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Contributor ○○

Balanced Fund - VWELX or VGWLX or Neither

I know we don’t really need another thread about these balanced funds, but here goes. If I’d only followed through on papa @yogibearbull  advice I’d still be in VWIAX. VWELX is my benchmark fund which I have been beating soundly the last several years and barely YTD. I’m considering starting a small position in VWELX or VGLWX and adding from cash on down equity days and transferring from VDIGX (or other equity) on days I think equity is irrationally exuberant. The goal would be to be in Admiral shares within a few months. I have enough cash to just purchase the Admiral shares outright but I’m more comfortable going slowly, and I make things complicated for my own amusement. @chang , I know you hold VWENX and could easily create the same ratio with your other funds. Is the reason you hold it so that there is one portion of your portfolio that you don’t need to mess with? As @R48  correctly mentions, the balanced funds don’t allow one to have control over the stock - bond portion of the balanced fund but I think the management re-allocation between equity and FI adds value. Plus, I have lots of other funds to make tactical allocations I want to achieve. Regarding VGWLX, I have some international exposure via the discussed MATFX. I have very little exposure to Europe by design, but maybe now is a time to dip back into it?  Do you think VGWLX is a decent vehicle for that or a dedicated international fund. In full disclosure, before this mess I had taken a position in VWIAX and when the poop hit the fan with both bonds and equity I panic sold, at the worst time. I’m still kicking myself for that. I’m favoring VWELX over VWIAX because I’m already full with FI and the more growth(ish) equity allocation to VWELX. Thoughts? -  TIA

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Re: Balanced Fund - VWELX or VGWLX or Neither

I think that allocation/balanced funds add value when the markets move fast. Fixed-income within them have taken a different role than in the past. They form my core and then I add some explore stuff. On huge up/down days, I know that my allocation/balanced funds and other active funds [including multi-asset/sector funds] are doing something even when I may or may not tinker with my explore portion. For my purposes, I prefer conservative-allocation2 with 30-50% equity so that I can add some explore; with moderate-allocation with 50-70% equity [and I have some], there isn't much room left for explore as my TAA target range is 40-60% equity.

Stick with old workhorses VWINX/VWIAX, VWELX/VWENX. I also added VTMFX recently.

YBB
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Re: Balanced Fund - VWELX or VGWLX or Neither


@rhythmmethod wrote:

I know we don’t really need another thread about these balanced funds, but here goes. 


It's OK, as long as we have a balanced discussion.


@rhythmmethod wrote:

VWELX is my benchmark fund which I have been beating soundly the last several years and barely YTD. I’m considering starting a small position in VWELX or VGLWX and adding from cash on down equity days and transferring from VDIGX (or other equity) on days I think equity is irrationally exuberant. The goal would be to be in Admiral shares within a few months. I have enough cash to just purchase the Admiral shares outright but I’m more comfortable going slowly, and I make things complicated for my own amusement. @chang, I know you hold VWENX and could easily create the same ratio with your other funds. Is the reason you hold it so that there is one portion of your portfolio that you don’t need to mess with? 


I can't comment on your entry technique, as that's really a matter of personal comfort and preference.

"I know you hold VWENX and could easily create the same ratio with your other funds. Is the reason you hold it so that there is one portion of your portfolio that you don’t need to mess with?" To be clear, my 401K has been shared between VWENX and VPMAX for years, but right at this exact moment I don't own either, as they were liquidated last week and a rollover check is in the mail. Up to now, the main reason for holding VWENX was simply that it was one of the best choices available in the 401K lineup.

I am not certain now that I will restore that same VWENX position in my Vanguard IRA. Actually, I have been building up VGWAX (Global Wellington) since the start of the year. Same overall strategy as Wellington, and same managers (almost). When you compare the portfolio stats, I think it's clear the smaller, younger fund enjoys a benefit from the tremendous disparity in size between the funds. Also, I've taken out a lot of trash in my portfolio during the last month, which has included a lot of "Foreign Value", so VGWAX is virtually my only remaining FV exposure now.


@rhythmmethod wrote:

As @R48  correctly mentions, the balanced funds don’t allow one to have control over the stock - bond portion of the balanced fund but I think the management re-allocation between equity and FI adds value. Plus, I have lots of other funds to make tactical allocations I want to achieve. Regarding VGWLX, I have some international exposure via the discussed MATFX. I have very little exposure to Europe by design, but maybe now is a time to dip back into it?  Do you think VGWLX is a decent vehicle for that or a dedicated international fund. In full disclosure, before this mess I had taken a position in VWIAX and when the poop hit the fan with both bonds and equity I panic sold, at the worst time. I’m still kicking myself for that. I’m favoring VWELX over VWIAX because I’m already full with FI and the more growth(ish) equity allocation to VWELX. Thoughts? -  TIA


I like your MATFX. One of these nights my trigger finger is going to itch that fund into my portfolio.

"I have very little exposure to Europe by design, but maybe now is a time to dip back into it?" I also cut my Europe exposure back by design. Europe's problems run deep. But I want to keep some exposure in my portfolio. No point penalizing Swiss pharmaceuticals and other solid, proven businesses. Even aggressive Foreign Growth funds have Europe exposure; if they thought European companies were too mired in doo-doo to grow competitively, they wouldn't own them. 

"Do you think VGWLX is a decent vehicle for that or a dedicated international fund." Assuming you're OK with a world allocation fund, which is what Global Wellington is, then I personally like VGWLX ... well, I have been buying it. Of course, you are getting a value-biased exposure across their international holdings (Europe, Asia,Pacific and Lat Am). But then you've got MATFX, which adds a growth component. Frankly, it looks pretty good to me. Kind of where I am / am going myself.

The only other fund right now on my radar, that could fit into your thinking on this, is the new Vanguard International Core Fund VWICX / VZICX. That's pure international equity, so obviously easier to "control" in your portfolio than a WA fund like Global Wellington.

Lastly, nothing wrong with VWELX / VWENX. It's still super cheap (the Global funds are, of course, more expensive). Great record, and no reason to think it won't continue that way forever. If I feel my IRA gets too unbalanced (too much foreign) at some point, then I will consider using it.

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Re: Balanced Fund - VWELX or VGWLX or Neither

Thanks, @yogibearbull and @chang. Lots of great feedback! I'll plan to make a move shortley and keep all ideas in play.

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Re: Balanced Fund - VWELX or VGWLX or Neither

@rhythmmethod thanks for starting this thread. I too am interested in starting a position in VWELX, VGLWX, or even VWIAX as a core holding. I like the active mgmt of these funds and value tilt (although PRWCX would be a nice choice too). @chang makes a good point of the smaller asset base of VGLWX, but I prefer dedicated funds for international exposure. For a younger investor in accumulation mode, what is the consensus on holding a core position in one of these balanced funds? 

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Re: Balanced Fund - VWELX or VGWLX or Neither


@rhythmmethod wrote:

the balanced funds don’t allow one to have control over the stock - bond portion of the balanced fund but I think the management re-allocation between equity and FI adds value. Plus, I have lots of other funds to make tactical allocations I want to achieve. Regarding VGWLX, I have some international exposure via the discussed MATFX. I have very little exposure to Europe by design, but maybe now is a time to dip back into it?  Do you think VGWLX is a decent vehicle for that or a dedicated international fund.


 

Rhythm:

I very recently went through a similar evaluation.

Yep, you give up fine control over bond/equity adjustments, but as you say, you still have some other stuff in your portfolio to get tactical with.

My thought was to take a large enough position in the balanced fund so that I would be comfortable owning nothing but that in a semi-calamity because I could go to cash in all other positions, leaving the balanced fund untouched. If it's a 60/40 fund and half of your portfolio, if you sell everything else to cash in a panic, you are down to 30/70 and I wouldn't ever want to be below 30 equity.

A major point of my recent changes was to simplify, have fewer holdings, and to give me something I felt I could live with unaltered medium to long term.

I also reduced international--throwing in the towel after 10 years of nowhere. I've contemplated global equity funds and would certainly consider Global Wellington, but I want more granular (region-specific) control of equities. And I don't want 10 or 15 positions.

Admittedly, I no longer recall the difference between a paradiddle and a ratamacue, so you might want to consider me a contrary indicator.

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Re: Balanced Fund - VWELX or VGWLX or Neither

I am hardly an expert but I've been in both Wellington and Wellesley Income a long time.  Over the long haul Wellington's return is a little higher but Wellesley Income is far less volatile.  When I was younger I wish I had put more in Wellington since I wasn't planning any withdrawals.

If I remember correctly, in the 2008 crash Wellington lost 22%, Wellesley Income lost 10%.  Wellesley Income is a better fund to use for down market withdrawals.  And, we are now setting our portfolio up for withdrawals. I am currently buying more Wellesley Income to adjust my asset allocation in my taxable accounts closer to 50/50.

I don't know how much international exposure you want.  I decided to check out my moderate-allocation funds.  I have American Funds Balanced Fund in a traditional IRA.  It is giving me monthly MRDs.  Since I do not need them right now I'm reinvesting them in Vanguard Wellington.  Balanced is around 12% foreign stocks/bonds.  Wellington is around 17%.  For me, that's enough. 

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Re: Balanced Fund - VWELX or VGWLX or Neither


@rhythmmethod thanks for starting this thread. I too am interested in starting a position in VWELX, VGLWX, or even VWIAX as a core holding. I like the active mgmt of these funds and value tilt (although PRWCX would be a nice choice too). @chang makes a good point of the smaller asset base of VGLWX, but I prefer dedicated funds for international exposure. For a younger investor in accumulation mode, what is the consensus on holding a core position in one of these balanced funds? 

@RunforFun - There is a lot we don't know about your situation. Briefly, I think a young accumulator might want more equity than a balanced fund offers. Depending on what other funds you own you might want to lean toward QQQ, SPX, MGK, TRBCX, etc and add international as you desire. You also might get better response on a mutual fund forum or portfolio management, etc than here. Good luck. We were young once ;-)


 

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Re: Balanced Fund - VWELX or VGWLX or Neither

@rhythmmethod You’re only as old as you feel! I’ll consider posting something on one of the other forums. I was just looking to get others thoughts on using VWELX, VGLWX, VWIAX or a similar fund as a ballast which it sounds like is your goal based on the OP. I’m new here. Well not exactly. I’ve read the forums for years just never posted.

My plan would definitely be to dial up the equity exposure given this would be held in a ROTH and I’m in my early-thirties. Instead of going full equities (especially given where the markets are), I like the idea of a core position (25-40% of portfolio) allocated towards a balanced fund and the rest in equities (VDIGX, PRWAX, PRDSX, etc.). VWELX and VWIAX have consistent historic performance which seems more important to me than worrying about FI/equity ratios. I’d rather limit some downside.

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Re: Balanced Fund - VWELX or VGWLX or Neither

@RunforFun Balanced funds have a lot of “analysis appeal”, but personally they cost me time and money when I was younger.

I would place my most aggressive investment in a Roth — 100% equity. In fact, I did exactly that last week (documented on the BSW thread).

You’ve still given way too little information for anyone to offer you tailored advice (which I wouldn’t do anyway). @retiredat48 will probably give you useful input if you post on the PD/M forum.

VWELX and VGWLX are great funds if they fit into your target AA. The equity leans to value, and right now I would lean more to growth, so I don’t think the Wellingtons are a one-stop solution.

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Re: Balanced Fund - VWELX or VGWLX or Neither


@RunforFun wrote:

@rhythmmethod You’re only as old as you feel! I’ll consider posting something on one of the other forums. I was just looking to get others thoughts on using VWELX, VGLWX, VWIAX or a similar fund as a ballast which it sounds like is your goal based on the OP. I’m new here. Well not exactly. I’ve read the forums for years just never posted.

My plan would definitely be to dial up the equity exposure given this would be held in a ROTH and I’m in my early-thirties. Instead of going full equities (especially given where the markets are), I like the idea of a core position (25-40% of portfolio) allocated towards a balanced fund and the rest in equities (VDIGX, PRWAX, PRDSX, etc.). VWELX and VWIAX have consistent historic performance which seems more important to me than worrying about FI/equity ratios. I’d rather limit some downside.


Well, FWIW, I opened a position in VWELX today. My thinking is that it is rather neutral. I was coming from an Asia focused growth fund. If there is a little more equity upside to ride I'll stay there until I feel things going south. At that time I'll re-allocate to VWINX. When things seem low enough I'll go back to VWELX (maybe the global version depending on how I'm feeling) I also hold VDIGX and consider it core with some downside protection. Good luck. You're ahead of the game already!

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Re: Balanced Fund - VWELX or VGWLX or Neither

another VG thread and the same funds again and again and again and again and again and again.

Wait... and again and again and again and again and again and again and again and again.

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Re: Balanced Fund - VWELX or VGWLX or Neither

@chang thanks for the feedback. "cost me time and money" do you mean underperformance of balanced vs pure equity exposure? That's really the point of my post, are balanced funds worth it? I know they "can" have a place in a portfolio given the situation, AA, etc. I've never used one. I've only ever used dedicated equity and FI exposure, mostly equities.

I have other accounts (401K, RO IRA, taxable with mostly indexed options). For the ROTH, I'm using an active strategy and I can go 100% equities in it. Mostly cash/equities now. I'm questioning whether using some ballast, like a balanced fund, could help over the LT since I don't plan to keep much FI exposure in the ROTH.

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Re: Balanced Fund - VWELX or VGWLX or Neither

Good luck to you as well. I've held VDIGX for over 6yrs. More of a conservative fund, but I like the steady growth and quality from Kilbride. Markets seem disconnected from the economy right now, but doesn't mean more juice can't be squeezed out of equities. I'm skeptical, but VWELX could help catch that if it happens.

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Re: Balanced Fund - VWELX or VGWLX or Neither

@RunforFun, I'd say for a young investor, a balanced fund is not the best option unless you are going to jump to cash when your equity fund falls 50% in 3 months.

If you can stomach the losses stay with equity.  I rode out the 2000 crash in 100% equity and stayed in 100% equity until 2008 crash.  After that, I've rebuilt and now have 75% in balanced funds and the rest I play with adjusting equity/bond/cash trying to do better than PRWCX and VWENX (and usually falling short).  I'm 60 now so that works for me, but if I were 40 or 30, I'd be equity heavy.

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