Global Wellesley and Wellington

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slowtraveler
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Global Wellesley and Wellington

Post by slowtraveler » Wed Oct 18, 2017 11:00 pm

Wellesley has treated me good so far.

Vanguard is releasing a globally diversified version with a .17% higher er.

There isn't any stocks/bonds yet in the fund as it is still accumulating funds in a money market before investing but does anyone have any wisdom on these?

They are newer so I am guessing they are more likely to fall under but being globally diversified gives much higher income potential even with the higher er. Plus, international markets are better prices on a cash flow basis.

jennypenny
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Re: Global Wellesley and Wellington

Post by jennypenny » Thu Oct 19, 2017 5:36 am

I'm tempted. I like Wellington Management (which is what you're buying since the fund is a start-up).

I'm not bothered by the fees, but that's my personality. I'm always willing to pay more for better management, especially as I get older/have more to manage/less interest in managing it. I own a PIMCO fund with relatively hefty fees but I'm paying for that specific management team and they haven't disappointed me.

ThisDinosaur
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Re: Global Wellesley and Wellington

Post by ThisDinosaur » Sun Oct 22, 2017 12:30 pm

So why is Wellington management so highly regarded around here? I mean, the fees are pretty low for an actively managed fund. But what, beyond that, do they do that's so special?

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Re: Global Wellesley and Wellington

Post by jacob » Sun Oct 22, 2017 3:00 pm

It's (the Wellington fund) positively ancient, consistent, balanced, and shows some nine (9!) decades of slightly outperforming its benchmark. It's about 2/3s stocks and 1/3 bonds at all times; so nice and steady combo. Check out its 2008/09 behavior, for example.

It's good for people who want even less involvement than the typical indexer. However, they're not as tax-optimized as you can do yourself; then again, tax-optimization requires personal effort.

Of course, you're locked into that equity/bond mix which you might disagree with if you're a young 100% stocks forever guy (but then at that point, you're already making more decisions). However, Wellington also runs Windsor and Wellesley with different ratios. Those are another pair of dependable geriatrics, so check them out too.

For my part, if I ever began to suspect I was losing my touch, sanity, or interest, I would strongly consider that family.

ThisDinosaur
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Re: Global Wellesley and Wellington

Post by ThisDinosaur » Sun Oct 22, 2017 3:16 pm

I don't see that Wellington did noticeably better than passive funds in 2008/9. What did I miss?

Isn't part of the point of active management to change AA in light of market conditions?

And what about their investment approach makes it likely to continue as managers retire and get replaced?

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Re: Global Wellesley and Wellington

Post by jacob » Sun Oct 22, 2017 3:31 pm

http://quotes.morningstar.com/chart/fun ... ture=en-US

No. The point of active management is to pick which securities to own within the limitations stipulated in the prospectus.

Like any company, there will be a board/advisors/team that ensures (in theory) that individuals are replaceable. While company culture might change and someone in the future might decide to "try something new", the fact that they haven't done so in almost 90 years suggests that they might not be so inclined.

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Tyler9000
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Re: Global Wellesley and Wellington

Post by Tyler9000 » Tue Oct 24, 2017 3:41 pm

I've long admired Wellesley as an inexpensive, well-run, conservative fund and regularly recommend it for people not so inclined to manage their own investments. BTW, add a few gold coins on top of that and you have something pretty close to the Permanent Portfolio performance-wise.

A global version of the same fund seems like a good idea, but I'd probably give it a little time to mature before diving in.

ThisDinosaur
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Re: Global Wellesley and Wellington

Post by ThisDinosaur » Tue Oct 24, 2017 8:32 pm

Tyler9000 wrote:
Tue Oct 24, 2017 3:41 pm
but I'd probably give it a little time to mature before diving in.
Why?

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Tyler9000
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Re: Global Wellesley and Wellington

Post by Tyler9000 » Tue Oct 24, 2017 8:58 pm

While the US versions of Wellesley and Wellington certainly have a good track record, brand new funds usually require a little patience. I'd personally want to wait until the AUM is sufficiently high and the AA is fully established. If you want international exposure in the meantime, I'd be more inclined to add something like VEA (at 1/5th the ER of the new offerings) to the core Wellesley or Wellington fund you already own. But that's just me. ;)

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Re: Global Wellesley and Wellington

Post by ThisDinosaur » Wed Oct 25, 2017 6:03 am

Whats the significance of the AUM for the individual investor? Is your concern that a new fund that doesn't get enough interest or performs poorly will be closed down? Do you not trust Wellington Management's security selection process to work as well in international markets?
Tyler9000 wrote:
Tue Oct 24, 2017 3:41 pm
add a few gold coins on top of that and you have something pretty close to the Permanent Portfolio performance-wise.
Curious if you modeled this somehow. I mean, I don't find the conclusion surprising at all. But they are using mostly corporate bonds, while PP emphasizes Treasuries only in the bond component because the treasury can make new money to pay its debt.

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Tyler9000
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Re: Global Wellesley and Wellington

Post by Tyler9000 » Wed Oct 25, 2017 10:50 am

ThisDinosaur wrote:
Wed Oct 25, 2017 6:03 am
Whats the significance of the AUM for the individual investor? Is your concern that a new fund that doesn't get enough interest or performs poorly will be closed down? Do you not trust Wellington Management's security selection process to work as well in international markets?
I have zero reason not to trust Wellington, and they're so popular that I think the risk of them closing the fund any time soon is low. It's more of a practical thing.

Let's say I name you the head of the Dinosaur Fund with the goal of cheaply replicating the Wellington fund. I give you a $1 bill to start, and ask you to divide that $1 among the 1000 securities currently held in the Wellington fund in accordance to your prospectus. Remember, you can't simply purchase another fund because you're the fund manager! On top of the problem with getting companies to return your calls wanting to invest a fraction of a penny, how would you account for the fixed trading fees that are larger than the value of the shares?

There's a reason that the Global Wellington fund is currently in a subscription period with the money simply sitting in a bank account -- it makes no financial sense to even attempt to follow its stated prospectus until it has a minimum level of funds to do so. Even once they open it up, I personally would hold off on jumping in until the total AUM grows a bit just to eliminate any risk of the small funding relative to the broad scope affecting performance in a negative way. Perhaps that's overly cautious on my part, though.

ThisDinosaur wrote:
Wed Oct 25, 2017 6:03 am
Tyler9000 wrote:
Tue Oct 24, 2017 3:41 pm
add a few gold coins on top of that and you have something pretty close to the Permanent Portfolio performance-wise.
Curious if you modeled this somehow. I mean, I don't find the conclusion surprising at all. But they are using mostly corporate bonds, while PP emphasizes Treasuries only in the bond component because the treasury can make new money to pay its debt.
I did model it a while back although I no longer have that data. Wellington and Wellesley are both included in the Simba Spreadsheet if you're inclined to study it for yourself.

slowtraveler
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Re: Global Wellesley and Wellington

Post by slowtraveler » Sun Dec 31, 2017 2:53 am

Still very early but Global Wellesley has underperformed both Wellesley and its benchmark according to Morningstar.

I wanted the international diversification but not at the cost of underperformance.

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Fish
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Re: Global Wellesley and Wellington

Post by Fish » Sun Dec 31, 2017 3:55 am

Tyler9000 wrote:
Wed Oct 25, 2017 10:50 am
ThisDinosaur wrote:
Wed Oct 25, 2017 6:03 am
Whats the significance of the AUM for the individual investor?
Let's say I name you the head of the Dinosaur Fund with the goal of cheaply replicating the Wellington fund. I give you a $1 bill to start, and ask you to divide that $1 among the 1000 securities currently held in the Wellington fund in accordance to your prospectus. Remember, you can't simply purchase another fund because you're the fund manager! On top of the problem with getting companies to return your calls wanting to invest a fraction of a penny, how would you account for the fixed trading fees that are larger than the value of the shares?
That was a great example to illustrate the problems with low AUM, thanks Tyler!
slowtraveler wrote:
Sun Dec 31, 2017 2:53 am
Still very early but Global Wellesley has underperformed both Wellesley and its benchmark according to Morningstar.
From fund inception, yes, but it appears they were in cash from 10/18-11/06. If you start the chart from 11/06 then it tracks the benchmark quite well: http://quotes.morningstar.com/chart/fun ... 2%3A955%7D

Edit: Oops, that was Wellington (which has virtually the same AA as the benchmark). Wellesley has underperformed its benchmark, which is the same as Wellington. So I don't think it's really underperforming per se, just that the benchmark has a higher equity allocation. Here's the corresponding chart for Wellesley: http://quotes.morningstar.com/chart/fun ... 2%3A955%7D

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Re: Global Wellesley and Wellington

Post by IlliniDave » Sun Dec 31, 2017 5:25 am

I don't own any Wellington or Wellesley, but one of my backup plans in case managing even a simple portfolio becomes too much for me is to throw it all into Wellington. It's essentially a ~65/35 balanced fund for the last 40 years.

I don't remember all the details (can check out Bogle's book The Clash of the Cultures if interested in the longer story), but Wellington Mgmt was Jack Bogle's original employer (c. 1951 until he founded Vanguard). When he got ousted as Wellington Mgmt's CEO he stayed on the board of directors of Wellington Fund (and the rest of the "Wellington group" of funds), and convinced the funds' board to set up it's own fund-owned, at-cost corporation to oversee certain aspects of the funds operation as well as Wellington Management in it's role as a consultant to the fund. Of course, he named this new corporation Vanguard. So the Wellington Fund (being the "flagship" of the group) was essentially the first Vanguard Fund, prior to the creation of any index funds. Through Vanguard Bogle restructured the fund from the failure it had become under a speculative management strategy into the low-cost, passively-managed (although non-index) strategy it's employed for the last 40 years. In other words, Vanguard was born when the Wellington Fund overthrew its management company after the funds' board of directors (chiefly Bogle) lost faith in them.

I don't know much about the new international version(s), but since Bogle's retirement Vanguard has begun to put more emphasis on international diversification and I suspect the fund(s) will be managed with the same general strategy as the similarly-named existing funds with returns either leading or lagging as a function of how oversees markets out- or under-perform US markets.

slowtraveler
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Re: Global Wellesley and Wellington

Post by slowtraveler » Tue Oct 16, 2018 9:32 pm

I bought global Wellesley and I see what Tyler is talking about. It takes time for the dividends to start. They've increased every quarter but it's been an annoying catch up to what they will be. It's slowly starting to stabilize and I expect in 2019, they'll hover around a more stable point. No SEC yield available. Higher ER. Performance seems flatter than the domestic fund, though this one may be as a result of US outperformance in 2018.

Wanting to update so others know some of the drawbacks of picking up a new fund before it's stabled out.

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Re: Global Wellesley and Wellington

Post by jacob » Sat Jan 05, 2019 11:12 am

Any other experiences so far?

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