Wellesley underperforming?

Sojourner

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Just came across this graphic on Yahoo Finance and was shocked to see how poorly VWINX has done in recent years compared to its "benchmark". What do we make of this? YF doesn't specify the exact benchmark, so it's hard to know how accurate or helpful this is. What's your take on the performance of Wellesley over the past 1/3/5 years? Is it "underperforming" in your view?
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I believe it's the bond losses because the long end of the Yield curve has seen rising yields as short term has dropped.
 
I don't know it's benchmark, but with a 40% equity AA, I came in around 10% for 2024. Those returns for one year seem terrible, benchmark or otherwise.
 
I believe it's the bond losses because the long end of the Yield curve has seen rising yields as short term has dropped.
Right, but wouldn't Wellesley's benchmark(s) also have those bond losses? The question is, has Wellesley underperformed compared to other balanced funds with similar AAs?
 
Right, but wouldn't Wellesley's benchmark(s) also have those bond losses? The question is, has Wellesley underperformed compared to other balanced funds with similar AAs?
Can't answer that as I don't have Wellesley. Anything that holds significant positions in long bonds is getting killed with short rates dropping as the Yield curve has inverted back to normal.
 
What is the benchmark? “Category” is very generic and could contain many dissimilar funds. Morningstar often lumps like this with their categories. A one year 18.6% average performance makes me think all the other funds had 60%+ equity exposure.

Regardless, a large fixed income component is going to make the prior 3 years look terrible.

And in general a balanced fund with a large equity allocation is going to beat VWINX anyway. That’s not why people buy VWINX - they are looking for more income and less volatility. Unfortunately we just came through a very tough interest rate period.
 
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After I saw 2023's EOY performance, I sold all my and my wife's VWINX in our Roth Ira's and bought VFIAX at the start of 2024, which worked out well. I'm not going back.
 
The stock market was driven by large tech stocks the last 5 years so Wellesley stocks are mostly value stocks, not growth. The bonds have also hurt its return. Now is likely a time to add the fund, not dump it at a loss.
 
I’ve held Wellesley (VWIAX) for many years and with the exception of 2024 have been disappointed by the recent results. Bond duration close to 7-years and value stocks have been its achilles heal. On multiple occasions I’ve looked for an exit.

I’ve held on expecting/hoping for a mean reversion as the market rotates to value. Of course *hoping* isn’t a plan, but I’m in agreement with VanWinkle that selling for a loss would not be wise at this time.
 
I was a long time large happy holder of Wellesley in my retirement account. Nov '21 I sold and bought Wellington....Bit more risk where I want to be conservative but it was a good switch for me
 
Not sure if it’s reasonable to judge since it is an income fund. Here is how the benchmark is defined at VG.

Weighted 65% bonds and 35% stocks. For bonds: Lehman U.S. Long Credit AA or Better Bond Index through March 31, 2000, and Bloomberg U.S. Credit A or Better Bond Index thereafter. For stocks: 26% S&P 500/Barra Value Index and 9% S&P Utilities Index through June 30, 1996, when the utilities component was split into the S&P Utilities Index (4.5%) and the S&P Telephone Index (4.5%); as of January 1, 2002, the S&P Telephone Index was replaced by the S&P Integrated Telecommunication Services Index; as of July 1, 2006, the S&P 500/Barra Value Index was replaced by the S&P 500/Citigroup Value Index; as of August 1, 2007, the three stock indexes were replaced by the FTSE High Dividend Yield Index.
 
I couldn’t find that article on Yahoo Finance, but considering they didn’t identify what the benchmark is, the article is worthless. Wellesley Is 1/3 stock and 2/3 bonds. I’m not aware of any other widely known balanced fund with that ratio. I prefer Fidelity Balanced FBALX, which is 60% stocks and 40% bonds, which last year returned 16.06%
 
After I saw 2023's EOY performance, I sold all my and my wife's VWINX in our Roth Ira's and bought VFIAX at the start of 2024, which worked out well. I'm not going back.
We did exactly the same.
 
I'm no expert but I look at Wellesley as a very long-term holding. The idea behind a balanced fund isn't yearly performance but long term stability with good performance (long term.) All those "downs" from the bond portion will likely turn around during the next time bonds rally. I don't have a lot, but I'm hanging on with interest in what will happen in a year or two. I guess we'll see as they say. YMMV
 
BND last year was -1.5%. VTI was +24.5% approximately.
One benchmark would be 60 BND and 40 VTI, which would be about 9% return
 
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Right, but wouldn't Wellesley's benchmark(s) also have those bond losses? The question is, has Wellesley underperformed compared to other balanced funds with similar AAs?
I went over to portfoliovisualizer.com to check, and it seems to me vwinx is matching its benchmark very closely. In fact, rolling returns for the last 1,3,5 and 7 years are very slightly higher for vwinx.

My "benchmark" was 33% US total equities and 67% US total bond.

Visit that site and look at the data for yourself.
 

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Times change. I remember when I first started lurking here, Wellesley was a hot topic, and even a little forum specific meme evolved: "Pssst! Wellesley." I guess the halcyon days are over.

Here's an old thread on this meme: "Pssst!! Wellesley"
 
Times change. I remember when I first started lurking here, Wellesley was a hot topic, and even a little forum specific meme evolved: "Pssst! Wellesley." I guess the halcyon days are over.

Here's an old thread on this meme: "Pssst!! Wellesley"
I don't think anything has changed...folks are still looking at 2-3 year returns and using those numbers to determine where to put their money.

Which, of course, is a good way to under-perform.
 
Wellesley is 33/67 as mrfeh says. If they compare it to 40/60, that would be an unfair comparison.

Wellesley Overview
"Balanced funds typically offer a higher allocation to stocks; however, this fund is unique in allocating about one-third to stocks and two-thirds to bonds."

In a similar way, I wouldn't compare the Balanced Index Fund (60/40) to Wellington (67/33) because Wellington has more equity exposure.
 
I went over to portfoliovisualizer.com to check, and it seems to me vwinx is matching its benchmark very closely. In fact, rolling returns for the last 1,3,5 and 7 years are very slightly higher for vwinx.

My "benchmark" was 33% US total equities and 67% US total bond.

Visit that site and look at the data for yourself.
Hmm, interesting. I guess it's all a matter of what you define as the "benchmark". I would expect VWINX to outperform an unmanaged index fund comprised of 33% total US equities and 67% total bond, since it's a managed fund that could buy/sell individual bonds to (somewhat) mitigate the effects of rising interest rates. The fact that it's barely outpacing a benchmark comprised predominately of a total bond index fund is quite surprising (to me, at least).
 
I checked the benchmark - stated as Allocation--30% to 50% Equity. So they are comparing a fund with 50% stocks to a fund with 33% stocks - this is a poor comparison.
 
Hmm, interesting. I guess it's all a matter of what you define as the "benchmark". I would expect VWINX to outperform an unmanaged index fund comprised of 33% total US equities and 67% total bond, since it's a managed fund that could buy/sell individual bonds to (somewhat) mitigate the effects of rising interest rates. The fact that it's barely outpacing a benchmark comprised predominately of a total bond index fund is quite surprising (to me, at least).
Don't expect managed funds to outperform indexes. There's a reason most people around here will tell you to just buy index funds.

ETA - even a well-respected fund like Wellesley is unlikely to give you better results when the expense ratio is taken into account (.23% in this case).
 
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Don't expect managed funds to outperform indexes. There's a reason most people around here will tell you to just buy index funds.

ETA - even a well-respected fund like Wellesley is unlikely to give you better results when the expense ratio is taken into account (.23% in this case).
Absolutely agree when it comes to equity index funds vs. managed funds. But I was under the impression that this is not the case for bond funds. I remember reading some threads here and on the Bogleheads forum years ago about how managed bond funds can be preferable to index funds due to the price/interest-rate relationship.
 
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