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VWINX: The one-fund lazy retirement income portfolio
"Through our own independent research and due diligence as a risk manager, I have found that one of the best single funds to own for retirees seeking a modest income stream and a diversified exposure to the equity and fixed-income markets is the Vanguard Wellesley Income Fund. I want to highlight this fund because I think it makes sense as both a portfolio building block, and as a stand-alone single-fund strategy."
dr: VWINX looks less volatile on the downside to me. expenses are much less. 3 year record, GLRBX is slightly ahead. 5 year record, dead even. the one area where GLRBX shines far and above is if it's held in a taxable account.
Great fund, but why anyone would take it over GLRBX is baffling.
To unbaffle your thoughts, over the last 23 years VWINX (portfolio 2) out performs GLRBX (portfolio 1) by almost all metrics and it did this with a razor thin expense ratio (.17%) compared to GLRBX's 1%.
GLRBX is a great choice if you can't access VWINX, just not as great.
In the chart below (created at this website) I wrote: "Though GLRBX lost less (-6.19% vs -9.78%) compared to VWINX and had a lower drawn down (-17.48% vs -18.82%) VWINX recovered in half the time compared for how long it took GLRBX." Recovery time is what help most investor sleep well at night.
Click on the image to enlarge and see details better:
Well, since 1997, if you go by years per M*, each has outperformed the other exactly half the time (also GLRBX ytd if anyone cares about shorter-term). (True, I shoulda looked all the way back to 1991.) I also was weighting its superior dip performance, as that is the sort of reason causing people to bail. More important to some are the facts that GLRBX is like a tenth the size, has a lower min, more exposure to midcaps (~15% the average market cap size of VWINX), and less foreign. VWINX is this more often 40/60 bond fund that balances out using megacaps, that's all; look at its imbalanced stock portfolio against its own benchmarks. Surprising no one went under the hood. Perhaps not truly comparable, in other words, and there is no "better choice"; it all depends on what you want. I like somewhat smaller-company stocks, per history, hence my statement. A good portfolio would happily hold lots of both, as there is little overlap.
A couple of posters have pinged me to add that they did not know of this fund and M* has not done deep reporting, so below are some news/interview items, two of them dated a bit, and I think the fees were reported too high.
I found the fund and family long ago because, being from the Midwest, I was always pining to get into MAPOX but could not do so via Fido or BoA portals. GLRBX seems pretty widely available.
@dicksonL, yes, thanks, a brief version of what I was trying to point out.
Another delta is that VWINX, however steady and better-than-indexlike it is and has been, its managers have been on the job only since right before the crash, so some might prefer GLRBX based on tenure alone. But again, best to own both.
@bee: >> the one area where GLRBX shines far and above is if it's held in a taxable account.
Did not even mention that.
As to your and Sven's other assertions, see the subsequent discussion. I'm not baffled about either one myself. Just that if you had to choose only one and go with it for long holding, the bond-heavy megacap would not be the preferred choice imo. But the differences are pretty small.
Mona, a good point, especially with different managers. But with the slightly deeper 08-09 dip followed by faster bounceback, probably attributable to megacap orientation (?)
I also wonder if Ted's listing would hold for the VWIAX Admiral shares, since those differences are so petite.
As I get farther into retirement I wonder if I should go 50-50 with these two funds, hmm.
I was speaking earlier of the Midwest, and see that one of the current VWINX managers is a UWisc econ / biz grad, same as famous Oakmark folkx and MAPOX as well, IIRC. If I were still an assigning editor, I would get a research story on UWisc mfund connections.
Anyone should feel fortunate to have owned either one over the last couple cycles.
Bee's right on the money...VWINX has outperformed GLRBX both in absolute return, with less volatility (although slightly worse MAXDD), higher dividend yield, and lower expense ratio.
These folks seem to have the magic formula for a long, long time...about as long as interest rates have been going down.
Across the current market cycle:
Across the last:
Like the referenced article suggests, why would anyone and especially retired folks consider anything else?
Hmmm...
Well, I do believe that the last time VWINX was not in top quintile was four market cycles ago...during a period of raising interest rates:
As always, what do you mean by 'these folks'? The mandate for the fund? The Vanguard cachet? The secret handshake handed down? The Vanguard algorithms? What?
Deleted post and graph. Speaking of one-fund lazy retirement portfolios, I tried to compare the two conservative five star funds listed here with my beloved junk bond funds over the past 10/15 years. I used one of my favorite five star junk bond funds and a present holding PHYTX. It was no contest with PHYTX the clear winner. But then I am biased! Junk bond funds are notable for their trend persistency and low volatility making them amenable to various trading methodologies using tight stops. Yes, I know 2008 was a disaster but the tight stop methodology would have kept you out of harm's way.
except for those like GLRBX who are shallower as to drawdown. So do the Alpha James family get lotsa Ps from M*? Should they? Continuous tenure as opposed to VWINX. What do you think the M* People criterion means?
Seems great. We turn to you to tell why. And if it is that the guys who joined in 07-08 simply continued it as it was, uh, did they add value? Is it actively managed, and if so in what senses? And if not?
And one final question to me is why and how do they track each other as tightly as they do, given their very different holdings and ERs??
But then I am biased! Junk bond funds (PHYTX) are notable for their trend persistency and low volatility making them amenable to various trading methodologies using tight stops. Yes, I know 2008 was a disaster but the tight stop methodology would have kept you out of harm's way.
Comparing PHYTX to PONDX since Dec 2007 on a buy and hold basis the graph below shows PONDX produced similar returns with less than half the MAXDD. I would imagine tight stops would achieve greater upside gains while removing MAXDD entirely. Would you review with us the nuts and bolts of this strategy?
bee, I *rarely* buy anything recommended by another as I like to do my own research/monitoring. But I must admit, much of the reason I had a good 2012 (better than the stock indexes and junk bonds) was entirely your doing. You were a vocal proponent of PONDX back then and I jumped aboard as it met my all my trendiness criteria. It was one smooth ride. So a belated thanks!
As to your question the research on various tight stops on non volatile trending markets, open end junk bond funds in particular, and then when to reenter was given to me by a fellow poster here. He and I have been e-mailing back and forth on junk bonds for many years now. So not to sound like an ..., but wouldn't feel right sharing the fruits of his labor without his permission. The basics is when a heretofore strongly trending non volatile market declines a certain percentage from any new highs, there is a greater percentage that decline will continue further. I recall that methodolgy got me out of PONDX in 2013 with most of the early 2013 gains intact and it eventually went on to much further declines before stabilizing and rising again, albeit never as high as my exit point..
Comments
Mona
Regards,
Ted
http://www.mutualfundobserver.com/discuss/discussion/20639/the-one-fund-lazy-retirement-income-portfolio-vwiax#latest
Sadly, I even read your link the day you posted. More evidence that my brain is operating on a mere 2 day data storage capacity.
Regards,
Ted
Tell me. It's like a hard disk that's full- something gets erased before anything new can be stored.
GLRBX is a great choice if you can't access VWINX, just not as great.
In the chart below (created at this website) I wrote:
"Though GLRBX lost less (-6.19% vs -9.78%) compared to VWINX and had a lower drawn down (-17.48% vs -18.82%) VWINX recovered in half the time compared for how long it took GLRBX." Recovery time is what help most investor sleep well at night.
Click on the image to enlarge and see details better:
P.S. My parent is using it for several decades and loving it!
Perhaps not truly comparable, in other words, and there is no "better choice"; it all depends on what you want. I like somewhat smaller-company stocks, per history, hence my statement. A good portfolio would happily hold lots of both, as there is little overlap.
Total Return: GLRBX Is Winner
1wk. 13wk. YTD 1yr. 3yr. 5yr. 10 yr.
GLRBX James Adv:Bal GR;Retail -0.86% 2.37% 2.95% 7.12% 8.89% 9.01% 7.47%
VWINX Vanguard Wellesley;Inv -0.50% 1.03% 1.78% 5.79% 8.04% 8.97% 7.31%
http://online.barrons.com/articles/SB50001424053111903715504577305581580259926
http://online.barrons.com/articles/SB50001424052702304539504576532400452721090
more recent and pertinent, one supposes:
http://online.barrons.com/articles/SB50001424127887324616904580105840921790752
I found the fund and family long ago because, being from the Midwest, I was always pining to get into MAPOX but could not do so via Fido or BoA portals. GLRBX seems pretty widely available.
@dicksonL, yes, thanks, a brief version of what I was trying to point out.
Another delta is that VWINX, however steady and better-than-indexlike it is and has been, its managers have been on the job only since right before the crash, so some might prefer GLRBX based on tenure alone. But again, best to own both.
@bee:
>> the one area where GLRBX shines far and above is if it's held in a taxable account.
Did not even mention that.
As to your and Sven's other assertions, see the subsequent discussion. I'm not baffled about either one myself. Just that if you had to choose only one and go with it for long holding, the bond-heavy megacap would not be the preferred choice imo. But the differences are pretty small.
VWINX has a lower 3-year, 5-year, 10-year, and 15-year Standard Deviation, a measurement important to me.
Best Regards,
Mona
I also wonder if Ted's listing would hold for the VWIAX Admiral shares, since those differences are so petite.
As I get farther into retirement I wonder if I should go 50-50 with these two funds, hmm.
I was speaking earlier of the Midwest, and see that one of the current VWINX managers is a UWisc econ / biz grad, same as famous Oakmark folkx and MAPOX as well, IIRC. If I were still an assigning editor, I would get a research story on UWisc mfund connections.
Anyone should feel fortunate to have owned either one over the last couple cycles.
Bee's right on the money...VWINX has outperformed GLRBX both in absolute return, with less volatility (although slightly worse MAXDD), higher dividend yield, and lower expense ratio.
These folks seem to have the magic formula for a long, long time...about as long as interest rates have been going down.
Across the current market cycle:
Across the last:
Like the referenced article suggests, why would anyone and especially retired folks consider anything else?
Hmmm...
Well, I do believe that the last time VWINX was not in top quintile was four market cycles ago...during a period of raising interest rates:
GLRBX has not been around that long:
As always, what do you mean by 'these folks'? The mandate for the fund? The Vanguard cachet? The secret handshake handed down? The Vanguard algorithms? What?
I was thinking...
Wellington Management Company LLP
Their people...believe there is cross over here with VWELX.
Vanguard's fee structure.
I think M* gets it right...VWINX has all five P's: People, Process, Price, Performance, Parent.
I mean, it's eye watering really...stock-like returns with bond-like drawdown...what every alternative fund touts.
But it now had $40B in AUM, like you mention above.
And, it's just been a very long time...since rates have increased.
except for those like GLRBX who are shallower as to drawdown. So do the Alpha James family get lotsa Ps from M*? Should they? Continuous tenure as opposed to VWINX. What do you think the M* People criterion means?
Seems great. We turn to you to tell why. And if it is that the guys who joined in 07-08 simply continued it as it was, uh, did they add value? Is it actively managed, and if so in what senses? And if not?
And one final question to me is why and how do they track each other as tightly as they do, given their very different holdings and ERs??
Now we are talking
A nice lower Standard Deviation combination throwing off some nice income, is a combination of VWINX and PONDX.
Best Regards,
Mona
As to your question the research on various tight stops on non volatile trending markets, open end junk bond funds in particular, and then when to reenter was given to me by a fellow poster here. He and I have been e-mailing back and forth on junk bonds for many years now. So not to sound like an ..., but wouldn't feel right sharing the fruits of his labor without his permission. The basics is when a heretofore strongly trending non volatile market declines a certain percentage from any new highs, there is a greater percentage that decline will continue further. I recall that methodolgy got me out of PONDX in 2013 with most of the early 2013 gains intact and it eventually went on to much further declines before stabilizing and rising again, albeit never as high as my exit point..