatism of Wellesley's active management.
Agreed.

I think a simple and sensible reason to hold Wellesley is to tilt a bit toward large cap value stocks and increase your holding of high quality corporate bonds - higher quality than the corporate bond portion of the total bond market index.

I don't think anyone's going to get killed with Wellesley. I hold it in my Roth.

EDIT: I also hold some in taxable for "emergency" money (really, for expenses I might need in 4-10 years, but I could access at any time).
Last edited by GoneOnTilt on Tue Sep 14, 2021 10:45 am, edited 1 time in total.
User avatar
Topic Author
willthrill81
Posts: 25552
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 »

life in slices wrote: Fri Aug 20, 2021 9:28 am For those using Wellesley for some level of their EF - are you keeping that in taxable?
If so, how has the tax drag been (dividends and interest)?
Back when we had an EF, we kept 2/3 of it in Wellesley and held it in a Roth IRA. That way, we could pull out our contributions with no penalty or taxes, but growth was tax free. It worked out very well for us.

I don't see a big problem with anyone keeping part of their EF in Wellesley in taxable. Generally, paying taxes means that you're getting at least some nominal return on your money.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
User avatar
Topic Author
willthrill81
Posts: 25552
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 »

tibbitts wrote: Thu Aug 19, 2021 6:31 pm
ScooterBob wrote: Thu Aug 19, 2021 4:23 pm Why the hate for Wellesley? I've owned it for years and have been very happy with the performance. Remember, everyone isn't 35 years old and in the accumulation stage. This fund works perfectly for a retiree or someone near retirement or for those that may be risk tolerant. Remember, perfection is not always the goal. If it is, you'll never be happy....

Bob
I don't think anybody "hates" it; you're just seeing some push-back to the implication that there's something magical about it.
I've never thought that there was anything 'magical' about Wellesley. 'Incredible' might be too strong a word, but when I created this thread, I thought that it was incredible that a 35/65 had not lagged U.S. stocks by any more than Wellesley had over its long tenure.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
tj
Posts: 5248
Joined: Thu Dec 24, 2009 12:10 am

Re: Vanguard's Wellesley Income fund is incredible

Post by tj »

willthrill81 wrote: Tue Sep 14, 2021 9:59 am
life in slices wrote: Fri Aug 20, 2021 9:28 am For those using Wellesley for some level of their EF - are you keeping that in taxable?
If so, how has the tax drag been (dividends and interest)?
Back when we had an EF, we kept 2/3 of it in Wellesley and held it in a Roth IRA. That way, we could pull out our contributions with no penalty or taxes, but growth was tax free. It worked out very well for us.

I don't see a big problem with anyone keeping part of their EF in Wellesley in taxable. Generally, paying taxes means that you're getting at least some nominal return on your money.
Are you still using Wellesley?
User avatar
Topic Author
willthrill81
Posts: 25552
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Vanguard's Wellesley Income fund is incredible

Post by willthrill81 »

tj wrote: Tue Sep 14, 2021 10:02 am
willthrill81 wrote: Tue Sep 14, 2021 9:59 am
life in slices wrote: Fri Aug 20, 2021 9:28 am For those using Wellesley for some level of their EF - are you keeping that in taxable?
If so, how has the tax drag been (dividends and interest)?
Back when we had an EF, we kept 2/3 of it in Wellesley and held it in a Roth IRA. That way, we could pull out our contributions with no penalty or taxes, but growth was tax free. It worked out very well for us.

I don't see a big problem with anyone keeping part of their EF in Wellesley in taxable. Generally, paying taxes means that you're getting at least some nominal return on your money.
Are you still using Wellesley?
No. We disposed of our EF a while back and so have no need of it anymore.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
User avatar
Jerry55
Posts: 825
Joined: Tue Jan 27, 2015 1:56 am
Location: That Toddlin' Town

Re: Vanguard's Wellesley Income fund is incredible

Post by Jerry55 »

GoneOnTilt wrote: Tue Sep 14, 2021 7:39 am
I think a simple and sensible reason to hold Wellesley is to tilt a bit toward large cap value stocks and increase your holding of high quality corporate bonds - higher quality than the corporate bond portion of the total bond market index.

I don't think anyone's going to get killed with Wellesley. I hold it in my Roth.
:sharebeer

I converted my federal VCP to a full on Wellesley ROTH IRA back in 2012, and overall, it gone up 97% in total.
I still hold my C fund, S fund and I fund in my TSP, but I'm extremely happy with Wellesley for sure.
Retired CSRS on 12/19/2012 @ age 57 w/39 years | Good Bye Tension, Hello Pension !!!
Post Reply