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Old 07-03-2016, 12:58 PM   #21
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I'm also a fan.
Wellesley is 12% of my portfolio, and Wellington is another 6%.

Not likely to increase those percentages, but unlikely to decrease them either. I like the stability they provide, and the expense ratios (just slightly higher than the average ER on my whole portfolio) are what I pay for that.
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Old 07-03-2016, 01:11 PM   #22
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Thanks everyone for the thoughtful and insightful replies!

Senator's comments and well thought-out portfolio remind me of other savvy posters at Bogleheads who've pointed out that Wellesley really doesn't have a "secret sauce" and that these days one can pretty much duplicate its performance with a 65:35 large cap value: IT corp. bond ETF approach. I would still choose Wellesley myself, but agree wholeheartedly that it'd be foolish to make such a concentrated portfolio one's whole enchilada. And of course it has no place in a taxable account. I will probably put my IRA (26% of total assets) in it and leave the rest in the Bogleheads 3 fund portfolio (though I have long since substituted Admiral shares of IT Treasury for Total Bond due to consistently better performance, benefitting from flight-to-safety [as we saw big-time this past week] and no state or local taxes]).

I love Paul Merman's generosity and overall investing savvy, but I've run the numbers on his "Ultimate Buy and Hold" and it has yielded around 5% during the entire time I've been ER'd. Other DFA slice-and-dice portfolios (check out Scott Burn's numbers over at AssetBuilder.com) are in the 3-3.5% range over the past 15 years - out of which you have to pay 1% portfolio mgmt/DFA access fees and the costs of a boatload of trades to keep the intricate slices balanced.

John Greaney, probably the earliest (and still one of the sharpest and most irreverent) ER site founders, has a great updated article on real world retiree returns on his site:

2015 Update: Real-Life Retiree Investment Returns

One of the portfolios he backtests is a William Bernstein MPT slice-and-dice, and Greaney's comment says it all, IMHO:

"While the MPT portfolio value has trailed the simple S&P500/fixed income portfolio (No. 1 above) by 21% as of Dec 31, 2015, advocates of this approach like its reduced volatility and sterling academic recommendations. Which brings us to an important investing truism -- it's OK to under perform as long as you're pleased with the results and proud of what you are doing."

Thanks again to everyone for sharing your thoughts. I learn a lot from this forum and am grateful to all of you.
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Old 07-03-2016, 02:19 PM   #23
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My husband's 457 has been at Fidelity for years. His employer has just announced that they are changing to Voya Financial. I am a bit disgruntled about this and am considering an IRA rollover to Vanguard. He is also entering RMD/MRD this year. If I do, I will probably split the money inside the IRA rollover between Wellington and Wellesley or put it all in Wellesley. I am clueless what to do with the RMD funds. At first I thought I would just rollover to the same funds but, after reading more, including comments here, I see I need to rethink things. I had wondered what others were doing with after tax money that they don't need.

Does Federal law offer any legal protection for rollover IRAs that were originally part of a retirement plan?
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Old 07-03-2016, 03:02 PM   #24
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I have Wellesley but from the time I was with Vanguard. I am with Fidelity now and they said they would charge me something like $75 a transaction ... Is everyone who owns Wellesley with Vanguard??


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Old 07-03-2016, 03:40 PM   #25
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I am 50/50 Wellesley and Wellington in my IRA and my wife's IRA and very happy so far with them. We are with Vanguard. I have a 401K at Schwab that I will be moving shortly and need to decide on whether to leave it with Schwab as an IRA or move it. The company is moving from Schwab to The Principal, which looks like a really bad deal for the employees.
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Old 07-03-2016, 04:01 PM   #26
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Originally Posted by kevink View Post
Thanks everyone for the thoughtful and insightful replies!

Senator's comments and well thought-out portfolio remind me of other savvy posters at Bogleheads who've pointed out that Wellesley really doesn't have a "secret sauce" and that these days one can pretty much duplicate its performance with a 65:35 large cap value: IT corp. bond ETF approach. I would still choose Wellesley myself, but agree wholeheartedly that it'd be foolish to make such a concentrated portfolio one's whole enchilada. And of course it has no place in a taxable account. I will probably put my IRA (26% of total assets) in it and leave the rest in the Bogleheads 3 fund portfolio (though I have long since substituted Admiral shares of IT Treasury for Total Bond due to consistently better performance, benefitting from flight-to-safety [as we saw big-time this past week] and no state or local taxes]).

I love Paul Merman's generosity and overall investing savvy, but I've run the numbers on his "Ultimate Buy and Hold" and it has yielded around 5% during the entire time I've been ER'd. Other DFA slice-and-dice portfolios (check out Scott Burn's numbers over at AssetBuilder.com) are in the 3-3.5% range over the past 15 years - out of which you have to pay 1% portfolio mgmt/DFA access fees and the costs of a boatload of trades to keep the intricate slices balanced.

John Greaney, probably the earliest (and still one of the sharpest and most irreverent) ER site founders, has a great updated article on real world retiree returns on his site:

2015 Update: Real-Life Retiree Investment Returns

One of the portfolios he backtests is a William Bernstein MPT slice-and-dice, and Greaney's comment says it all, IMHO:

"While the MPT portfolio value has trailed the simple S&P500/fixed income portfolio (No. 1 above) by 21% as of Dec 31, 2015, advocates of this approach like its reduced volatility and sterling academic recommendations. Which brings us to an important investing truism -- it's OK to under perform as long as you're pleased with the results and proud of what you are doing."

Thanks again to everyone for sharing your thoughts. I learn a lot from this forum and am grateful to all of you.

I checked out Greaney's site and it looks like the Buffett portfolio is the way to go in both scenarios The WB portfolio is: 75% Stock/25% Fixed Income, rebalanced annually consisting of:75% BRKa 21% VFSTX, 4% VMMXX

It has most success over both periods, 1994 to 2016 and 1999 to 2016.
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Old 07-03-2016, 04:42 PM   #27
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I can confirm Fidelity charges a $75 transaction fee to buy Wellesley. I currently own Fidelity Balanced fund (FBALX) and while similar, they are not the same. Wellesley favors Value Stock and BBB or higher rated bonds. Fidelity Balanced favors Growth stocks and HAS 8% of their bonds rated less than BBB.
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Old 07-03-2016, 05:39 PM   #28
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I have Wellesley but from the time I was with Vanguard. I am with Fidelity now and they said they would charge me something like $75 a transaction ...
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Originally Posted by Al18 View Post
I can confirm Fidelity charges a $75 transaction fee to buy Wellesley.
You can purchase Wellesley Investor shares through Fidelity but not Admiral shares. Fidelity charges $75 the first time you buy. For subsequent purchases you can setup automatic investments through 'Automatic Account Builder' and pay $5. After it executes once you can turn it off or choose "skip a contribution". There is no fee to sell.
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Old 07-03-2016, 06:57 PM   #29
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We currently own about 7% VWELX, 30% VWINX, and 3% VGSTX for a total of 40% of our portfolio. Schwab has waived the transaction fees for us...
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Old 07-03-2016, 07:02 PM   #30
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I have Wellington for my HSA investment. I've had some in Wellesley before but decided to just do the indexing (tot stock, tot bond, tot intl stock) routine instead.
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Old 07-03-2016, 09:42 PM   #31
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Wellesley makes up 29.8 % of my Sep-IRA and is easily my largest holding. I also own a much lesser amount of Wellesley (and of Wellington) in a regular account. I figure I'm in good company if W2R and REWahoo both have good-sized slugs of it. I do admit that it did shake me up a bit when unclemick sold his pssst Wellesley to buy a Target date account. (I think I got that right).
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Old 07-03-2016, 10:09 PM   #32
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...These are actively managed funds. I guess Wellesley and Wellington are managed by the same managers. I got the impression they were similar but with different AA's. Might not have this exactly right though...
Yes, they are actively managed. A fund manager (forgot whether Wellesley or Wellington) in a video interview stressed that they are stock pickers and no indexers. Wellesley is 40% stock, while Wellington is 60%. So, of course Wellington is more volatile than Wellesley. Their stock holding compositions are not the same, however.

One does not get rich with these funds, but he would not get wiped out either. They are managed by a team following a certain conservative investment discipline, not a hot-shot manager who takes large risks.

I have only a bit in both currently. When I get older and tired of tracking my individual stocks, I may get more into these funds plus one or two other similar conservative funds. It will be easier for my wife to manage when I croak, compared to holding index funds then needing the courage and know-how to balance between them.
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Old 07-04-2016, 02:29 AM   #33
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I can confirm Fidelity charges a $75 transaction fee to buy Wellesley. I currently own Fidelity Balanced fund (FBALX) and while similar, they are not the same. Wellesley favors Value Stock and BBB or higher rated bonds. Fidelity Balanced favors Growth stocks and HAS 8% of their bonds rated less than BBB.
wellesley also has a 50% stake in long term treasury's which can be a big plus when bond rates fall but it can burn you pretty bad when rates reverse as eventually they will .

at this stage i sold my balanced fund last week and now own all separate bond and stock funds that can be tweaked as things see fit . if need be i can easily shed the interest rate sensitive stuff for more appropriate types of bond funds when the time comes .
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Old 07-04-2016, 05:48 AM   #34
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KevinK, please excuse the Noobiness of this question but why would Wellesley "... of course it have no place in a taxable account"? We have about 10% in DW's 401(k) and recently, about 15% in an after-tax account that we are planning to use to fund the Gap to 59 1/2 in about 4-5 years . I like the idea of getting some income as well as the stability. I understand it is actively managed so there are lot of trades but those dividends aren't taxed as regular income if held long-term, but rather as CGs, correct? Or do I still have a lot to learn? (very likely and not mutually exclusive). Thanks.
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Old 07-04-2016, 06:11 AM   #35
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KevinK, please excuse the Noobiness of this question but why would Wellesley "... of course it have no place in a taxable account"? We have about 10% in DW's 401(k) and recently, about 15% in an after-tax account that we are planning to use to fund the Gap to 59 1/2 in about 4-5 years . I like the idea of getting some income as well as the stability. I understand it is actively managed so there are lot of trades but those dividends aren't taxed as regular income if held long-term, but rather as CGs, correct? Or do I still have a lot to learn? (very likely and not mutually exclusive). Thanks.
Nothing is clear cut as Kevink thinks it is. In my case with no earned income i need to meet the min income requirement for Obamacare as my state did not expand medicare for low income folks.
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Old 07-04-2016, 06:58 AM   #36
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Presently we have 29% in Wellington (my tIRA and rIRA), 24.5% in Wellesley (her tIRA and rIRA) all admiral shares, and 11.5% in my tIRA TRP retirement fund. Then 35% in various stocks (taxable holdings). The IRAs were paired down from a number of different managed funds over the last few years in effort to simplify for retirement. I will probably move the TRP IRA into the Wellington. We are not going to buy any more individual stocks but are not selling either at this time. We probably won't need to since they provide dividends that we haven't even used for the past few years. We haven't tapped into the IRAs either but that will soon change next year when we have to take RMD. We still haven't gotten out of a frugal mindset but are trying.
We may not have the ideal AA or investment picks but I'm doing the best I can by reading posts here. Some posts can be too technical and go right over my head but there are many that are easy to understand and make sense to me. I don't think we would be in as good a financial shape if it wasn't for them.

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Old 07-04-2016, 07:07 AM   #37
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I understand it is actively managed so there are lot of trades but those dividends aren't taxed as regular income if held long-term, but rather as CGs, correct? Or do I still have a lot to learn? (very likely and not mutually exclusive). Thanks.
The dividends from the bonds within the Wellesley fund are taxed as regular income and the dividends from the stocks are taxed as qualified dividends. At the end of most years there is also a capital gain distribution reflecting the trading that has gone on within the fund.

The year end 1099-DIV will indicate how much of the dividend paid out was qualified dividends (lower tax rate).

ETA
At least that is how I understand it.
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Old 07-04-2016, 07:16 AM   #38
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While I am a big fan of Wellesley and Wellington I have not held them because my AA is more of a slice & dice and due to tax efficiency considerations. That said, I just looked at my IRA and domestic equities and bonds are about 50/50 so I could go 50/50 with Wellesley and Wellington.... something to consider next time I rebalance though I admit that the duration of the bonds is more than I would like.
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Old 07-04-2016, 07:46 AM   #39
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I checked out Greaney's site and it looks like the Buffett portfolio is the way to go in both scenarios The WB portfolio is: 75% Stock/25% Fixed Income, rebalanced annually consisting of:75% BRKa 21% VFSTX, 4% VMMXX

It has most success over both periods, 1994 to 2016 and 1999 to 2016.
BRKA does not pay a dividend. I wonder if that S&P portfolio has dividends reinvested, or not? Even Warren advises to stick with an S&P fund.

Otherwise the Harry Dent portfolio seems to blow away the competition...for this period looked at anyway.

They should have also compared the S&P by itself, I see a $508,761 ending balance...
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Old 07-04-2016, 08:00 AM   #40
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For the fans of Wellington/Wellesley: Is the bond duration less of a concern because you are counting on the managers to reduce duration before rates start their rise? If the managers are being counted on to be smarter than the average stock buyer, is it any different to ask them to be smarter than bond buyers?
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