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VWINX Wellesley still good fund ?
Old 02-01-2018, 08:25 PM   #1
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VWINX Wellesley still good fund ?

Those of you that have Wellesley in your portfolio, I know it has been a great steady performer over many, many years. With this unique situation coming up where we could possibly have a large stock market correction in conjunction with interest rate increases, would Wellesley take a hit both on the equity side and the bond side ? In 2008's stock crash, the bond side sort of helped offset some of the hurt from the equity side. I'm guessing due to the Feds decreasing the rates, the bond portion increased. Since rates are very low now, and ultimately forecasted to increase, would we just have to weather the storm (as they put it). Anyone remember years where there was both increasing rates and a stock decline - and how Wellesley performed during those years ? Thanks for your thoughts on this.
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Old 02-01-2018, 10:17 PM   #2
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Since Inception in 1970 Wellesley has had only 6 years of negative returns:
1973 (3.49%), 1974 (6.43%), 1987 (1.92%), 1994 (4.44%), 1999 (4.14%), 2008 (9.84%).

I don't think any of those prior examples quite match the situation you describe but I would suspect that 1973 and 1974 would be the closest with the added twist of high inflation which we may or may not see this time. I notice that Greenspan mentioned in a recent interview that the current situation seems like a recipe for stagflation which would point to the 1973-74 scenario. If so, I think Wellesley performance would not be too bad since if I recall correctly the stock market was down close to 50 % then.
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Old 02-01-2018, 11:04 PM   #3
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Thanks for the reply, EJ. It does look like 1973-1974 comes close to the scenario I was describing...and Wellesley didn't do too bad considering
there were interest rate increases and significant stock decreases in 73/74. VWINX had cumulative two year drop of about 10%.

Obviously, those were different times and I'm not sure what VWINX's portfolio mix was based on back then, but that's at least some frame of reference for me.
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Old 02-02-2018, 01:23 AM   #4
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Originally Posted by Russman View Post
Those of you that have Wellesley in your portfolio, I know it has been a great steady performer over many, many years. With this unique situation coming up where we could possibly have a large stock market correction in conjunction with interest rate increases, would Wellesley take a hit both on the equity side and the bond side ? In 2008's stock crash, the bond side sort of helped offset some of the hurt from the equity side. I'm guessing due to the Feds decreasing the rates, the bond portion increased. Since rates are very low now, and ultimately forecasted to increase, would we just have to weather the storm (as they put it). Anyone remember years where there was both increasing rates and a stock decline - and how Wellesley performed during those years ? Thanks for your thoughts on this.
Wellesley has always had about 35% stock to 65% bonds,give or take a couple point each way. They might change the bond duration some , but it doesn't change much from year to year.
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Old 02-02-2018, 01:32 AM   #5
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Wellesley has always had about 35% stock to 65% bonds,give or take a couple point each way. They might change the bond duration some , but it doesn't change much from year to year.
+1

I donít believe the management team chase returns by changing the AA.
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Old 02-02-2018, 04:31 AM   #6
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The description at Vanguard for Wellesley says about 1/3 stock, 2/3 bond. At the end of 2017 it was 38.6% stock.

https://personal.vanguard.com/us/Fun...ect=true#tab=2
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Old 02-02-2018, 07:12 AM   #7
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I'm 57 years old and holding my (core) shares. The earliest that I expect to need to withdraw any portion - would be age 70 1/2. There will be a couple of different economic cycles over the next 12-13 years.

"A steady drip fills the bucket."

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Old 02-02-2018, 07:15 AM   #8
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The limitation is the fund contains about 99 stocks and ~900 bonds.

Far fewer than the Total market indexes for US stocks and bonds.
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Old 02-02-2018, 09:09 AM   #9
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Thanks for confirming Wellesley's historical AA. As the saying goes, past performance is not an indicator of future performance, but can't deny that Wellesley has been pretty darn consistent. Out of 46 years, only 6 years were down (the worst being 9.8% in 2008). Their combination of the mix and management team must be doing something right. Now I can stop looking at the daily financials. You all have a good day.
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