Yep. Indexing during accumulation allows you to grow with market which you hope is a good thing. When taking out of portfolio I like having what you feel is good active management process/managers to avoid negative market pitfalls. As well as Wellesley we have bought back into Vanguard GNMA for a small portion of our bonds; an excellent managed fund of US government backed securities.
Wellesley - Thoughts on the Fund
- Thread starter chinaco
- Start date
My portfolio consists of actively managed and index funds. I own Wellington, Wellesley, and Dodge and Cox (balanced fund). Over the years I have come to favor the actively managed balanced funds for retirement due to the simple fact that not only do they live, eat, and breathe the market (something I don't care to do) - they keep the portfolio in balance between their stated goal of stock and bond percentages. Proper balance is something I've failed to do with my other funds over the years, and I financially can see my shortcomings/mistakes (hindsight is always 20/20). Emotions, fears, and mental paralysis has left me trailing the balanced funds. In my case - I've come to realize that I would've been better off to let the professionals make these decisions/adjustments to my portfolio (I can't seem to handle it successfully now in my late 50's). From what I gather - most people don't do this well either. I believe I would be more successful keeping my eye on the balanced funds' management behavior in my retirement years than constantly struggling to keep tweaking performance and balance myself.
IndependentlyPoor
Thinks s/he gets paid by the post
More geeky charts and tables, sorry.
I was wondering just how good Wellesley is, so I compared its risk/return to other balanced funds as well as to an "optimum" allocation of all two fund portfolios of Vanguard stock/bond funds. I also included the individual component funds that comprise the portfolios.
Here is what it looks like.
The two-fund portfolios are red, the component funds by themselves are black, and the balanced funds are blue.
You can see that Wellesley does pretty well. The funds marked 2 and 3 (39/61 Health Care/Long Term Invst. Grade Bonds, and 44/56 Health Care/Long Term Treasury) produced better returns at about the same volatility, but I would not want my core holdings dominated by either pair.
The fund marked 1 is 16/84 Health/High Yield Corp. Bond. Surprisingly, this portfolio produced about the same return for less volatility.
I did not include any rebalancing in my hypothetical portfolios, so they suffered from that.
I wanted all the comparisons to be over the same time frame, and I wanted that time to be reasonably long, so I picked 1/1/1992 to the present and included only those funds for which I could get data for the whole time frame. This resulted in each fund having 4712 data points. My poor laptop was cranking.
I could have used a longer time frame, but that would have reduced the number of funds with data over the full time frame. As it is, the popular Total Stock Market fund didn't make the cut (but the 500 Index did).
I defined the optimum allocation as the one that produced the best ratio of equivalent APR to volatility over the time period. I used the standard deviation of the daily percent change in NAV as my measure of volatility.
Here is the same data in tabular form:
View attachment Balanced risk adjusted return.pdf
View attachment Two fund risk adjusted return.pdf
View attachment Component fund adjusted return.pdf
I have an interactive version of the chart that pops up the portfolio or fund information when you hover over a point, but it requires downloading the Mathematica Player, and I doubt that anybody wants to go to that trouble.
I was wondering just how good Wellesley is, so I compared its risk/return to other balanced funds as well as to an "optimum" allocation of all two fund portfolios of Vanguard stock/bond funds. I also included the individual component funds that comprise the portfolios.
Here is what it looks like.
The two-fund portfolios are red, the component funds by themselves are black, and the balanced funds are blue.
You can see that Wellesley does pretty well. The funds marked 2 and 3 (39/61 Health Care/Long Term Invst. Grade Bonds, and 44/56 Health Care/Long Term Treasury) produced better returns at about the same volatility, but I would not want my core holdings dominated by either pair.
The fund marked 1 is 16/84 Health/High Yield Corp. Bond. Surprisingly, this portfolio produced about the same return for less volatility.
I did not include any rebalancing in my hypothetical portfolios, so they suffered from that.
I wanted all the comparisons to be over the same time frame, and I wanted that time to be reasonably long, so I picked 1/1/1992 to the present and included only those funds for which I could get data for the whole time frame. This resulted in each fund having 4712 data points. My poor laptop was cranking.
I could have used a longer time frame, but that would have reduced the number of funds with data over the full time frame. As it is, the popular Total Stock Market fund didn't make the cut (but the 500 Index did).
I defined the optimum allocation as the one that produced the best ratio of equivalent APR to volatility over the time period. I used the standard deviation of the daily percent change in NAV as my measure of volatility.
Here is the same data in tabular form:
View attachment Balanced risk adjusted return.pdf
View attachment Two fund risk adjusted return.pdf
View attachment Component fund adjusted return.pdf
I have an interactive version of the chart that pops up the portfolio or fund information when you hover over a point, but it requires downloading the Mathematica Player, and I doubt that anybody wants to go to that trouble.
chinaco
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Feb 14, 2007
- Messages
- 5,072
VG video on Wellesley Management
https://personal.vanguard.com/us/insights/article/FMV-wellesley-income-12152009
https://personal.vanguard.com/us/insights/article/FMV-wellesley-income-12152009
