Alteratives to Wellington?

[utrecht]

I'm probably the only won who didnt know this but I guess Vanguard Wellington is closed to new investors. Anyone have any good alternatives that are similar?

 

[MichaelB]

Wellington is closed for institutional investors on third party platforms. It's still open for individuals investing from their Vanguard accounts.

 

[utrecht]

I cant invest at E-Trade and Im not an institutional investor. I guess I can invest directly at Vanguard though?

 

[Backdraft57]

That was my experience Utrecht. I bought it directly from Vanguard when I couldn't from Fidelity

Sent from my SM-G935V using Early Retirement Forum mobile app

 

[Senator]

You could always go to one of these highly correlated ETFs....

Once of which is VOO, which is just the S&P. It is a 99.8% correlated ETF. From what I can see, there is no magic that Wellington has.

100.0%	VWENX	Vanguard Mutual Funds	Wellington Admiral Shares
99.9%	SCHV	Schwab	Large-Cap Value
99.9%	VGSTX	Vanguard Mutual Funds	STAR
99.8%	VOO	Vanguard	S&P 500
99.8%	SCHX	Schwab	Large-Cap Core
99.8%	SCHB	Schwab	Multi-Cap Core
99.7%	IWL	iShares	Russell Top 200 ETF
99.7%	EUSA	iShares	MSCI USA ETF
99.7%	AOR	iShares	Growth Allocation ETF
99.7%	VBIAX	Vanguard Mutual Funds	Balanced Index Admiral Shares
99.6%	VTXVX	Vanguard Mutual Funds	Target Retirement 2015
99.6%	SCHD	Schwab	Equity Income
99.6%	IWX	iShares	Russell Top 200 Value ETF
99.6%	VWINX	Vanguard Mutual Funds	Wellesley Income
99.6%	VMVAX	Vanguard Mutual Funds	Mid-Cap Value Index Admiral
99.5%	AOA	iShares	Aggressive Allocation ETF
99.5%	VIG	Vanguard	Dividend Appreciation
99.4%	VTMFX	Vanguard Mutual Funds	Tax-Managed Balanced Admiral Shares
99.4%	MGK	Vanguard	Mega Cap Growth
99.4%	AOM	iShares	Moderate Allocation ETF
99.4%	FSCKX	Fidelity	Spartan Mid-Cap Index Fund - Fidelity Advantage Class
99.4%	MDY	SPDR	S&P MIDCAP 400
99.4%	VTWNX	Vanguard Mutual Funds	Target Retirement 2020
99.4%	FSCLX	Fidelity	Spartan Mid-Cap Index Fund - Investor Class
99.3%	MMTM	SPDR	S&P 1500 Momentum Tilt
99.3%	MDYG	SPDR	S&P 400 Mid Cap Growth
99.3%	VCVSX	Vanguard Mutual Funds	Convertible Securities
99.3%	MGC	Vanguard	Mega Cap
99.3%	KXI	iShares	Global Consumer Staples ETF
99.3%	PWV	PowerShares	Dynamic Large Cap Value Portfolio

https://similarstocks.com/vanguard-mutual-funds/vwelx

 

[samclem]

You could always go to one of these highly correlated ETFs....

Once of which is VOO, which is just the S&P. It is a 99.8% correlated ETF. From what I can see, there is no magic that Wellington has.

Senator,
Any idea what time period that correlation covers? When I went to the link, I couldn't tell, but it looks like it may be for the last 30 days, which isn't much of a history.

Wellington and the Vanguard S&P 500 can be expected to vary a lot in their performance when stocks take a hit. For example, from June 2008 through Mar 2009, the S&P fund took a 46% loss, while Wellington had a 31% loss. Even if the performance of the funds were closely corellated most of the time, the difference in their performance during periods such as this would be important to many investors.

If we go for a longer window (1/1/2000 through today), a $10K starting amount in each fund would have about $21,300 in the S&P fund today and $26,400 in Wellington. So, it does not appear that the funds are pretty much the same, though on many days their performance may be similar. I don't think Wellington has any magic, but I'm not surprised that a fund with 1) stocks that are weighted toward value and 2) holdings that are about 30% bonds, 70% equities will perform differently than a fund holding only the 500 largest US publicly-traded companies.

 

[MichaelB]

Wellington and the Vanguard S&P 500 can be expected to vary a lot in their performance when stocks take a hit. For example, from June 2008 through Mar 2009, the S&P fund took a 46% loss, while Wellington had a 31% loss. Even if the performance of the funds were closely corellated most of the time, the difference in their performance during periods such as this would be important to many investors.

+1

Correlation says nothing about risk or performance, only directional moves.

 

[fritz]

Wellington Management is the reason we own both Wellington and Wellesley balanced funds.

 

[Another Reader]

Wellington is the biggest reason I put up with Vanguard's quirks and marginal customer service.

 

[Looking4Ward]

Wellington is the biggest reason I put up with Vanguard's quirks and marginal customer service.

Same here.

 

[target2019]

I would open an account at Vanguard to get VWELX, if you can't get it elsewhere.

I'm looking at RLBGX in my 401K account, as a possibility for 2017 contributions.

RLBGX American Funds American Balanced Fund® Class R-6 Fund RLBGX chart

M* assigns it to category 50-70% Equity.

I expect over time it will lag VWELX Wellington.

 

[FANOFJESUS]

Kind of like Wellington The Oakmark Funds | Equity & Income

 

[Senator]

Here is a great thread that discusses Wellington too.

http://www.early-retirement.org/forums/f28/wellesley-vs-everything-else-in-er-82548.html

 

[exnavynuke]

Since 1985, a 66% VTI and 34% BND portfolio has been a pretty much dead ringer for the performance of Wellesley according to the backtest link posted in the thread that Senator brought up.

 

[samclem]

Since 1985, a 66% VTI and 34% BND portfolio has been a pretty much dead ringer for the performance of Wellesley according to the backtest link posted in the thread that Senator brought up.

Is that just end-to-end, or also during stock calamities (Oct 1987, 2008) and bond market woes (1969, 1994)?

 

[exnavynuke]

Is that just end-to-end, or also during stock calamities (Oct 1987, 2008) and bond market woes (1969, 1994)?

The whole time. Portfolio 2 is Wellington, 1 is VTI/BND mix.

https://www.portfoliovisualizer.com...ocation2_1=34&symbol3=VWELX&allocation3_2=100

#	Initial Balance	Final Balance	CAGR	Std.Dev.	Best Year	Worst Year	Max. Drawdown	Sharpe Ratio	Sortino Ratio	US Mkt Correlation
1	$10,000	$17,827	6.70%	10.82%	21.36%	-22.07%	-31.89%	0.64	0.93	0.99
2	$10,000	$17,603	6.55%	10.69%	22.20%	-22.30%	-31.26%	0.63	0.92	0.97

 

[samclem]

The whole time. Portfolio 2 is Wellington, 1 is VTI/BND mix.

https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2016&lastMonth=12&endDate=08%2F13%2F2016&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&showYield=false&reinvestDividends=true&symbol1=VTI&allocation1_1=66&symbol2=BND&allocation2_1=34&symbol3=VWELX&allocation3_2=100

# Initial Balance Final Balance CAGR Std.Dev. Best Year Worst Year Max. Drawdown Sharpe Ratio Sortino Ratio US Mkt Correlation

1 $10,000 $17,827 6.70% 10.82% 21.36% -22.07% -31.89% 0.64 0.93 0.99

2 $10,000 $17,603 6.55% 10.69% 22.20% -22.30% -31.26% 0.63 0.92 0.97

According to a note on that page:

Note: The time period was automatically adjusted based on the available data (May 2007 - Nov 2016) for the selected asset: Vanguard Total Bond Market ETF (BND)

So, we're only looking at that most recent 9 year period, not back to 1985. This misses some fairly important market perturbations (and opportunities for Wellington's active managers to shine--if they truly add value). I think we'd need a bond fund with a longer history in their database than BND has to see that.

 

[alaska55]

According to a note on that page:
So, we're only looking at that most recent 9 year period, not back to 1985. This misses some fairly important market perturbations (and opportunities for Wellington's active managers to shine--if they truly add value). I think we'd need a bond fund with a longer history in their database than BND has to see that.

BND is a eft use VBMFX. Which is the mutual fund version started Dec. 1986.

 

[alaska55]

BND is a eft use VBMFX. Which is the mutual fund version started Dec. 1986.

VTI also is a EFT only goes back to 2001 use the mutual fund version VTSMX.

 

[samclem]

Here's a look back to 1987 comparing:
-- "Portfolio 1" : 66% VFINX (Vgd S&P 500)/34% VBMFX (Vgd Total Bond Index) (rebalanced annually)
-- "Portfolio 2" : 100% Wellington

#
......Initial Balance..Final BalanceCAGR..Std.Dev...Best Year..Worst Year..Max. Drawdown...Sharpe Ratio...Sortino Ratio...US Mkt Correlation
Port 1..$10,000.......$131,412....8.99% 10.18%. 30.90%...... -22.71%.... -34.01%........... 0.59............. 0.86.............. 0.98
Port 2..$10,000.......$158,593....9.68% 10.01%. 32.92%...... -22.30%.... -32.53%........... 0.66............. 0.99.............. 0.90

Fairly similar performance, and with the Admiral class shares available today, it's possible that the homebrew index portfolio would have a higher ending balance than the Wellington portfolio. But, that still just takes us back 30 years, which might still miss some dramatic opportunities for Wellington to set itself apart.

Note: The higher Sortino ratio of the Wellington portfolio indicates it had better performance when adjusted for downside volatility compared to Portfolio 1.

 

[alaska55]

I'm probably the only won who didnt know this but I guess Vanguard Wellington is closed to new investors. Anyone have any good alternatives that are similar?

A good alternative would be 65% VEIPX Vanguard Equity Income Fund which is also managed by Wellington and 35% CD ladder. If this is new money going in monthly 65% VEIPX and 35 BND or 65% VTI and 35% bnd is fine. Right now I would think twice about dumping a large amount into any bond fund. I would wait until the dust settles on interest rates. A cd ladder will most likely outperform bond funds in the near future.

 

[NW-Bound]

Just looking at Morningstar, the earliest I can go back for all 3 funds VBMFX (bond), VTSMX (stock), and VWENX (Wellington Admiral) is 1993.

A $10K invested would become $34,700 for VBMFX, $82,800 for VTSMX, and $88,100 for VWENX. Wellington has the same or better long-term growth than total stock, yet with much lower volatility.

Note how Wellington trailed behind the total market in the late 90s, as its managers shunned the techs and dotcoms. But then, that saved it from the tech crash of 2000-2003. Also note the better performance during the financial crisis of 2007-2009.

 

[bUU]

And I thought that was the whole point of the fund: To achieve comparable gains with lower volatility. No?

 

[nun]

I recently opened a solo401k and had to decide how to invest the money. I wanted to keep it simple and just have one fund so went with Vanguard Balanced Index (VBINX) and stopped worrying.

 

[FANOFJESUS]

I recently opened a solo401k and had to decide how to invest the money. I wanted to keep it simple and just have one fund so went with Vanguard Balanced Index (VBINX) and stopped worrying.

That is a good choice in the upper tax brackets. Wellington would be good in the lower tax brackets.