There was a posting over at M* that discussed this somewhat. I would be appreciative if anyone here would care to read it and give their opinion. Thanks.
http://tinyurl.com/j7vu2
http://tinyurl.com/j7vu2
Wellington or Wellesley ... have certainly done a good job ... of sticking to their investment objectives [large value dividend paying stocks and high quality corporate bonds]... if an investor wants a value tilted balanced fund, either of these would do nicely, especially if one qualifies for admiral shares
which is what OP was looking forwab said:It's fine if you're looking for large cap value and bonds.
LL said:There was a posting over at M* that discussed this somewhat. I would be appreciative if anyone here would care to read it and give their opinion. Thanks.
http://tinyurl.com/j7vu2
Lets see, its cheap, simple and you dont have to do any rebalancing. Returns provide more than 4% income and if you reinvest the residual, you would have beaten inflation from 1970-today. You invest and cash the checks.wab said:I guess I never understood the fascination with Wellesley. It's fine if you're looking for large cap value and bonds.
Cute Fuzzy Bunny said:I think for a retiree, early or otherwise, who doesnt like volatility and wants simple and cheap, its perfectly fine for one stop shopping. I think for people considering annuities or other income contraptions, it'd be a grave mistake to not take a hard look at buying this fund instead.
2B said:I avoid "balanced" funds. I'd recommend buying a conservative equity income type fund and then buying CDs or laddered bonds individually.
wab said:The OP said preservation of capital is important, and they are looking at a 5-10 year horizon before retirement.
So far, everybody who loves Wellesley is basing their love on past behavior. Yes, it's true -- in a 20-year-long dropping interest rate environment coupled with a 20-year-long stock market bull run, a 60/40 (or 65/35) mix of bonds/stock can't go wrong. The bond allocation saved the fund in the last bear market.
Any guesses as to what the fund would do in a rising interest rate environment coupled with a secular bear market?
Hint: it won't preserve capital.
If they are OK with a mix of large-cap value and bonds, Wellesley is a fine pick. The fund is not magic. The historical returns of the fund are meaningless.
If they want to ensure that their capital is preserved over the next 5 or 10 years, I would go with a smaller allocation of stocks and either buy TIPS that mature when they retire or buy a fund like Vanguard's Target 2015, which seems like a better fit than Wellesley for their situation, but might just as easily drop in value over the next 5-10 years.
Cute Fuzzy Bunny said:35% dividend paying large cap value in wellesley is more dangerous than 50% Total Stock Market in the 2015 fund in a secular bear?
watch it! they are obviously younger than i, and i'm not over the hill!! bet you're aging too (even Gabe is aging).he's got aging conservative parents
Cute Fuzzy Bunny said:Got some data showing that LCV doesnt behave much different from LC over the long haul?
Cute Fuzzy Bunny said:I dont see any lessening of the 'value premium' given that the LCV indexes at vanguard are whomping the LCB and LCG indexes in YTD, one year and five year returns.
DOG51 said:What fund do you recommend for your conservative equity income allocation?
I like your thinking on laddering cd's. I plan to do that. On the equity side, how about DVY? I believe it is yielding arounding 3.7%.2B said:DOG51,
Fidelity or Vanguard Equity Income Fund -- They are both Large/Value stock funds about the same holdings as either Wellington or Wellesley. I'm just trying to avoid exposing the fixed income portion to interesest rate changes. If they buy a $10,000 CD that matures in 5 years they will get their $10,000 back in 5 years. They'll get their interest too. A bond fund could be worth more or less. They'd be happy it were more but getting less wouldn't be very good for preservation of capital.
DOG51 said:I like your thinking on laddering cd's. I plan to do that. On the equity side, how about DVY? I believe it is yielding arounding 3.7%.
2B said:You're getting the CDs/bonds for income and stability. I didn't look at it's holdings but if it's really the high dividend paying Dow stocks this would be a very narrow selection of stocks. I'd avoid it as being not deversified enough.