Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Wellington versus Wellesley
Old 08-06-2013, 11:58 AM   #1
Thinks s/he gets paid by the post
David1961's Avatar
 
Join Date: Jul 2007
Posts: 1,074
Wellington versus Wellesley

Am considering moving my IRA funds into either of these Vanguard finds. Have done some preliminary research and both seem to have similar goals. Wellington is more heavily invested in stocks. And I read the other thread that Wellington may be closed to new investors , so that may make my decision easier. Seems like the main difference I can tell is that Wellesley is more focused on preserving your value during a down market. Wellington may be a better long term investment, but may be getting too big to maintain this - probably why it is closed to new investors. Am I correct?
__________________

__________________
David1961 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-06-2013, 12:06 PM   #2
Full time employment: Posting here.
dtbach's Avatar
 
Join Date: Apr 2011
Location: Madison
Posts: 750
That might be. I just put 80K into Wellington about 3 weeks ago so this would be very recent.

This is from a web search dated 28 Feb this year:

Vanguard Group Inc., the world’s biggest mutual-fund company, said two funds including the $68 billion Vanguard Wellington Fund won’t open new accounts for financial advisers and institutional investors.

So it looks like it is still open to individual investors
__________________

__________________
Wild Bill shoulda taken more out of his IRA when he could have. . . .
dtbach is offline   Reply With Quote
Old 08-06-2013, 12:35 PM   #3
Thinks s/he gets paid by the post
bUU's Avatar
 
Join Date: Dec 2012
Location: Georgia
Posts: 1,902
I think you and I must have tipped the scale. I put 118K into Wellington about 3 weeks ago.
__________________
bUU is offline   Reply With Quote
Old 08-06-2013, 12:49 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,388
Sell, sell, sell!

__________________
NW-Bound is offline   Reply With Quote
Old 08-06-2013, 12:51 PM   #5
Full time employment: Posting here.
dtbach's Avatar
 
Join Date: Apr 2011
Location: Madison
Posts: 750
Quote:
Originally Posted by bUU View Post
I think you and I must have tipped the scale. I put 118K into Wellington about 3 weeks ago.
That would be a pretty delicate scale tipping on our .00029% of contributions!
__________________
Wild Bill shoulda taken more out of his IRA when he could have. . . .
dtbach is offline   Reply With Quote
Old 08-06-2013, 03:34 PM   #6
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,823
I just bought $10K of Wellington in my "play money account". This account is a tiny $10K Roth IRA that I use to act out my hunches in miniature while sticking to my boring old financial plan for the vast majority of my nestegg, thus avoiding catastrophic consequences.

I have never had Wellington before. I had been planning to make this purchase since January and all the news about Wellington this afternoon reminded me of that.

So anyway, dtbach is right - - you can still buy it.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 08-06-2013, 04:29 PM   #7
Full time employment: Posting here.
Accidental Retiree's Avatar
 
Join Date: Feb 2012
Posts: 975
Like W2R, we just bought some Wellington, new to us, too. We have been moving money to Vanguard as funds become available from maturing CDs, and Wellington was our next stop.

Thanks to this forum, we started with Wellesley earlier this year.
__________________
Chief Retirement Strategist
The AR Group
Accidental Retiree is offline   Reply With Quote
Old 08-06-2013, 04:45 PM   #8
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,240
DW has both as a part of her Roth IRA funds. These are the only two managed funds I would probably ever own. Most of our other fund investments are strictly index funds. I credit Uncle Mick (as well as the rest of the forum) for giving me the interest to research Wellesley (and then Wellington). So far, these two have had decent returns for the most part. I view them as "set and forget" - much like index funds. YMMV

Hey! Let's hear it now! Pssst! Wellesley! (Thanks Uncle Mick!)
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 08-06-2013, 05:29 PM   #9
Recycles dryer sheets
 
Join Date: Nov 2003
Location: Charlotte
Posts: 360
Wellington/Wellesley have been a large part of our portfolio. If you have equal amounts of them then you wind up with a 50/50 allocation which just happens to be our overall allocation. Sold quite a lot of Wellesley back in May but have retained all of the Wellington. Will go back into Wellesley some time after interest rates have risen.
__________________
WilliamG is offline   Reply With Quote
Old 08-06-2013, 07:46 PM   #10
gone traveling
 
Join Date: Jun 2012
Location: Austin
Posts: 245
Quote:
Originally Posted by WilliamG View Post
Wellington/Wellesley have been a large part of our portfolio. If you have equal amounts of them then you wind up with a 50/50 allocation which just happens to be our overall allocation. Sold quite a lot of Wellesley back in May but have retained all of the Wellington. Will go back into Wellesley some time after interest rates have risen.
+1

Exactly my situation (both funds account for 60% of my investments) and strategy - eventually get to where both funds comprise 100% of my investments as a 50/50 split but only after interest rates are climbing).
__________________
LakeTravis is offline   Reply With Quote
Old 08-06-2013, 08:10 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,388
Quote:
Originally Posted by WilliamG View Post
Sold quite a lot of Wellesley back in May but have retained all of the Wellington. Will go back into Wellesley some time after interest rates have risen.
What? Are you keeping the sale proceed in cash? Dirty market timer, you!
__________________
NW-Bound is offline   Reply With Quote
Old 08-07-2013, 12:20 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,388
I bought Wellington and Wellesley only a few years ago, but some people here have had them for longer.

Out of curiosity, I look at their performance vs. Vanguard S&P Index (the flagship fund). For the period of 2000-2013, both lead the S&P by a good margin. For $10K in 1/2000, in 8/2013 you would have $14.6K in VFINX, $20K in Wellesley, and $25.9K in Wellington.

But if you bought in 1/2003 near the bottom of the 2000-2003 crash, then it's $23.6K for VFINX, $21.1K for Wellesley and $24.8 for Wellington at the current time.

What happened was that most of the lead of these funds occurred when they sidestepped the tech stock and dotcom parts of the S&P. After the crash of 2000-2003, then all 3 are roughly the same over the last 10 years. The steadiness of the balanced funds is attractive, of course, for the distribution phase of an ER's life.

Thought that was interesting to note. When you buy makes all the difference.

PS. If we have another crash, I strongly suspect these 2 funds will come down less than the S&P, as they did in the past.
__________________
NW-Bound is offline   Reply With Quote
Old 08-07-2013, 09:50 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 1,903
Quote:
Originally Posted by NW-Bound View Post
I bought Wellington and Wellesley only a few years ago, but some people here have had them for longer.

Out of curiosity, I look at their performance vs. Vanguard S&P Index (the flagship fund). For the period of 2000-2013, both lead the S&P by a good margin. For $10K in 1/2000, in 8/2013 you would have $14.6K in VFINX, $20K in Wellesley, and $25.9K in Wellington.

But if you bought in 1/2003 near the bottom of the 2000-2003 crash, then it's $23.6K for VFINX, $21.1K for Wellesley and $24.8 for Wellington at the current time.

What happened was that most of the lead of these funds occurred when they sidestepped the tech stock and dotcom parts of the S&P. After the crash of 2000-2003, then all 3 are roughly the same over the last 10 years. The steadiness of the balanced funds is attractive, of course, for the distribution phase of an ER's life.

Thought that was interesting to note. When you buy makes all the difference.

PS. If we have another crash, I strongly suspect these 2 funds will come down less than the S&P, as they did in the past.
Yes, the virtue of a well managed balanced fund (ala Wellsi/Welltn) is reducing the volatility when the market goes crazy either overall or in a particular area that then becomes overweight in an index such as SP500.

Of course the reverse is that when the stock market is booming the balanced fund is lagging sometimes by quite a bit. In 1999 Wellesley was down by over 4% while IDX500 was up over 20%. At the time I didn't feel too smart about sticking with Wellesley.
__________________
ejman is offline   Reply With Quote
Old 08-09-2013, 06:06 PM   #14
Recycles dryer sheets
 
Join Date: Nov 2003
Location: Charlotte
Posts: 360
Meant to link this earler. Steve Vernon article on these two funds for retirement.

Recession-Proof Your Retirement Savings -- Part 2 - CBS News
__________________
WilliamG is offline   Reply With Quote
Old 08-09-2013, 06:20 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,388
Good article. I only have a comment on this conclusion.
If you had invested in either one of these funds and lived off the income stream, you would have survived one of the worst decades for investing with a relatively steady stream of income and your retirement savings intact. Many retirement investors fared a lot worse.
The initial $200K in Jan 2000 would grow into $209K for Wellington and $219K for Wellesley on Jan 2010, if all distributions were consumed. The above amounts were not sufficient to match the inflation during that time frame. One would need to have $257K at the end for the principal to keep up with inflation.

However, the payout often exceeded 3.5%. If an investor exercised restraint and spent less in order to reinvest the excess, perhaps he/she might come closer to retain the principal after inflation.
__________________
NW-Bound is offline   Reply With Quote
Old 08-10-2013, 12:16 PM   #16
Thinks s/he gets paid by the post
MooreBonds's Avatar
 
Join Date: Aug 2004
Location: St. Louis
Posts: 2,091
Quote:
Originally Posted by NW-Bound View Post
Good article. I only have a comment on this conclusion.
If you had invested in either one of these funds and lived off the income stream, you would have survived one of the worst decades for investing with a relatively steady stream of income and your retirement savings intact. Many retirement investors fared a lot worse.
The initial $200K in Jan 2000 would grow into $209K for Wellington and $219K for Wellesley on Jan 2010, if all distributions were consumed. The above amounts were not sufficient to match the inflation during that time frame. One would need to have $257K at the end for the principal to keep up with inflation.

However, the payout often exceeded 3.5%. If an investor exercised restraint and spent less in order to reinvest the excess, perhaps he/she might come closer to retain the principal after inflation.
This was just a quick and dirty analysis on Wellesley, from Jan 1 2000 to Dec 31 2010, with approximate numbers:

Average Price 2000 = $19/share
Average 2010 = $21/share

Average yield from 2000 to 2010 was well over 3.5%. If you took a 3.5% distribution from Wellesley's share price each year and let the rest simply sit in a MM account (not reinvested), you have the following comparisons:

Capital growth from Wellesley 2000-2010 = 11%
Distribution amount above 3.5%/year accumulated in MM account from 2000-2010 = ~$5.14/share = 27%

So if you add your extra cash distributions above 3.5%/year that you didn't spend, your Wellesley portfolio holding would have grown to a total of about $26.14/share, or about 38% from 2000-2010, a bit more than the inflation you cite.

Of course, the biggest factor not taken into account in the above example are the income taxes owed on the distributions you didn't spend. But even if you reduce your 'savings above the 3.5% withdrawal rate' by 25% for taxes, you still achieve total portfolio growth (capital gain plus excess dividend accumulation) of 31% from 2000-2010, roughly in-line with inflation.

However, because Wellesley has a large slug in bonds, it was a somewhat unique 10-year excellent period to own bonds amid the declining interest rates, which certainly helped Wellesley.
__________________
Dryer sheets Schmyer sheets
MooreBonds is offline   Reply With Quote
Old 08-10-2013, 01:22 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,388
Thanks for the info. Indeed, Wellesley outperformed Wellington in the recent years. And being able to draw 3.5% and keep your principal the same after inflation is pretty darn good. Tax would be moot in a tax-deferred account anyway.

Anyway, perhaps investors have sensed that the tide has turned, and more flock to Wellington now, causing its manager to close the fund. I wonder if someone has the inflow/outflow to these funds for a comparison. The YTD and last-12-month returns show that Wellington trounces Wellesley, beating the latter by more than 2X.
__________________
NW-Bound is offline   Reply With Quote
Old 08-10-2013, 04:34 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
Quote:
Originally Posted by NW-Bound View Post
Anyway, perhaps investors have sensed that the tide has turned, and more flock to Wellington now, causing its manager to close the fund. .
Not sure why the fund closed but we (DW) are in those slowly migrating from Wellesley to Wellington. Drawing down Wellesley to live on and occasionally adding to the small Wellingtn holding. Just figure even the Wellesley bond gurus will have trouble with bonds going forward but still want a balanced fund.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Old 08-10-2013, 06:45 PM   #19
Thinks s/he gets paid by the post
redduck's Avatar
 
Join Date: Mar 2005
Location: yonder
Posts: 2,052
For sure the W/W funds are still available to buy at Vanguard because I initiated a position in both funds yesterday. I could not buy either of them at another brokerage.
__________________
redduck is offline   Reply With Quote
Old 08-10-2013, 08:26 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 5,872
I just got a semiannual report for Wellington, of which we own a small amount in tax-deferred accounts. It says" "s you may know, we announced in February that the fund would no longer accept new accounts from financial advisor or institutional clients.....individual investors may continue to establish new accounts and make additional purchases."

Amethyst

Quote:
Originally Posted by NW-Bound View Post
.

Anyway, perhaps investors have sensed that the tide has turned, and more flock to Wellington now, causing its manager to close the fund. .
__________________

__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success to be able to spend your life in your own way. Christopher Morley.
Amethyst is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 07:39 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.