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Wellesley competition

I have never understood why someone has not come along and tried to emulate VWINX. My gut feel is that their success is 80% process and 20% intellectual property (managerial decisions). To my knowledge there is no other single fund that even attempts to use the VCIT/VYM combo which in certain periods of time competes favorably with VWINX. VWINX is on an island.

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Re: Wellesley competition

IMO, the formula of dividend-paying stocks and investment-grade bonds is so simple that it works great with Vanguard's low ER. Others cannot beat it with higher ERs.

Did you mean Wellesley in the Subject?

YBB
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Re: Wellesley competition

Do you mean buy both VCIT and VYM separately?  That would work..... but seems someone would recognize the mutual fund profit potential of introducing a single fund combining those two together with prospectus authority to slightly 10% adjusting the allocations as conditions require.  The vast majority of investors do not know the performance mix VCIT/VYM combo even exists, however they would know if combined into one fund. Most investors look at individual fund performance rankings, etc. It seems Fidelity or Blackrock would attempt to offer a product. 

Thanks for subject correction.

 

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Re: Wellesley competition

My personal most important indice to judge suitability is upside downside capture ratio in which VWINX excels IMO. There doesn't seem to be a competitive fund. Some like chocolate some like vanilla nothing wrong with either one of them.

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Re: Wellesley competition

See below, all portfolios are 40/60. VYM /VCIT is the worse option (performance+SD+the rest). VDIGX/VBILX is the best option. The key was to have better performance but also better SD and the rest. See PV(link)

Past performance is no guarantee of future returns  :-)

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
VYM /VCIT7.91% 6.58%18.09%-3.42%-12.38% 1.11.74
VDIGX/VCIT8.32% 6.25%20.84%-0.97%-10.69% 1.222
VDIGX/VBILX7.85% 5.05%18.49%-1.19%-6.60% 1.412.53
VWINX7.58% 5.33%16.39%-2.57%-8.59% 1.292.19
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Re: Wellesley competition

FD, interesting work.

Switching to VBILX corp & gov't bonds 5-10 year maturity from VCIT corp only outperforms VWINX in all 4 metrics MaxDraw, Sharpe, SD and CAGR. VDIGX uses a different benchmark than VYM also.

VBILX/VDIGX is a better combo than VCIT/VYM.

If you open up the window to the month after VDIGX changed objectives (1/2003) from your 12/2009 PV analysis we get the same results (1/2003 to present).  All 4 metrics are better than VWINX. 

Wellington manages VDIGX which is interesting.

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Re: Wellesley competition


@shipwreckdalone wrote:

FD, interesting work.

Switching to VBILX corp & gov't bonds 5-10 year maturity from VCIT corp only outperforms VWINX in all 4 metrics MaxDraw, Sharpe, SD and CAGR. VDIGX uses a different benchmark than VYM also.

VBILX/VDIGX is a better combo than VCIT/VYM.

If you open up the window to the month after VDIGX changed objectives (1/2003) from your 12/2009 PV analysis we get the same results (1/2003 to present).  All 4 metrics are better than VWINX. 

Wellington manages VDIGX which is interesting.


VDIGX is a blend fund and doesn't belong in the conversation of dividend focused value funds.  It may well have done better because growth has done better over the last 10 years.  VCIT/VYM are just indexes.  Wellesley also gives you targeted capital gains.  It would take an actively managed fund with the same management mindset to compete with VWINX and a very low ER.  Most fund families couldn't do it at VWINX's ER.

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Re: Wellesley competition

Bilp, we discussed this fund hundreds of times and other managed funds. You can't ever find the exact thing and why it is managed. We are looking for a replacement, close is good enough. Several will never accept it

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Re: Wellesley competition

Bil, I think you make a valid point IMO. VDIGX is not as value tilted as VWINX even tho the phrase "value" was removed from VWINX benchmark in 2007. VWINX uses FTSE High Div Index. VDIGX uses NASDAQ US Div Achievers Select Index. Both fund overviews refer to investing in companies that "grow" or "increase" their dividend over time.

VWINX   P/E 16.7X               VDIGX   P/E  23.5X

VWINX  price/book  2.3X     VDIGX   P/B   4.9X

My OP was to question why another fund company has never been able to emulate VWINX. 

Any combination of funds competitive with VWINX regardless of how they are benchmarked are welcome and interesting to evaluate.

At some point VWINX will face rising yields (negative), but at some point the favor will return to value (positive).

Please don't post of how VWINX holds their own in a rising rate environment. It is still not an optimal situation for a balanced fund particularly with 65% bonds.

Regardless, I think VWINX is a great fund. 

 

 

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Re: Wellesley competition

VWINX is open to buy, so why try to "emulate" it? It's impossible to "emulate" an actively managed fund. You can buy similar funds, or concoct a mixture of ETFs that approximate its portfolio by sector, asset class, market cap, etc., but all you will be doing is to find a comparatively similar fund. I don't see the point when VWINX is open and available.

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Re: Wellesley competition

Please re read my messages. I think I explained already. Becasue big profits could be made by the mutual fund company that creates one to emulate it. It would benefit investors and the mf company. Two choices better than one. Many good 50/70 allocation funds. Only one good 40/60 imo.  


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Re: Wellesley competition


@shipwreckdalone wrote:

Please re read my messages. I think I explained already. Becasue big profits could be made by the mutual fund company that creates one to emulate it. It would benefit investors and the mf company. Two choices better than one. Many good 50/70 allocation funds. Only one good 40/60 imo.  



I suspect part of Wellesley's success is attributable to its 0.16% ER (Admiral class). A competitor seeking to make big profits by emulating Wellesley is going to run into a conundrum competing with Wellesley's low cost.

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Re: Wellesley competition


@shipwreckdalone wrote:

Bil, I think you make a valid point IMO. VDIGX is not as value tilted as VWINX even tho the phrase "value" was removed from VWINX benchmark in 2007. VWINX uses FTSE High Div Index. VDIGX uses NASDAQ US Div Achievers Select Index. Both fund overviews refer to investing in companies that "grow" or "increase" their dividend over time.

VWINX   P/E 16.7X               VDIGX   P/E  23.5X

VWINX  price/book  2.3X     VDIGX   P/B   4.9X

My OP was to question why another fund company has never been able to emulate VWINX. 

Any combination of funds competitive with VWINX regardless of how they are benchmarked are welcome and interesting to evaluate.

At some point VWINX will face rising yields (negative), but at some point the favor will return to value (positive).

Please don't post of how VWINX holds their own in a rising rate environment. It is still not an optimal situation for a balanced fund particularly with 65% bonds.

Regardless, I think VWINX is a great fund. 

 

 


@shipwreckdalone ,

Fine.  I guess you are saying that you don't really plan to hold 40/60 VDIGX/VCIT or else your comment on rising bond rates seems odd.  VCIT will be hit harder than Wellesley if rates rise.  So how is it comparable?  The thing you and FD are leaving out is that the main purpose of Wellesley is to generate an income stream at reasonable risk with some growth.  Go to PV and compare income over the last 10 years.

Wellesley's equity benchmark states: "This index fund seeks to track a benchmark that provides broad exposure to U.S. companies that are dedicated to consistently paying larger-than-average dividends.", not growth of dividends.  While VDIGX is clearly a dividend growth fund.  Apples to oranges.

Anyone can stick two funds together with the same TR over some period and say they are comparable, but your original point was why isn't there a basic mirror fund at some other fund family, and I still think it comes down to cost.

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Re: Wellesley competition


@bilperk wrote:

@shipwreckdalone wrote:

Bil, I think you make a valid point IMO. VDIGX is not as value tilted as VWINX even tho the phrase "value" was removed from VWINX benchmark in 2007. VWINX uses FTSE High Div Index. VDIGX uses NASDAQ US Div Achievers Select Index. Both fund overviews refer to investing in companies that "grow" or "increase" their dividend over time.

VWINX   P/E 16.7X               VDIGX   P/E  23.5X

VWINX  price/book  2.3X     VDIGX   P/B   4.9X

My OP was to question why another fund company has never been able to emulate VWINX. 

Any combination of funds competitive with VWINX regardless of how they are benchmarked are welcome and interesting to evaluate.

At some point VWINX will face rising yields (negative), but at some point the favor will return to value (positive).

Please don't post of how VWINX holds their own in a rising rate environment. It is still not an optimal situation for a balanced fund particularly with 65% bonds.

Regardless, I think VWINX is a great fund. 

 

 


@shipwreckdalone ,

Fine.  I guess you are saying that you don't really plan to hold 40/60 VDIGX/VCIT or else your comment on rising bond rates seems odd.  VCIT will be hit harder than Wellesley if rates rise.  So how is it comparable?  The thing you and FD are leaving out is that the main purpose of Wellesley is to generate an income stream at reasonable risk with some growth.  Go to PV and compare income over the last 10 years.

Anyone can stick two funds together with the same TR over some period and say they are comparable, but your original point was why isn't there a basic mirror fund at some other fund family, and I still think it comes down to cost.


As I already said before, you will never find different managed funds to be exactly the same.  Does that mean we can never compare funds? the purpose of many investors is to find better performance and/or SD, and for others maybe income.

Wellesley is one of the best conservative funds I know for decades and why many retirees that want to buy & hold should own it but that doesn't mean we can't look for other options.

BTW, I beat Wellesley on performance, SD, and higher income in the last 3 years but that's another story ;-)

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Re: Wellesley competition

Bil, the best combo was VBILX/VDIGX not VCIT/VDIGM as you say. 

Yes, we have already discussed value vs growth. I gave indicies above on both funds.

No I do not plan to hold a combo. I would hope one day to get a new fund with similar fund performance emulating VWINX. I thought at one time American's TAIFX woud be it, but recent performance lags.

Yes, I think declining interest rates is more optimal than rising rates for a balanced fund.

Yes, I appreciate FD's contribution to find a better performing combo.

You said "Anyone can stick two funds together with the same TR over some period and say they are comparable".  OK.  Do you know of ANY fund combo that beats FD's for all 4 metrics?  Growth or value. Particularly Max Draw. Please let me know. I already know about PIMIX types. I need combo of 5-10 year bond world and any equity. 

At the end of the day VWINX is my best option as long as the mgr remains.

ER may be a reason for lack of another 40/60 fund, but the 50/70 universe of funds also competes on ER and there are several comparitive good choices in that space. Why not 40/60?

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Re: Wellesley competition


@FD1001 wrote:

@bilperk wrote:

@shipwreckdalone wrote:

Bil, I think you make a valid point IMO. VDIGX is not as value tilted as VWINX even tho the phrase "value" was removed from VWINX benchmark in 2007. VWINX uses FTSE High Div Index. VDIGX uses NASDAQ US Div Achievers Select Index. Both fund overviews refer to investing in companies that "grow" or "increase" their dividend over time.

VWINX   P/E 16.7X               VDIGX   P/E  23.5X

VWINX  price/book  2.3X     VDIGX   P/B   4.9X

My OP was to question why another fund company has never been able to emulate VWINX. 

Any combination of funds competitive with VWINX regardless of how they are benchmarked are welcome and interesting to evaluate.

At some point VWINX will face rising yields (negative), but at some point the favor will return to value (positive).

Please don't post of how VWINX holds their own in a rising rate environment. It is still not an optimal situation for a balanced fund particularly with 65% bonds.

Regardless, I think VWINX is a great fund. 

 

 


@shipwreckdalone ,

Fine.  I guess you are saying that you don't really plan to hold 40/60 VDIGX/VCIT or else your comment on rising bond rates seems odd.  VCIT will be hit harder than Wellesley if rates rise.  So how is it comparable?  The thing you and FD are leaving out is that the main purpose of Wellesley is to generate an income stream at reasonable risk with some growth.  Go to PV and compare income over the last 10 years.

Anyone can stick two funds together with the same TR over some period and say they are comparable, but your original point was why isn't there a basic mirror fund at some other fund family, and I still think it comes down to cost.


As I already said before, you will never find different managed funds to be exactly the same.  Does that mean we can never compare funds? the purpose of many investors is to find better performance and/or SD, and for others maybe income.

Wellesley is one of the best conservative funds I know for decades and why many retirees that want to buy & hold should own it but that doesn't mean we can't look for other options.

BTW, I beat Wellesley on performance, SD, and higher income in the last 3 years but that's another story ;-)


Completely agree, FD.  But that isn't what the OP was about.  He wasn't looking for "other options" he was wondering why there was no "mirror" fund at another fund family.  There clearly are many combos that would compare well with Wellesley over some period in terms of TR  and even income.  For example, VYM and VWEHX  at 40/60 kills Wellesley in income and has a higher TR over the ten year period.  Other metrics are not as good.  It depends what an investor wants.  I'm just commenting of what @shipwreckdalone was asking about.

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Re: Wellesley competition


@shipwreckdalone wrote:

Bil, the best combo was VBILX/VDIGX not VCIT/VDIGM as you say. 

Yes, we have already discussed value vs growth. I gave indicies above on both funds.

No I do not plan to hold a combo. I would hope one day to get a new fund with similar fund performance emulating VWINX. I thought at one time American's TAIFX woud be it, but recent performance lags.

Yes, I think declining interest rates is more optimal than rising rates for a balanced fund.

Yes, I appreciate FD's contribution to find a better performing combo.

You said "Anyone can stick two funds together with the same TR over some period and say they are comparable".  OK.  Do you know of ANY fund combo that beats FD's for all 4 metrics?  Growth or value. Particularly Max Draw. Please let me know. 

At the end of the day VWINX is my best option as long as the mgr remains.

ER may be a reason for lack of another 40/60 fund, but the 50/70 universe of funds also competes on ER and there are several comparitive good choices in that space. Why not 40/60?


No and I don't care to look for them.  I'm happy with Wellesley in that space and with all due respect to FD, I think his reliance on a little less SD and a little more Sharpe is just his hobby horse.  Unless the metrics are dramatically different, only a few things count over any period; TR if that is your goal, or Income if that is your goal, or a combination of both if that is your goal.  I've never met an investor who cheerfully said my TR was lower than I wanted but boy my SD sure looked good.

So to try to answer your question of WHY no fund like Wellesley one more time, it is really simple math.  Unless you believe there are managers out there who can create huge alpha compared to Wellesley's then you are stuck with the fact that Vanguard is a non-profit shop, and with a .16 ER, and VG's buying power Wellesley can't be beat over time unless the managers are superior enough to overcome both costs and the need to make a profit.

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Re: Wellesley competition

I am long-time holder of VWINX/VWIAX in my Vanguard accounts. It is part of my "core".

I used M* Premium Screener for funds in 30-50% equity category. There are total 130 distinct fund that include 103 no-load funds, only 85 with ERs below 0.75%, only 50 with ERs below 0.50%.

So, others have indeed tried but none is as good.

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Re: Wellesley competition

Well, Wellesley is a great fund in its category but Wellington isn't.  Should we stop looking for a better choice because you can't match its holding?

Where does it stop?

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Re: Wellesley competition


@FD1001 wrote:

Well, Wellesley is a great fund in its category but Wellington isn't.  Should we stop looking for a better choice because you can't match its holding?

Where does it stop?


Of course not.  I have held all three at the same time in the past.  If you look over 20 years, there is virtually no difference between The dividend growth/intermediate bond index combo and Wellesley.  The problem, FD, is a better choice is always after the fact and doesn't assure future performance, particularly in discreet asset classes; value, growth, blend.

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