that this fund holds 57% of their assets in long term bonds? The question is not a knock on the fund but just a general question.
It's been alnost 2.5 months since the original post in this thread. Interest rates have, in fact, gone down, not up. I make this observation not to ridicule the original post--I agreed with the idea at the time--but to point out the uncertainty of basing investments on what "should" happen. It often doesn't.
Maybe interest rates will start back up again. Maybe not. Wellesley will take advantage of either move.
I'm not concerned. The yiled is 3.61 now, and if you look at the 1/3/5/10 year results, they are consistently superior, 5 star morningstar. If you are looking at holding for at leat 5 years it's a safe place to put you money; you can't time the market. However be sure to weight yyour portfolio more to equities overall: i.e., emerging markets broke out this week and they have been dogging for a while.
The advice is good--dollar-cost-averaging is always smart--but I wouldn't wait. Interest rates have already begun to rise. The 10 year rate is around 3.5% and this fund's current yield is up to 3.09%. The real reason not to wait, though, is that DCA is already a way to avoid making big initial timing bets while still moving toward a desired investment in a measured way. Why spoil the strategy by trying to time the move?
About a year ago interest rates were close to what they are now and I would have made the same observation, "interest rates can only go up from here." But, I would have been wrong. Interest rates can, and did, go down and didn't start rising again until a few months ago. Now, I agree, it looks like interest rates will be in an uptrend for awhile, but I could be wrong yet again.
We don't really know what tomorrow will bring. This fund tries to make sense out of the uncertainty by balanced investing. It's a strategy that takes advantage of market ups and downs by investing in both stocks and bonds. This past week the fund is actually slightly ahead though the market was down overall. If you are uncomfortable with the stock/bond distribution of Wellesley, I suggest Wellington. It's a mirror image with about 2/3 stock and 1/3 bonds.
This fund has been around for quite a while, including the inflationary 1970s, but their worst 3-year total return metric is 1.95%. Wellesley is no barn burner but it has produced a 6.3% average return over the years, with relatively few gliches. By comparison, the much more volatile stock market's average return has been about 6.7% over the last 80 years. Retirees who need income but can't afford to lose principal, will be hard pressed to find a better investmentt.
For a bit of added safety I would diversify with a Vanguard short-term bond fund.