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Old 03-14-2010, 10:34 AM   #21
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I believe this describes the underlying basic strategy of Wellesley, which is described as an income fund. In theory you should be able to spend the dividends while keeping up with inflation.

I repeat: in theory.
Besides, if you have 70% in other funds that are growing at rates exceeding inflation, and then rebalance each year, their increase should bolster up Wellesley anyway if there are any problems with inflation.
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Old 03-14-2010, 10:43 AM   #22
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Besides, if you have 70% in other funds that are growing at rates exceeding inflation, and then rebalance each year, their increase should bolster up Wellesley anyway if there are any problems with inflation.
Hey, back off - or I'll bring up your coprophobia chorophobia problem...
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Old 03-14-2010, 10:48 AM   #23
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Hey, back off - or I'll bring up your coprophobia chorophobia problem...
You sewage rats RV owners must be really good sports, since you do seem to have a lot of fun considering what you spend your free time doing. (ugh!)
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Old 03-14-2010, 03:17 PM   #24
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I was surprised when I looked up Wellesley that fund managers are relatively recent. 2007 for the equity manager and 2008 for the fixed income manager. This being a Vanguard fund I won't be overly concerned but for a semi-active fund the management would matter.

Here is what Morningstar says about the fund managers
Quote:
Strategy
W. Michael Reckmeyer III, who runs the equity portion of the fund, is a yield-oriented contrarian. The fund typically has little exposure to growth-oriented sectors such as technology. The fund's bond stake (about 60% of assets) is run by Wellington Management's John Keogh, who keeps the portfolio concentrated in higher-quality issues. The fund often has a longer duration, a measure of interest-rate sensitivity, than many of its peers, leaving it vulnerable to rising rates.

Management
This fund has a relatively new, but still experienced, management. John Keogh replaced Earl McEvoy, who had been running the fixed-income portfolio for decades, in June 2008. He's a veteran bond manager who also runs the fixed-income side of Vanguard Wellington VWELX. W. Michael Reckmeyer III, who had worked with previous stock manager Jack Ryan on this fund for more than a decade, took over in June 2008. Like Ryan, Reckmeyer also runs part of Vanguard Equity-Income VEIPX.
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Old 03-14-2010, 07:02 PM   #25
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Well, in light of the new managers historical data is pretty irrelevant, but I ran some numbers anyway. Here is a risk/return chart for Wellesley and several other funds for comparison. The horizontal axis is the standard deviation of the percentage daily change of the NAV. The vertical axis is the equivalent APR return for the time period. I began the time period at the earliest date for which data is available for all of the funds - July 1996.
The symbols are:
VWINX - Wellesley Income
VBMFX - Total Bond Index
VTSMX - Total Stock Index
VGTSX - Total International Stock Index
VEIPX - Equity Income
I didn't include TIPS (VIPSX) because it lands almost on top of VBMFX.

riskReturn fund list.gif

You can see that Wellesley does pretty well. Higher return than Total Bond with only a little more volatility. Better return and significantly less volatility than Equity Income.

I don't own Wellesley now, but I did have a little of it in my Mother's portfolio for years. I was always surprised at how well it performed. I should have bought more.
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Old 03-14-2010, 07:05 PM   #26
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I am a huge fan, but also am hesitant to use too much of one fund. We have approximatley 60% spread between Wellesley and Wellington in IRA and Balanced Index in Roths. Use these along with Total International to achieve our 40% stock target.

Wellington management has excelled over time with several different particular managers.

Here is a graph comparing Wellesley with 500 and Total Bond indices over time.

VWINX: Vanguard Wellesley Income Fund Chart | Morningstar

ps - Sorry, couldn't get 500 and total bond to save for link, but you can add and change funds for comparison.
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Old 03-14-2010, 07:15 PM   #27
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I decided to dip my toe into the Wellesley pool in Jan 09. Some really smart people on some early retirement forum on the Internet had quite a few discussions that made a lot of sense to me.

Besides, who am I to resist a well-delivered "Psssstttt" ?

Only 5% of my total retirement portfolio resides there right now. As time goes on over the next 10-15 years, I will be consolidating some of my actively managed VG equity funds. My intent is to use Wellesley as the repository of the future exchanges, i.e. simplify my portfolio and increase my stake in Wellesley. I haven't yet decided all the dirty details.
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Old 03-14-2010, 07:18 PM   #28
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Just for the heck of it, here are the Target retirement funds.
VTINX - Target Retirement Income
VTOVX - Target Retirement 2005
VTENX - Target Retirement 2010
VTXVX - Target Retirement 2015
VTWNX - Target Retirement 2020
VTTVX - Target Retirement 2025
VTHRX - Target Retirement 2030
VTTHX - Target Retirement 2035
VFORX - Target Retirement 2040
VTIVX - Target Retirement 2045
VFIFX - Target Retirement 2050

They line up just like they are supposed to. Very Gratifying. Sometimes statistics work. The last three pile up so that you can't read their labels, but I'm too lazy to do anything about it.

riskReturn Target funds.gif

I just can't help it...

Let me amend what I said above. The more stock heavy funds do have more volatility, but we have been conditioned to expect them to return more, not less than bonds. The reason they look so bad is their inception dates are particularly unfortunate.
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Old 03-14-2010, 07:40 PM   #29
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I have owned both Wellesley and Wellington for many years, and I like both of these funds. Now that MIL needs some passive income to supplement her SS, we have put a significant portion of her portfolio in Wellesley too. She spends the dividends and reinvest the capital gain distributions.
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Old 03-14-2010, 11:00 PM   #30
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DW's IRA is 65% Wellesley and 35% Star. It is not our only assets, she has a small Roth and this does not include my IRA & TSP funds. But the Wellesley/Star combination has worked well for her simple to understand. She began monthly withdrawals from Wellesley Jan 2010, so far its value has gone up faster than withdrawals. And Star has done even better.
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Old 03-15-2010, 05:08 PM   #31
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Well, due to some reading here and other research, I decided to augment my portfolio with Wellesley - and am happy - I hope for it to provide income in the interim years until my pension kicks in - one of my multiple streams of income in my 'multiple streams of income' theory. Options, options, always have options.....
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Old 03-15-2010, 05:30 PM   #32
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Performance

I read a lot of comments about both Wellington and Wellesley. I own both of them ever since my dad starting me investing 32 years ago. I read that they are not diversified enough, not enough small cap, etc etc

I am not the smartest guy (not was probably my dad) when in comes to investing, but go to Vanguard web-site and Research their funds. Then to a reverse sort on the performance for both 5 and 10 years - what more could anyone want from these funds??
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Old 03-15-2010, 05:44 PM   #33
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I have ~33% of our savings in Wellesley, and like W2R, plan on using the dividends as income, letting cap gains re-invest.

I add diversity by owning bond and equity funds that invest overseas plus a US total stock market index fund.

I also have ~10% cash to ride out market swings.
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Old 03-15-2010, 06:46 PM   #34
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I do not own a dime of Wellesley, but:

For those concerned about "new" managers of the fund, I think you can relax. Wellington mgmt (fund advisor) is a shop that runs money by committee. Investment decisions are not the decision of a single person, and the firm cultivates its style and tries explicitly to have the same process regardless of the people who stay or go. The Wellington people I have met have uniformly impressed me with their smarts, FWIW.
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Old 03-15-2010, 07:15 PM   #35
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I do not own a dime of Wellesley, but:

For those concerned about "new" managers of the fund, I think you can relax. Wellington mgmt (fund advisor) is a shop that runs money by committee. Investment decisions are not the decision of a single person, and the firm cultivates its style and tries explicitly to have the same process regardless of the people who stay or go. The Wellington people I have met have uniformly impressed me with their smarts, FWIW.
Thanks Brewer
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Old 03-15-2010, 07:46 PM   #36
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I, also, have no Wellesley in our Portfolio. I do, however, have a considerable pile in VINIX (12%-13%). Several years ago, the long-time manager left and my heart stopped. He had been there for many, many years and was quite an impressive individual. (Yeah, I know -- it is an indexed non-managed fund.) Anyway, I didn't see how I could replace that investment with something comparable so I bit the bullet and held steady. Now, I can't even remember his name and the ship sailed as smoothly as it did before. You have to trust in Vanguard as an entity and not worry about the little pieces.
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Old 03-16-2010, 10:15 PM   #37
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I think Wellesley and Wellington are both great funds and I second Brew's comment about Wellington Management ..... not to worry, IMHO.

I currently own Wellesley in my taxable along with enough FTSE All World ex US to bring my foreign up to 30% of equity (Wellesey only has about 7%). Keep in mind that I am 75 and spending the distributions.

Wellesley is not tax efficient and should be held in a tax sheltered or tax free account if you have the space and don't need to spend the distributions.

Cheers,

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Old 03-16-2010, 11:27 PM   #38
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I am surprised by the responses on this thread. Some folks here seem to assume that new managers will beat the markets (i.e. the equivalent bond/equity index composition) just because they work for Vanguard... ? Also, how is a decision by committee make it better? Ultimately, some-ONE is responsible for final decision, which is what I would think you'd want. If it's a committee, then noone is really responsible. Plus it makes it even harder to track individual performances.

It's hard enough, and some believe impossible, to find a single person consistently beating markets in time to get in with their fund, and yet many seem to be convinced that just belonging to a club (like vanguard) already ensures ability to beat the markets...?

Is this a new kind of religion and I just missed the orientation?
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Old 03-16-2010, 11:37 PM   #39
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I've read thru all the post here. Are you using a broker or are you doing this yourself. ? If you are doing this yourself which platform are you using.? Am interested because I'm a little tired of paying commissions and fees. Thanks...for all replies..
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Old 03-17-2010, 06:53 AM   #40
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I am surprised by the responses on this thread. Some folks here seem to assume that new managers will beat the markets (i.e. the equivalent bond/equity index composition) just because they work for Vanguard... ? Also, how is a decision by committee make it better? Ultimately, some-ONE is responsible for final decision, which is what I would think you'd want. If it's a committee, then noone is really responsible. Plus it makes it even harder to track individual performances.

It's hard enough, and some believe impossible, to find a single person consistently beating markets in time to get in with their fund, and yet many seem to be convinced that just belonging to a club (like vanguard) already ensures ability to beat the markets...?

Is this a new kind of religion and I just missed the orientation?
Cannot speak for the rest, but I am Orthodox Pastafarian. Ramen!

Seriously, I think most of the VG faithful are not interested in "beating the market.". The mere fact that one invests in index funds ensures they will not. This is more about asset allocation, diversification and avoiding blowing yourself up than beating the market.

As for committee vs. Solo managers, of course mgmt by committee does not guarantee better performance. My point is more that the turnover of a particular individual matters much less. I have worled for a one man show in this business and I can tell you that that sort of shop is vulnerable to the "grand master" making a mistake or leaving, while a committee process means decisions are more incremental. So a committee process, especially one with a long track record, is far less likely to blow up a fund. I imagine that is what most Wellesley investors want.
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