Wellesley - Thoughts on the Fund

I am a huge fan, but also am hesitant to use too much of one fund. We have approximatley 60% spread between Wellesley and Wellington in IRA and Balanced Index in Roths. Use these along with Total International to achieve our 40% stock target.

Wellington management has excelled over time with several different particular managers.

Here is a graph comparing Wellesley with 500 and Total Bond indices over time.

VWINX: Vanguard Wellesley Income Fund Chart | Morningstar

ps - Sorry, couldn't get 500 and total bond to save for link, but you can add and change funds for comparison.
 
I decided to dip my toe into the Wellesley pool in Jan 09. Some really smart people on some early retirement forum on the Internet had quite a few discussions that made a lot of sense to me. ;)

Besides, who am I to resist a well-delivered "Psssstttt" ? :cool:

Only 5% of my total retirement portfolio resides there right now. As time goes on over the next 10-15 years, I will be consolidating some of my actively managed VG equity funds. My intent is to use Wellesley as the repository of the future exchanges, i.e. simplify my portfolio and increase my stake in Wellesley. I haven't yet decided all the dirty details. :blush:
 
Just for the heck of it, here are the Target retirement funds.
VTINX - Target Retirement Income
VTOVX - Target Retirement 2005
VTENX - Target Retirement 2010
VTXVX - Target Retirement 2015
VTWNX - Target Retirement 2020
VTTVX - Target Retirement 2025
VTHRX - Target Retirement 2030
VTTHX - Target Retirement 2035
VFORX - Target Retirement 2040
VTIVX - Target Retirement 2045
VFIFX - Target Retirement 2050

They line up just like they are supposed to. Very Gratifying. Sometimes statistics work. The last three pile up so that you can't read their labels, but I'm too lazy to do anything about it.

riskReturn Target funds.gif

I just can't help it... :greetings10:

Let me amend what I said above. The more stock heavy funds do have more volatility, but we have been conditioned to expect them to return more, not less than bonds. The reason they look so bad is their inception dates are particularly unfortunate.
 
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I have owned both Wellesley and Wellington for many years, and I like both of these funds. Now that MIL needs some passive income to supplement her SS, we have put a significant portion of her portfolio in Wellesley too. She spends the dividends and reinvest the capital gain distributions.
 
DW's IRA is 65% Wellesley and 35% Star. It is not our only assets, she has a small Roth and this does not include my IRA & TSP funds. But the Wellesley/Star combination has worked well for her simple to understand. She began monthly withdrawals from Wellesley Jan 2010, so far its value has gone up faster than withdrawals. And Star has done even better.
 
Well, due to some reading here and other research, I decided to augment my portfolio with Wellesley - and am happy - I hope for it to provide income in the interim years until my pension kicks in - one of my multiple streams of income in my 'multiple streams of income' theory. Options, options, always have options.....
 
Performance

I read a lot of comments about both Wellington and Wellesley. I own both of them ever since my dad starting me investing 32 years ago. I read that they are not diversified enough, not enough small cap, etc etc

I am not the smartest guy (not was probably my dad) when in comes to investing, but go to Vanguard web-site and Research their funds. Then to a reverse sort on the performance for both 5 and 10 years - what more could anyone want from these funds??
 
I have ~33% of our savings in Wellesley, and like W2R, plan on using the dividends as income, letting cap gains re-invest.

I add diversity by owning bond and equity funds that invest overseas plus a US total stock market index fund.

I also have ~10% cash to ride out market swings.
 
I do not own a dime of Wellesley, but:

For those concerned about "new" managers of the fund, I think you can relax. Wellington mgmt (fund advisor) is a shop that runs money by committee. Investment decisions are not the decision of a single person, and the firm cultivates its style and tries explicitly to have the same process regardless of the people who stay or go. The Wellington people I have met have uniformly impressed me with their smarts, FWIW.
 
brewer12345 said:
I do not own a dime of Wellesley, but:

For those concerned about "new" managers of the fund, I think you can relax. Wellington mgmt (fund advisor) is a shop that runs money by committee. Investment decisions are not the decision of a single person, and the firm cultivates its style and tries explicitly to have the same process regardless of the people who stay or go. The Wellington people I have met have uniformly impressed me with their smarts, FWIW.
Click to expand...

Thanks Brewer :flowers:
 
I, also, have no Wellesley in our Portfolio. I do, however, have a considerable pile in VINIX (12%-13%). Several years ago, the long-time manager left and my heart stopped. He had been there for many, many years and was quite an impressive individual. (Yeah, I know -- it is an indexed non-managed fund.) Anyway, I didn't see how I could replace that investment with something comparable so I bit the bullet and held steady. Now, I can't even remember his name and the ship sailed as smoothly as it did before. You have to trust in Vanguard as an entity and not worry about the little pieces.
 
I think Wellesley and Wellington are both great funds and I second Brew's comment about Wellington Management ..... not to worry, IMHO.

I currently own Wellesley in my taxable along with enough FTSE All World ex US to bring my foreign up to 30% of equity (Wellesey only has about 7%). Keep in mind that I am 75 and spending the distributions.

Wellesley is not tax efficient and should be held in a tax sheltered or tax free account if you have the space and don't need to spend the distributions.

Cheers,

charlie
 
I am surprised by the responses on this thread. Some folks here seem to assume that new managers will beat the markets (i.e. the equivalent bond/equity index composition) just because they work for Vanguard... ? Also, how is a decision by committee make it better? Ultimately, some-ONE is responsible for final decision, which is what I would think you'd want. If it's a committee, then noone is really responsible. Plus it makes it even harder to track individual performances.

It's hard enough, and some believe impossible, to find a single person consistently beating markets in time to get in with their fund, and yet many seem to be convinced that just belonging to a club (like vanguard) already ensures ability to beat the markets...?

Is this a new kind of religion and I just missed the orientation?
 
I've read thru all the post here. Are you using a broker or are you doing this yourself. ? If you are doing this yourself which platform are you using.? Am interested because I'm a little tired of paying commissions and fees. Thanks...for all replies..
 
smjsl said:
I am surprised by the responses on this thread. Some folks here seem to assume that new managers will beat the markets (i.e. the equivalent bond/equity index composition) just because they work for Vanguard... ? Also, how is a decision by committee make it better? Ultimately, some-ONE is responsible for final decision, which is what I would think you'd want. If it's a committee, then noone is really responsible. Plus it makes it even harder to track individual performances.

It's hard enough, and some believe impossible, to find a single person consistently beating markets in time to get in with their fund, and yet many seem to be convinced that just belonging to a club (like vanguard) already ensures ability to beat the markets...?

Is this a new kind of religion and I just missed the orientation?
Click to expand...

Cannot speak for the rest, but I am Orthodox Pastafarian. Ramen!

Seriously, I think most of the VG faithful are not interested in "beating the market.". The mere fact that one invests in index funds ensures they will not. This is more about asset allocation, diversification and avoiding blowing yourself up than beating the market.

As for committee vs. Solo managers, of course mgmt by committee does not guarantee better performance. My point is more that the turnover of a particular individual matters much less. I have worled for a one man show in this business and I can tell you that that sort of shop is vulnerable to the "grand master" making a mistake or leaving, while a committee process means decisions are more incremental. So a committee process, especially one with a long track record, is far less likely to blow up a fund. I imagine that is what most Wellesley investors want.
 
brewer12345 said:
Seriously, I think most of the VG faithful are not interested in "beating the market.".
Click to expand...

Since this thread was about actively managed fund, I assume beating the market is really the goal. Otherwise, would not you just be investing in index ETFs and funds if you are not interested in that?
 
smjsl said:
Since this thread was about actively managed fund, I assume beating the market is really the goal.
Click to expand...
I'm a Wellesley and Wellington fund investor. I purchased those funds not with the expectation of beating the market, but with the desire to not be beaten by the market.:)
 
REWahoo said:
I'm a Wellesley and Wellington fund investor. I purchased those funds not with the expectation of beating the market, but with the desire to not be beaten by the market.:)
Click to expand...

In that case, as I know you know, your desires and goals can be assured by buying index funds instead, and not by buying Wellesley/Wellington...
 
The reason why people around here like Vanguard Wellesley and Wellington is because both funds have a long history of steadily growing investor's money (See what John Bogle had to say about Wellington: http://johncbogle.com/speeches/JCB_WMC1203.pdf). Their low fees make them particularly competitive in the actively managed funds arena.
 
smjsl said:
I am surprised by the responses on this thread. Some folks here seem to assume that new managers will beat the markets (i.e. the equivalent bond/equity index composition) just because they work for Vanguard... ? Also, how is a decision by committee make it better? Ultimately, some-ONE is responsible for final decision, which is what I would think you'd want. If it's a committee, then noone is really responsible. Plus it makes it even harder to track individual performances.

It's hard enough, and some believe impossible, to find a single person consistently beating markets in time to get in with their fund, and yet many seem to be convinced that just belonging to a club (like vanguard) already ensures ability to beat the markets...?

Is this a new kind of religion and I just missed the orientation?
Click to expand...

Actually Vanguard, PenFed, and Costco make up the holy trinity of the Retire Early forum. Bogle along with Buffett is among the pantheon of ER Gods.
Joking aside what the firms share is a "don't be evil" attitude, which translates to "don't rip off your customers"

In the case of Vanguard and Wellesley you are right they won't necessarily beat the market and certainly mere employment by Vanguard doesn't make a manager superior. What you will get is a fund that a has long history of providing good predictable returns, for relatively long risk, and the management/culture seem to work hard and doing stupid things that will lose your money.

The benefit of Wellesley vs index fund of say 60% Total Bond Fund and 40% Total Stock Market, is the Wellesley are constantly tweaking the asset allocation and seemingly doing a better job than most individual doing it at home, and they charge low expenses.
 
smjsl said:
Since this thread was about actively managed fund, I assume beating the market is really the goal. Otherwise, would not you just be investing in index ETFs and funds if you are not interested in that?
Click to expand...

Brewer is right on. The post was inquiring about the funds performance (solid, predictable, lower market risk and at the same time not under perform its blended index).

Plus risk in terms of management risk. The fund has some new managers. A committee decision process reduces the chances of major blunders, or an individual taking inordinate risks to try to goose the returns or to make up for other bad investment decisions.
 
One "warm fuzzy" that I get from owning Wellesley as my major holding in my taxable account is that the long term experience of Wellington Management might help preserve capital in the event of a "black swan".

Cheers,

charlie
 
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