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income funds
Old 03-20-2005, 06:55 PM   #1
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income funds

Obviously, there are many income funds available
but I've noticed a huge number of ER folks here
seem to feel very strongly about Wellesley/Wellington
funds. What makes these funds so attractive when
compared to other income funds? I'm just curious as
to why the consensus seems to center around these
two funds.

FYI, I personally have Oakmark Equity& Income (OAKBX)
as my income fund. though it's not technically a pure
income fund. I have been extremely happy with its performance.

Joe
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Re: income funds
Old 03-20-2005, 07:40 PM   #2
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Re: income funds

I do not believe these two funds are classified as income funds. They are balanced funds. One is 40/60 and the another is 60/40 (stocks/bonds) mix. These two funds have a good track record during bear and bull markets and they have been around for a long long time.
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Re: income funds
Old 03-20-2005, 07:52 PM   #3
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Re: income funds

Weeel...technically wellesley calls itself the "wellesley income fund".

Wellington is one of the oldest, if not the oldest, mutual fund. Wellesley is its little brother and considered the same sort of fund (high dividend large cap value + shorter-intermediate high quality bonds) only more conservative.

"Old money" hideouts. For some time a 'standard' among the well to do was to start in wellington and slowly shift your money to wellesley as you aged. Sort of a roll-your-own target retirement fund...

Wellesley simply turns in good returns, throws off a lot of income, and hasnt taken any "bad beatings" even during some relatively ugly times.

To be fair, its had some nice runs in large cap value and in the types of bonds its owned. With rising interest rates and a push to growth stocks, it could stodge along for a few years.

Still my largest holding. You have to love the reliability of big bond yields and stock dividends landing in your checking account ever quarter.

I used to own your oakmark fund...one of the better ones...but it charges over 1% management fee IIRC...my wellesley admiral shares charged .19-.20% last year. I get a .80% head start right off the bat.
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Re: income funds
Old 03-22-2005, 07:33 AM   #4
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Re: income funds

TH,

Do you own Wellesley in a taxable account? Sorry if you have posted this info before.

LovesLife
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Re: income funds
Old 03-22-2005, 02:02 PM   #5
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Re: income funds

Yes I do, but my tax rate is ridiculously low. The healing powers of the brain are removing the horrific experience of tax time from my memory as we speak, but I think we paid ~7% to the feds and ~6% to the state.

Bond/interest payouts in a taxable fund when you're at a 30-50% tax rate would be a bad idea.

3.5% paid out quarterly into your checking account when you've got a low tax profile, along with an average 5%+ annual capital appreciation is a good thing!
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Re: income funds
Old 03-22-2005, 02:13 PM   #6
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Re: income funds

Thank you, TH, for your reply.

I am restructuring everything and I think the Wellesley fund looks very good. Most of my money is in taxable accounts and I am doing a whole port restructure. I appreciate your comments regarding the tax brackets. Very helpful.

LovesLife
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