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Vanguard's Global Wellesley Income and Global Wellington Funds in registration & prospectus
So these two new funds look like Vanguard's version of a global allocation fund like SGENX, if I'm reading correctly. Will be interesting to compare returns of these two with SGENX,VMVFX and RPGAX.
Superficially sounds really good (global versions of Wellesley, Wellington). Not so sure of the details. Some of my concerns:
Does Vanguard (or Wellington Management) have a good track record internationally? Vanguard's weakest funds on average are its international stock funds (per M*).
The Wellesely fund's stock sleeve manager, Ian R. Link (Wellington Management) manages mostly domestic funds. The two global funds he seems to be managing are HLEYX and Wellington Global Value Equity (Luxembourg). They're okay, but nothing to get excited about.
The only fund I can fund that's (co)managed by Nataliya Kofman (equity sleeve manager for the Wellington global fund) is Wellington Global Quality Equity Fund. It seems she joined the existing manager a year ago, so may be essentially a rookie manager on her own with the equity portion of Global Wellington.
Is hedging currency in a hybrid fund a good idea?
While I disagree with Vanguard's views on hedging currency on bond funds, at least I appreciate its position. Bond funds are used to generate relatively steady income, and currency fluctuations don't advance that objective. But in a hybrid fund, a major role of bonds is to provide volatility that's out of sync with the equity markets. Currency volatility can also help with that. Why take advantage of that with the equity portion but then tamp it down by hedging the fixed income portion of the portfolio?
I'm a big fan of Wellington/Vanguard and think they do a great job domestically. It's the international portion that calls for more careful review.
Agreed, but does anyone know anything about the who are going to manage the equity portions of the funds- Nataliya Kofman for Wellington and Ian Link for Wellesley? They both seem to be managing funds registered in the UK. She seems to be managing a US focused Wellington fund in the UK that's only a year old and he's managing a global Wellington fund registered in the UK that's 5 years old. Obviously they've both been around Wellington for a decade and he has a lot more previous investment experience than she does, but she's getting the fund with the higher equity allocation. Does that mean they believe more in her than him? The fixed income managers are all straight from the US Wellington and Wellesley funds but it seems the equity side is a passing of the torch. Would anyone have concerns about that?
I'm not as concerned about who gets which fund - Link is also managing several other (domestic) funds - JNL/WMC Value (co-manager), HBLAX (co-manager of equity portion), HQIAX (co-manager), HIAVX (co-manager). That alone could explain his not getting the more equity-oriented fund.
There's also the unknown of which fund will draw more money. 40% of Global Wellesley could wind up being more assets that 60% of Global Wellington.
6.22% and 11.88% foreign equity (amounting to about 1/6 of each fund's equity). That foreign equity is comprised of multnationals like BAT, Unilever, TransCanada (Keystone pipeline), Novartis, AstraZeneca, Total, Accenture, Canadian National Railway. Household names (well, at least to investors).
I'm looking for some experience that goes beyond comparing Pfizer, Merck, Novartis, and AstraZeneca. I expect global funds to wade a bit more deeply into foreign waters.
I telephoned Vanguard to find out how much portfolio overlap/duplication there is likely to be between the new funds and the already existing "non-Global" Wellington and Wellesley Income funds. The first voice did not know. He found me an expert. He didn't know. I'd like to know.
What underlies *my* question to Vanguard is whether it makes sense to own one/both in addition to the existing funds or instead of one/or both. Wellington Fund is presently closed. Knowing the percentage of portfolio overlap would tell me if an investment in Global Wellington was to any extent an equivalent to investing in "non-Global" Wellington.
It's the quiet period so, in theory at least, they shouldn't be answering those questions. I'm surprised Vanguard was able to drop the press release Ted linked but the reality is they didn't say much other than what's already in the registration statement and I'm sure they have plenty of lawyers to make sure they don't do anything that causes big problems. Anyway, I wouldn't imagine these funds are going to close quickly considering the types of companies they tend to invest in so we should be able to evaluate the overlap and make decisions based on reality rather than whatever a customer service person could tell you. I'm interested in the Global Wellington because the US version is closed but I'll definitely wait to see how things develop before I make any commitments.
Per VWELX summary prospectus, the fund is"open to clients who invest through a Vanguard brokerage account," and I opened a position in VWELX at Vanguard in early June. '
Comments
Does Vanguard (or Wellington Management) have a good track record internationally? Vanguard's weakest funds on average are its international stock funds (per M*).
The Wellesely fund's stock sleeve manager, Ian R. Link (Wellington Management) manages mostly domestic funds. The two global funds he seems to be managing are HLEYX and Wellington Global Value Equity (Luxembourg). They're okay, but nothing to get excited about.
The only fund I can fund that's (co)managed by Nataliya Kofman (equity sleeve manager for the Wellington global fund) is Wellington Global Quality Equity Fund. It seems she joined the existing manager a year ago, so may be essentially a rookie manager on her own with the equity portion of Global Wellington.
Is hedging currency in a hybrid fund a good idea?
While I disagree with Vanguard's views on hedging currency on bond funds, at least I appreciate its position. Bond funds are used to generate relatively steady income, and currency fluctuations don't advance that objective. But in a hybrid fund, a major role of bonds is to provide volatility that's out of sync with the equity markets. Currency volatility can also help with that. Why take advantage of that with the equity portion but then tamp it down by hedging the fixed income portion of the portfolio?
I'm a big fan of Wellington/Vanguard and think they do a great job domestically. It's the international portion that calls for more careful review.
There's also the unknown of which fund will draw more money. 40% of Global Wellesley could wind up being more assets that 60% of Global Wellington.
I'm looking for some experience that goes beyond comparing Pfizer, Merck, Novartis, and AstraZeneca. I expect global funds to wade a bit more deeply into foreign waters.
Regards,
Ted
Vanguard Website:
https://pressroom.vanguard.com/news/Press-Release-VG-Launches_Global-Wellington-Global-Wellesley-072617.html
'
https://www.sec.gov/Archives/edgar/data/52848/000093247117005432/worldfunds485bmerged.htm