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Why did Wellesley drop 0.28% today?
Old 05-28-2013, 10:12 PM   #1
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Why did Wellesley drop 0.28% today?

Broad market was up better than 0.6% today
My intermediate term bond fund was down 0.7%
I can usually guestimate what Wellesley (40/60) will do based on the broad stock and bond markets - I would have guessed it would be about flat. I realize it isn't meant to precisely track the indices but a 0.3% drop seems almost approaching wacky.

Is it just that their stocks did relatively poorly today or is it dividend time or something (shouldn't be for a month)?

I realize this seems trivial but it's just enough to make me go hmmm
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Old 05-28-2013, 10:47 PM   #2
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Some bond funds with longer duration dropped quite a bit, so I could guess that perhaps the duration of the Wellesley bonds is longer than the duration of the bond fund(s) you looked at. I think Vanguard has duration on their web site, so you could tell me if this hypothesis is consistent with the duration of the Wellesley bond portfolio.
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Old 05-28-2013, 10:52 PM   #3
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Actually all of my bond related funds dropped to day.

Vanguard High-Yield Corporate (VWEHX) dropped $.01

Vanguard Short Term Investment Grade (VFSUX) dropped $.02

Vanguard Total Bond (VBTLX) dropped $.07.

Wellesley (VWIAX) dropped $.17. (Those are Admiral Shares. OP said $.28 drop but perhaps that is for Investor).
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Old 05-28-2013, 11:33 PM   #4
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My Intermediate-Term bond fund (AIBAX) dropped .44% today. It has an Average Duration of 2.9 years, so it's on the short side of intermediates.
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Old 05-28-2013, 11:36 PM   #5
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Quote:
Originally Posted by Katsmeow View Post
...

Wellesley (VWIAX) dropped $.17. (Those are Admiral Shares. OP said $.28 drop but perhaps that is for Investor).
Actually OP said "Why did Wellesley drop 0.28% today?" (not $.28), which is what the Admiral shares dropped (= $.17/).

I figured it was the bonds taking a hit.
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Old 05-28-2013, 11:55 PM   #6
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Part of it is bonds dropped. Part of it is higher yielding equities (the kind owned by Wellesley) underperformed the wider market today.
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Old 05-29-2013, 12:33 AM   #7
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Actually OP said "Why did Wellesley drop 0.28% today?" (not $.28), which is what the Admiral shares dropped (= $.17/).
Yeah, I'm an idiot and failed to notice that.
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Old 05-29-2013, 04:59 AM   #8
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With the recent indications out of the Fed and the news that consumer confidence is on the rise the bond markets are probably reacting to the possibility of interest rate increase. It is almost always a negative corollary which is amplified by the term of the bonds in the fund. Wellesley has a ten year average maturity on the bonds it holds so it may be a little more sensitive to market news.
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Old 05-29-2013, 08:20 AM   #9
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It could be worse, BOND etf dropped .95% yesterday. Maybe some premature selling based on interpretation of FED minutes or not.
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Old 05-29-2013, 08:37 AM   #10
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Part of it is bonds dropped. Part of it is higher yielding equities (the kind owned by Wellesley) underperformed the wider market today.
+1 I believe Wellesley, had a double hit, in bonds and high yields, so that even the equity portion couldn't get it above water.
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Old 05-29-2013, 09:40 AM   #11
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prediction - "duration" is about to become a household term
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Old 05-29-2013, 01:09 PM   #12
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prediction - "duration" is about to become a household term
In addition, as the US economy (and the World's economy too) start to improve in a significant way, the 30 year bond bull market is going to implode. Bonds (particularly long term) are about at the same inflection point as Internet stocks were in 2000.
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Old 05-29-2013, 01:54 PM   #13
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^ Also, I think we are going to see some of those 401k "stable value" funds drop when interest rates jump - anyone take a look at the "duration" in their stable value fund?
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