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Wellesley Fund
Old 03-02-2024, 05:09 PM   #1
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Wellesley Fund

I have had this fund for a couple of years. Hasn't done well due to rates ect. Looking for some feedback on keeping or getting out. I'm very conservative. I hold MM, Stable Value Fund, SP500 and Wellesley. Roughly 30/70. Any feedback is appreciated
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Old 03-02-2024, 06:03 PM   #2
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Once upon a time, long ago (1990s), I held Wellesley and Wellington. They both did terrible for a decade or so, and I ditched them for VTI and VOO. I haven't looked back.

Stable Value and Wellesley both contain a large % of bonds (VWINX has 64% bonds), so I think you're AA is probably something like 72%+ bonds. This is a huge drag on your overall performance, and means you'll have a hard time keeping up with inflation, even if you keep your WR to 4%.
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Old 03-02-2024, 06:15 PM   #3
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I held it a few years back. It did well then dropped way below my purchase price then returned to within a few cents of that price. I sold it and took a 25k loss d/t taxable gains reinvested over a couple of years. It's still well below my selling price and still spitting out taxable gains (if in a taxable account like I was....I know). Anyway, some of those dollars are now in cds and a corresponding amount to the stock component is in an index fund. I do not regret selling.
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Old 03-02-2024, 06:36 PM   #4
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Money Markets funds are currently paying around 5%. 1 year CD are paying 5%. These have been the rates for around 20 months. If you're looking for a good 60/40 blended fund, Fidelity Balanced FBALX is doing well, having returned 72.2% over the past 5 years according to https://weissratings.com/en/mutual-fund/fbalx-nasdaq
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Old 03-02-2024, 07:52 PM   #5
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Old 03-03-2024, 01:51 AM   #6
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wellesly bet on a large concentration of long term bonds and lost .

what is interesting is the that while wellesley returned a mere 3% cagr since feb 2020 , fidelity balanced which is more equity laden at about 60% returned 9.67% so 100k in wellesly grew to 112,170 , 100k in fidelity balanced grew to 144,643….pretty good for fidelity balanced considering it was just 20% more equities yet more than 3x the return

spy being 100% equites grew to 159,935 a 12.67% return

so once again the fact we had rising rates did not effect equities much while the portfolios that were designed to be defensive and mitigate these temporary dips did a lot worse

but what is interesting is that the sharpe ratio which is a measure of risk vs return has wellesly at a mere .16% while fidelity balanced fund was .55 and the s&p .93% .

the higher the number the better the risk vs reward so wellesly was barely worth the risk over that period .

ladding a bit of gold tends to help wellesley so a small 20% stake in gold , iau or gld helped things a wee bit bringing wellesley up to almost a 4% cagr and a sharpe ratio of .23 and it grew to 115,806.

that makes wellesley a bit closer to a golden butterfly portfolio.


by itself gold grew to 126,862 6.13% cagr and sharpe ratio of .35% beating wellesly by itself in risk vs reward

but the big brother of defensive portfolios, the permanent portfolio

which is 25% spy

25% long term bonds

25% gold

25% short term treasuries

did about the same as wellesly , clocking in at 3.44% cagr , 114,492 and a sharpe ratio of .20


so wellesly did about the same as any other defensive portfolio over that terrible period , if they held long term bonds as a defensive component
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Old 03-03-2024, 04:16 AM   #7
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Originally Posted by Brangus Baldies View Post
I have had this fund for a couple of years. Hasn't done well due to rates ect. Looking for some feedback on keeping or getting out. I'm very conservative. I hold MM, Stable Value Fund, SP500 and Wellesley. Roughly 30/70. Any feedback is appreciated
Getting in/out of funds because of performance over a couple years will lead you to much heartache.
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Old 03-03-2024, 04:23 AM   #8
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for sure .

nothing is immune to down turns all the time .

the exact same defensive portfolios that are considered low ulcer like the ray dalio all season or harry brown permanent portfolio did poorly in the rising rates


here were results historically vs 2022

historically the all season and permanent portfolio were some of the lowest ulcer portfolios there are .

yet 2022 hit them bad as 3 out of 4 asset classes were overly rate sensitive .

the best of the ulcer rated historically the ray dalio all season came in second to last in 2022

HISTORICALLY




2022 RESULTS

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Old 03-03-2024, 05:33 AM   #9
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Old 03-03-2024, 06:33 AM   #10
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Money Markets funds are currently paying around 5%. 1 year CD are paying 5%. These have been the rates for around 20 months. If you're looking for a good 60/40 blended fund, Fidelity Balanced FBALX is doing well, having returned 72.2% over the past 5 years according to https://weissratings.com/en/mutual-fund/fbalx-nasdaq
Any advice on which Fidelity mutual fund or ETF for a:

100 fixed income - FZDXX
10/90 fund -?
20/80 fund -?
30/70 fund -?
40/60 fund -?
50/50 fund -?
60/40 fund - FBALX
70/30 fund -?
80/20 fund -?
90/10 fund -?
100 stock fund - FXAIX
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Old 03-03-2024, 06:38 AM   #11
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does it incur a taxable event if you sell wellesley and wellington funds and buy some other funds in vanguard? have had both for a very long time and they were slow to build, but really didn't notice until last time I put money into vtsax and it really showed the difference in which funds you are in.
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Old 03-03-2024, 07:50 AM   #12
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does it incur a taxable event if you sell wellesley and wellington funds and buy some other funds in vanguard? have had both for a very long time and they were slow to build, but really didn't notice until last time I put money into vtsax and it really showed the difference in which funds you are in.
Yes if it's in a taxable account. No if in IRA or Roth.

By the way, it's bad tax planning to have it in a taxable account.
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Old 03-03-2024, 08:00 AM   #13
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Any advice on which Fidelity mutual fund or ETF for a:

100 fixed income - FZDXX
10/90 fund -?
20/80 fund -?
30/70 fund -?
40/60 fund -?
50/50 fund -?
60/40 fund - FBALX
70/30 fund -?
80/20 fund -?
90/10 fund -?
100 stock fund - FXAIX
Use both FZDXX and FXAIX in proportions to acheive the overall AA you want.
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Old 03-03-2024, 08:01 AM   #14
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I held Wellesley for years but did sell it on a dip that minimized capital gains for me only because of the uncertainty of end of year distributions. Any effort to carefully manage income throughout the year is easily thwarted by an unanticipated distribution.
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Old 03-03-2024, 08:39 AM   #15
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Use both FZDXX and FXAIX in proportions to acheive the overall AA you want.
I suggest FSKAX instead of FXAIX, and for long term holdings, FXNAX (total bond) instead of FZDXX.

The rate on FZDXX is very nice now, but it won't stay there.
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Old 03-03-2024, 09:13 AM   #16
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You reminded me to sell this laggard. Have a small amount in a rollover IRA.
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Old 03-03-2024, 10:40 AM   #17
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Since Wellesley is 60-65% LT bonds it would seem logical that its performance after the 2023 bond debacle may tend to revert to its long term performance in the vicinity of 6-8% unless long term rates continue to increase at the pace of the recent past. Lets also remember that in the debacle of 2022 Wellesley was down about roughly half as much as the S&P 500 so for folks that may not have decades left to regain large losses it may make sense to hold (in tax advantaged accounts) to defensive investments such as Wellesley. And although the recent experience has been for quick rebounds from big market drops that's not always the case. For example, the lost decade (1/2000-12/2009) where Wellesley (7% CAGR) actually came out ahead of the S&P 500 (-1% CAGR)
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Old 03-03-2024, 11:15 AM   #18
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FXNAX seems like a total loser, with a 5 total return of 3.37% and a rating of D+ according to https://weissratings.com/en/mutual-fund/fxnax-nasdaq

I think you’ll be happier with a combination of Money Market fund FZDXX (for short term liquidy) along with a CD ladder to lock in interest rates for 6 months to 3 years. You can go to a 5 year CD ladder, but it’s difficult to guess what interest rates will be that far out.
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Old 03-03-2024, 11:16 AM   #19
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FXNAX seems like a total loser, with a 5 total return of 3.37% and a rating of D+ according to https://weissratings.com/en/mutual-fund/fxnax-nasdaq

I think youíll be happier with a combination of Money Market fund FZDXX (for short term liquidy) along with a CD ladder to lock in interest rates for 6 months to 3 years. You can go to a 5 year CD ladder, but itís difficult to guess what interest rates will be that far out.
Looking at 5 year returns is meaningless.
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Old 03-03-2024, 03:38 PM   #20
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Thanks for all the feedback
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