Wellesley Income vs Wellington

[Brat]

I have a very significant % of our IRAs in Wellesley and this fund is the only place we have bonds. Bonds have been doing very well since we purchased it but looking forward that can't continue. I am seriously considering moving that $ to Wellington.

We do have investments in dividend focused stocks and ETFs.

What do you financial maven's think? DH is 75, I am 72.

 

[gabrewer]

My understanding is the Wellington is a "traditional" balanced fund -- approximately 60% stock/40% fixed income & cash. So moving from Wellesley may decrease your bond exposure somewhat but it would still be fairly significant. At the same time you would be increasing your exposure to stocks. Personally I'm an advocate of everyone have a significant stock position no matter what their stage in life, but you'll need to evaluate that in terms of your own risk tolerance. However, I like Wellington -- see as a fund that would serve someone well throughout all their life stages.

 

[braumeister]

The average duration of the bonds in both funds is the same, so it's just a matter of percentages, right? If so, then it's simply a matter of adjusting your AA to where you're more comfortable, IMHO.

 

[pb4uski]

+1 IIRC Wellesley is ~40/60 and Wellington is the inverse (~60/40) so it depends on how much equity exposure you want.

Another key question is whether this is money you plan to rely on or whether it is what I call "nice to have" money that it is unlikely that you will use and will likely be inherited by your heirs. If this money is something you plan to rely on, I would leave it in Wellesley - though even Wellesley might be aggressive if you will need it in the short term. OTOH, if it is the latter then my personal view is that Wellington is a better choice and more consistent with how the heirs might invest it.

You could also call Vanguard and chat with the reps about how you plan to use this money and see if they have any suggestions.

 

[NW-Bound]

What to do depends on which group you belong to.

1) People who think the bond boom has run its course, and one needs to do something about it.

2) People who think the above is not true. Or even if it's true, doing anything is not going to help, and may even hurt, hence one just stays put.

It's almost like religion.

No, it is religion!

 

[Ed_The_Gypsy]

This is a quandary. I have some Wellesley, too, but not a lot.

If interest rates go up, my feeling is that equities will suffer as well. This thread: Bogleheads • View topic - Are Wellesley bonds Intermediate or Long ? says that as of Sept 30, 2012, the average maturity there was 6.6 years.

My gut feeling is that the NAV and the dividends to a lesser extent would take a modest hit for about 5 years. I think I will stay with Wellesley, but I am younger than you.

You could divest of everything with bonds in it and build a 5-year CD ladder with the bond part and put the equity part back into equities.

Do you have a plan for the time when you can't manage your investments yourself any more? Some kind of simplification program to smooth out the bumps later in life? If so, perhaps you could make a partial start since this would be a bump. Smoothing out the bumps usually means lower returns as well. It all depends on when you want to go on autopilot.

 

[W2R]

My AA includes 30% Wellesley, and I am keeping it. I have been happy with it thus far, and even if its performance sank further I could still manage. There is no way, at my age of 65, that I would suddenly adopt an AA of more than 50% equities so I have to have some fixed income investment. To be honest, I am sure that Wellington Management (that manages both Wellesley and Wellington) can do a better job of managing their bond allocation than I can. So I'll just stick with Wellesley and let them do their best.

Bear in mind that I am no investment guru.

 

[Brat]

..
Do you have a plan for the time when you can't manage your investments yourself any more? Some kind of simplification program to smooth out the bumps later in life? If so, perhaps you could make a partial start since this would be a bump. Smoothing out the bumps usually means lower returns as well. It all depends on when you want to go on autopilot.

I really want to go on autopilot, at our age sudden health issues can cause missing critical points where action is required.

When the day comes that we can't/shouldn't manage our investments we will turn that over to DD who will likely use her own advisor. She and all the relatives on SIL's side of the family are CPAs and include CFOs. We are the 'poor' relatives.

Right now Wellington comprises 58% of our combined IRAs and is our only investment that has bonds. I had a meeting with our Fidelity representative Friday, she recommended keeping Wellington unless I wanted to restructure a lot of our other holdings.

I think I will focus on increasing the quality of our equity holdings.

 

[Ed_The_Gypsy]

I really want to go on autopilot, at our age sudden health issues can cause missing critical points where action is required.

When the day comes that we can't/shouldn't manage our investments we will turn that over to DD who will likely use her own advisor. She and all the relatives on SIL's side of the family are CPAs and include CFOs. We are the 'poor' relatives.

Right now Wellington comprises 58% of our combined IRAs and is our only investment that has bonds. I had a meeting with our Fidelity representative Friday, she recommended keeping Wellington unless I wanted to restructure a lot of our other holdings.

I think I will focus on increasing the quality of our equity holdings.

That % and strategy sound reasonable to me.

Fair winds.

Ed

 

[Spanky]

Right now Wellington comprises 58% of our combined IRAs and is our only investment that has bonds. I had a meeting with our Fidelity representative Friday, she recommended keeping Wellington unless I wanted to restructure a lot of our other holdings.

Do you mean Wellesley?

 

[Brat]

Do you mean Wellesley?

Yes, miss-type.