But my Bond Funds really are doing well...

[W2R]

Maintaining your AA during bad years takes mental fortitude. During the 90's I annually sold shares from stock funds and bought bond funds even though there was lots of hype of a new paradigm and Dow 30,000 etc. It worked well 'cos my losses in 2000 and 2001 were only 2% and 4.5%. However, 2002 was tough to keep re-balancing as I was down 11% that year but the following year was up 20.7%

Around that time I heard an interview with a manager from one of the Pension funds for a megacorp. The interviewer asked him what his secret was because just before the stock melt down he sold $MM's of stocks and bought bonds, then just before stocks came back he sold $MM's of bonds and bought stocks.

His explanation that he was no financial wizard, he was simply following the AA laid down by the trustees of the pension fund. And re-balancing when they got 5% out of kilter.

That's an encouraging story! My asset allocation for ER is pretty conservative (45:55 equities:fixed), and I am hoping that will help me during bad years. During good years, I am thinking that I will be so busy buying Wellesley with the profits from my equity funds, that I won't be tempted to stray. We shall see.

I have been pretty happy with Wellesley myself, though I expected it to perform a bit better with bonds prices having gone up like they have in the past few months. However, not making much money is still better than losing a lot of it. The only thing is that Wellesley has performed so well since October (relative to the rest of my portolio) that I haven't been able to add money to it as per my asset allocation model. It's just too rich right now compared to everything else...

That's true! It has been doing really well compared with my equity funds, and this has been very encouraging to me. My plan has 30% of my portfolio in Wellesley. So, I will be eager to see these dividends at the end of the month, to see some real $$ instead of making wondering projections in Excel of what I might receive.

In the 5 years I have been investing in Wellesley I've done the equivalent of 8.8% year on year, but as you can see from my returns it has fluctuated by as much as 9%, although no negative returns on any given year.

2003 10.74%2004 12.60%2005 3.65%2006 11.39%2007 6.00%

Wow - - those do vary quite a bit. But even 3.65% would be enough to make me happy. With the economy faltering, I would think that this year dividends could be less.

 

[FIREd]

In the 5 years I have been investing in Wellesley I've done the equivalent of 8.8% year on year, but as you can see from my returns it has fluctuated by as much as 9%, although no negative returns on any given year.

2003 10.74%2004 12.60%2005 3.65%2006 11.39%2007 6.00%

Wellesley is up "only" about 0.6% since October 9, 2007 according to Quicken... I hoped it would have done a bit better (ha, expectations!), but I guess the 35% it holds in equities has been beaten down pretty good in the past few months... But I am still very happy with it. Plus I get new shares every 3 months and a nice dividend that keeps on going up..

 

[FIREd]

With the economy faltering, I would think that this year dividends could be less.

Actually, if anything, it looks like the dividend yield on Wellesley (and Wellington) has gone up a bit a since the beginning of the credit crunch.

 

[Alan]

Wellesley is up "only" about 0.6% since October 9, 2007 according to Quicken... I hoped it would have done a bit better (ha, expectations!), but I guess the 35% it holds in equities has been beaten down pretty good in the past few months... But I am still very happy with it. Plus I get new shares every 3 months and a nice dividend that keeps on going up..

Yes, it is down at present. I'll be estimating my returns on it April 1st. Meanwhile the personal returns shown for me on the VG website show 1 year return 2/28/07 to 2/29/08 as 1.6% - but I don't intend making any moves. (Wellesley is about 1/3rd of my portfolio)

 

[W2R]

Wellesley is up "only" about 0.6% since October 9, 2007 according to Quicken... I hoped it would have done a bit better (ha, expectations!), but I guess the 35% it holds in equities has been beaten down pretty good in the past few months... But I am still very happy with it. Plus I get new shares every 3 months and a nice dividend that keeps on going up..

My Wellesley is down a little bit from Jan 25th and Feb 14th, when I bought it (less than half a percent today, almost even yesterday). I think is holding its own very nicely in the crummy market we have had during the past month. It is definitely a "sleep at night" investment! That is what I was hoping, since I have 30% of my portfolio in it, and I am pleased so far.

 

[FIREd]

My Wellesley is down a little bit from Jan 25th and Feb 14th, when I bought it (less than half a percent today, almost even yesterday). I think is holding its own very nicely in the crummy market we have had during the past month. It is definitely a "sleep at night" investment! That is what I was hoping, since I have 30% of my portfolio in it, and I am pleased so far.

Yep, Wellesley is definitely a "sleep at night" investment. It is actually more stable than some of my pure bond funds. So sit back, relax and watch the dividends roll in! VG hasn't annouced yet the March dividend paying date for its funds, but pay day will probably be in 2 weeks...

 

[W2R]

Actually, if anything, it looks like the dividend yield on Wellesley (and Wellington) has gone up a bit a since the beginning of the credit crunch.

I hope that continues!

Yep, Wellesley is definitely a "sleep at night" investment. It is actually more stable than some of my pure bond funds. So sit back, relax and watch the dividends roll in! VG hasn't annouced yet the March dividend paying date for its funds, but pay day will probably be in 2 weeks...

That's what I am figuring, based on the date last year near the end of March.

 

[ziggy29]

I have been pretty happy with Wellesley myself, though I expected it to perform a bit better with bonds prices having gone up like they have in the past few months.

Keep in mind that when people say bonds have done very well over the last 2-3 months, they really mean Treasuries. A lot of corporates, even high grade corporates, are down despite lower interest rates, as the most skittish investors are bailing out of anything that has a shred of risk. Wellesley doesn't have many Treasuries -- with its yield, how could it?

While it's hard to overcome emotional decisions about money, this is the sort of "be greedy when people are fearful" stuff Warren Buffett talks about, I think.

 

[FIREd]

Keep in mind that when people say bonds have done very well over the last 2-3 months, they really mean Treasuries. A lot of corporates, even high grade corporates, are down despite lower interest rates, as the most skittish investors are bailing out of anything that has a shred of risk. Wellesley doesn't have many Treasuries -- with its yield, how could it?

Good point. But if Wellesley's 35% equity portion plunged about 15% since last october (as the DOW has), then that means that its 65% bond portion must have gone up at least 9% since its overall return has been +0.6% over the same period. Not too shaby when you look at it this way I guess... Vanguard's Intermediate term treasury fund is "only" up about 10% since last October... For some reason I thought it would have been more than that (It feels like rates have gone down so much in the past 6 months that treasury prices should have gone up a lot more).

 

[Alan]

I don't believe Wellesley holds any treasuries. See below holdings as end of Feb.

Wellesley Income Fund Adm as of 02/29/2008

Consumer Discretionary 2.00%
Consumer Staples 14.40%
Energy12.90%
Financials 24.50%
Health Care 9.60%
Industrials 6.80%
Information Technology 0.00%
Materials 9.30%
Telecommunication Services 7.10%
Utilities 13.40%

 

[FIREd]

Wellesley held only about 4% in US Gvt obligations as of 12/31/2007...