That is correct. Wellesley is at this time roughly 30% large cap value and the rest the shorter side of intermediate bonds, of various types. So only about 30% is qualified.
Cube rat...basically wellesley is a bit of an odd animal. In a nutshell it uses a 30-35% chunk of large cap value and the rest in fairly high quality bonds. The bonds provide ballast and income. Large cap value occasionally falls out of favor but in the longer hauls the asset class provides one of the highest returns, along with doling out a fairly substantial qualified dividend.
Sort of like a family car with a small supercharger under the hood. Kinda boring looking but...
You can get capital appreciation from the stocks going up, you can get capital appreciation from the value of the bonds going up, and both produce steady income streams.
You need a very odd and unusual set of circumstances to produce a negative valuation. Very fast, very rapid increase in interest rates coupled with a bear market in stocks and a bear market in bonds. Stable rates, stable markets and you'll keep getting your good yield with a little bit of appreciation on the side. Dropping rates, strong markets in stocks and bonds and you get a double digit return year.
No double digit annualized losses in the fund since its inception, no two losing years in a row, usually after one of those single digit losing years you get a very good year.
When I was a single guy with a 45 year+ investing horizon and the need for current income without selling shares, and a moderately low tax profile, I had most of my money in wellesley.
Last piece of trivia...Wellesleys "sister" fund, Wellington, is pretty much the upside down of wellesley...60-65% large cap value, 35-40% bond. Wellington is the oldest surviving US mutual fund, dating back to just before the depression and is the harbor of a lot of "old money". Rumor has it that wellesley was created as a transitional fund for all these "old money" folks to move their wellington holdings towards something similar in investment ideals and fund management, but with more income and less volatility. I dont know if any of thats true, but its a good story.
And for actively managed funds, they carry pretty cheap ER's especially at the admiral level.
Alec (ats5g here) did an analysis and found that if you mix your own indexes to produce a 'wellesley-like' mix, you can get similar performance at a slightly lower cost, at least historically. You have to do your own rebalancing though.
Nice fund for people who arent in a very high tax bracket, cant take volatility, like getting good consistent returns, and arent swinging for the fences. This is the fund that hits a single and occasionally a double at almost every at bat.
I dropped it because my new wifes income makes the dividends a little bit more expensive for us taxwise, I can stomach more volatility with a small income coming into the household and our health care insurance being paid for through her work, and I with that in mind I can swing for the fences as much as I want.
