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Old 07-04-2016, 08:20 AM   #41
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like all balanced funds that is likely the case .
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Old 07-04-2016, 08:20 AM   #42
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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).
Pssst, that surprised me too, but glad I stayed the course.
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Old 07-04-2016, 08:25 AM   #43
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i would not buy a target date fund in retirement . last thing i want is a fund loading me up on bonds regardless of where interest rates are going .
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Old 07-04-2016, 08:39 AM   #44
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i would not buy a target date fund in retirement . last thing i want is a fund loading me up on bonds regardless of where interest rates are going .
Nothing stops you from having Vanguard Target 2045 at age 70.

That has negligible amount of bonds compared to Wellesley. Even Target 2015 has less bonds then Wellesley.
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Old 07-04-2016, 08:41 AM   #45
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well you can always mix and match target date funds but the idea preached is you pick "your own retirement date"
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Old 07-04-2016, 08:41 AM   #46
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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 than bond buyers?
I am not invested in these but I would say the answer is murky at best. First these are balanced funds so it is hard to know how the funds will manage a rate rise and how to separate performance due to bond portfolio changes and stock portfolio changes. I think they can somewhat adjust AA's too but have not read the prospectus.

And how fast will the rates rise? If rates rise slowly (like in April 2004 to June 2006) Wellesley could still go up due to the stock component. Might not be as outstanding but most here are probably not into bragging about their home runs, or are they?
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Old 07-04-2016, 08:47 AM   #47
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well you can always mix and match target date funds but the idea preached is you pick "your own retirement date"
But you are on track. Wellesley is a great income fund, but I would be worried about future of 60% bonds in it.
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Old 07-04-2016, 08:53 AM   #48
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well you can always mix and match target date funds but the idea preached is you pick "your own retirement date"
I am already retired. I have problems picking up my death date.

Oh wait! That's for determining WR.
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Old 07-04-2016, 09:17 AM   #49
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Wellesley is not a "diversified" portfolio in itself. I have heard that Vanguard would not recommend holding Wellesley or Wellington as the whole portfolio. Don't get me wrong, I like both funds.
There just are other holdings needed to diversify properly.
+1

I agree. It is tempting to put it all into Wellesley and just have them send one a check every month. And certainly 100% in Wellesley is a better investment than many of the 'products' that have been sold to people in the past and even now. But, the future is unpredictable so having some diversification is important.

Still keeping it simple is also important. A Wellesley fan could do 60% in Wellesley, 20% in the Total USA Stock Index, and the remaining 20% in an International Stock Index.
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Old 07-04-2016, 09:50 AM   #50
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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?
Looking just at Wellesley since I don't have any interest in Wellington the average bond duration is only a bit longer than Vanguard's Intermediate Term Treasury fund. As I recall Annette Thau ("The Bond Book") deems IT bonds (and Treasuries specifically) as the risk:return "sweet spot." Anyway, it looks to me like the answer to your question is a qualified yes: they're pushing the maturity envelope a little in search of yield at the moment.

I generally prefer index funds myself and have the same objections in principle to both active management and the small number of bonds and stocks included in Wellesley, but maybe given the fund's track record over 46 years one might regard it as kind of a Berkshire Hathaway exception.
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Old 07-04-2016, 10:25 AM   #51
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well you can always mix and match target date funds but the idea preached is you pick "your own retirement date"

You're quite right on that. But I would think more experienced investors preferring to use a target date fund for part or all of their portfolios would "pick their own AA" and to heck with the labelled retirement date. Still, they've given up some control which can be a bad or good thing.
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Old 07-04-2016, 10:45 AM   #52
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I generally prefer index funds myself and have the same objections in principle to both active management and the small number of bonds and stocks included in Wellesley, but maybe given the fund's track record over 46 years one might regard it as kind of a Berkshire Hathaway exception.
The record of Wellesley and Wellington (and BRK, too) is quite good. But I'd never put all my faith (and money) in one manager or management team. Things change, people don't live forever, priorities and incentives shift. So, back to the OP, I'd be okay with having a "chunk" under active management in either W or W, but would want a majority in a well-diversified AA of equities and bonds, with rebalancing done mechanically. If the managers can add value and (especially) avoid a stock or bond bubble, I'll be happy to take advantage of that, but I wouldn't bet everything on their abilities.
So, if a person owns W or W and has the bulk in low-cost indexed funds, does one rebalance after taking account of the internal holdings of these two actively-managed funds, or is it smarter to just fence them off and rebalance only the other parts of one's portfolio? On the face of it, I'd say fence them off, or else you'll be rebalancing against the efforts of their managers (i.e. when they increase LCV, you'd have to reduce LCV in the index holdings) and might just as well save the management fees and have everything in index funds.
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Old 07-04-2016, 11:03 AM   #53
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When I look at my allocations, I consider the average percentage of bonds and equities in both Welling and Welles. Breaking it out this way gives me a better handle on my overall allocation. Probably not necessary, but that's what I do.
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Old 07-04-2016, 11:20 AM   #54
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Wellesley is great if you bought in 1980. Today I think rates are headed up. Wellesley would also cost me 2k more in taxes each year. But I am thinking about paying more in taxes to buy the wellington so I can't throw rocks in a glass house.
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Wellesley vs. everything else in ER
Old 07-04-2016, 11:22 AM   #55
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Wellesley vs. everything else in ER

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So, if a person owns W or W and has the bulk in low-cost indexed funds, does one rebalance after taking account of the internal holdings of these two actively-managed funds, or is it smarter to just fence them off and rebalance only the other parts of one's portfolio? On the face of it, I'd say fence them off, or else you'll be rebalancing against the efforts of their managers (i.e. when they increase LCV, you'd have to reduce LCV in the index holdings) and might just as well save the management fees and have everything in index funds.

That's an interesting question and I'd be interested to know how others handle that. In our case, Wellesley and VTINX make up approximately half our portfolio with the remainder being mostly low-cost index funds. I sort of "fence them off" as you say and let them handle their own internal rebalancing. I pay no attention to the aggregate percentages of the asset classes across those two. However, I do pay attention when deciding how much international, emerging markets, reits and small cap value to hold or "tilt to" outside of the two balanced funds. And I occasionally "cross the fence" to rebalance between those "core" balanced funds and their "satellites" so as to keep our overall asset allocation where we want it.
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Old 07-04-2016, 11:47 AM   #56
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So, if a person owns W or W and has the bulk in low-cost indexed funds, does one rebalance after taking account of the internal holdings of these two actively-managed funds, or is it smarter to just fence them off and rebalance only the other parts of one's portfolio?
I take the internal holdings into account because my AA is 45:55, and Wellesley does not have that same balance.

Excel makes that balancing chore pretty trivial. Basically, Wellesley is 30% of my total portfolio. I can't change its internal balance so I enter that in one cell of my balancing spreadsheet.
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Old 07-04-2016, 12:17 PM   #57
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For the few that do not yet know of this site;
PerfCharts - StockCharts.com - Free Charts

It really is a great tool to evaluate funds over specific time frames. I like the the comparison of the SPY, and VFIAX to VWELX and VWIAX from 2001 to date. It is hard to argue risk/performance for these two funds versus the S&P. If you use an underscore like _VWIAX, it will show performance without dividends reinvested.
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Old 07-04-2016, 12:23 PM   #58
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For the few that do not yet know of this site;
PerfCharts - StockCharts.com - Free Charts

It really is a great tool to evaluate funds over specific time frames. I like the the comparison of the SPY, and VFIAX to VWELX and VWIAX from 2001 to date. It is hard to argue risk/performance for these two funds versus the S&P. If you use an underscore like _VWIAX, it will show performance without dividends reinvested.
Thank you. Kind of fun to play with the time scale. When set to the 15 year period (2001 on) W/W are nothing short of amazing.
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Old 07-04-2016, 01:28 PM   #59
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..... As for ETF's, not a fan from being burnt so badly on market spread. My former accountant started the Madrona Fund ETF's, put all of accounts in his own ETF's, charged his normal 0.8%, on top of very high ETF costs and we lost mucho dinero trying to get out of low volume ETFs when we ran away.
Your former accountant sounds like a moron to me.
Compare those ETF's he put you in, to VTI and it is like night to day.
My quick check of Madrona funds (with expense of 1.25%) is crazy.

There are plenty of broad, high volume, very low cost ETF's (think 0.155 - 0.05% expense).

So don't throw out the baby with the bathwater .
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Old 07-04-2016, 04:36 PM   #60
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Not wanting to hijack this thread, but what's the thoughts on Vanguard Tax Managed Fund for a taxable account? It's 50% stock and 50% municipal bonds.
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