I've owned the Vanguard Wellesley Income Fund for a long time. It's been a steady performer; nothing earth shattering. I've also got some IRA funds tied up with another mutual fund company and am thinking of also switching those funds over to Vanguard. I'm considering VWELX but am a little concerned that half their top ten holdings are invested in Oil companies. I'm hoping that someday (soon) there is a correction in the price of oil and it drops. I would think this would hit VWELX and all of the other funds heavily invested in oil pretty hard. Any comments? I was also looking at VBINX.
I just saw an article on the best funds to buy for the long haul. Wellington was right up there. The article mentioned a well-timed exit from bank stocks early in the current debacle. I would hope for similar nimbleness when it comes to commodities. But, whatever, the balanced approach of this fund means that your losses should be minimized. This fund won't make for cocktail party bragging rights during a bull market, but over the long haul you'll make the most money right here.
Wellesley is similar but invests most of its money in bonds, rather than stocks. Income should be greater, but capital appreciation potential less. Which you prefer probably depends on your time horizon and risk tolerance.
I would actually differ in that $10,000 invested in Wellington in 1998 would be worth $20,243.46 today. An hypothetical $10,000 indexed to the DJIA would be worth $16,620, $13,970.41 indexed to the S & P 500, and $13,208.42 indexed to the Nasdaq.
I know what most of you will say....but we need to be in stocks to get capital appreciation. Hey, I'm 30 years old, and I understand that point. However, we must all remember that this is a double edged sword. You cannot discount the horrific losses that the DJIA suffered during the early part of this decade because they count. If you look at Vanguard's stock funds you will find that Wellington smoked some of them in 10 year return and some even in OVERALL return over the life of the fund.
This is impressive because Wellington's history includes the crash of 1929 and it sports a return of 8.37% that includes that dark period. I would, upon further review, be more than happy to bring that up with my friends who are of the Jim Cramer set and wheel and deal stocks day and night for a return that is actually less that Wellington is getting for me.
I doubt that it will hurt the fund very much at all. The fund has almost $49 billion in assets and 35% of those are tied up in highly rated bonds. Furthermore, the fund is spread over 111 different stocks and many different sectors. The fund does not have a great deal of turnover so, when oil stocks come down to earth, they will hold somthing else that will do well.
Are you new to the Wellington Fund? You really should not be losing any sleep over this fund and its allocation. It survived the Great Depression, has never failed to pay a quarterly dividend in its entire history, and it almost always distributes a capital gain. Please see the following article on the history of the fund, written by John Bogle himself, to get a better idea as to why you should be excited to be in this fund:
I believe in it so much that it is the only non-taxable stock or mutual fund that I own. The $10,000 buy in was brutal but it beats bank interest! :)
are you looking at what Wellington is holding on yahoo or on the Vanguard website? ...... the Vanguard website is listing the holdings as of the end of February, Yahoo is showing the holdings as of the end of 2007, they have changed.
I believe Wellesley and Wellington are both managed by the same company. I'd have to check to make sure.
My wife has had this fund in her 401k for years and I was very impressed with the way it held up during the tech crash compared to what I had, which was mostly index funds.
I looked further back and over the long haul they have a great record. At the first of last year I exchanged half of my holdings in index funds for Wellington, today I'm glad I did and have been adding to it every month.
I trust the management team to know when to bail out of the oil stocks, so that doesn't bother me.
I've owned this stock for around 5 years and it has an aoutstanding record.
Look at the long term chart and you will see it looks real good..
I intend to move more of my long term money into this fund...
I would not be concerned at all with the stock allocation in the Wellington Fund. Remember, 1/3 of the fund is high quality bonds and this acts as a shield against the ups and downs of the market. Wellington is down slightly for me while my 401K investments are down 15%.
Furthermore, the top holding is actually AT&T and the rest of the top 10 has non-oil components such as GE, Bank of America, IBM, Eli Lilly, and Wal-Mart. The fund has 111 different stocks total.
I have been thrilled with Wellington in that it does what it is actually supposed to do. For example, the fund goes down 0.50% when the market goes down 1% on a given day. I have had consistent returns that are in the high single digits and none of the nasty swings that have recently hurt the market.
Bottom line....It was one of the first mutual funds created, it survived the Great Depression, and it has returned a dividend EVERY QUARTER THAT IT HAS EXISTED. It has only failed to return a capital distribution once in the 1970's. You can read John Bogle's history of the Wellington fund at the following link:
John founded Vanguard and worked at one time for the Wellington Management Co. prior to founding Vanguard.
This fund is a winner. The 10K buy in is brutal but the results are worth it and it certainly beats bank interest.