"Retire with the Wellington Fund" by Josh Scandlen?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
AussieDad
Posts: 238
Joined: Fri Aug 21, 2015 7:54 pm

"Retire with the Wellington Fund" by Josh Scandlen?

Post by AussieDad »

Just wondering if anyone had read it and if it's worth the read. Thanks
User avatar
David Jay
Posts: 14586
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by David Jay »

A number of years ago, White Coat Investor had a post "150 portfolios that are better than yours" here: https://www.whitecoatinvestor.com/150-p ... han-yours/

There are several single funds that are appropriate for a retirement portfolio. Balanced index fund is number 4, Lifestrategy Moderate is number 6. Both of those are single funds with an AA similar to Wellington.

Wellsley (more conservative) is number 135.

What is important is to pick a portfolio and stick with it. The whole point of the WCI post is that there are hundreds of reasonable portfolios.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
User avatar
David Jay
Posts: 14586
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by David Jay »

Oh, and I have a one-fund portfolio for retirement: LifeStrategy Moderate. I still have some bond holdings to get me through to the start of SS, but everything for the long term is LS Moderate (almost everything is in tax-advantaged space).
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by nisiprius »

Based on Amazon "look inside the book," it does not look very interesting to me. It is an exploration of some variations of "safe withdrawal rate" systems, with the gimmick that, instead of using a passive portfolio based on fixed percentage allocations to the stock and bond markets, he is basing it on the actively-managed, varying-asset-allocation Wellington Fund.

I think the book was self-published. The parts I was able to read are full of small errors in grammar, style, etc.

In some ways it's interesting to study withdrawal systems based on a real-world fund that could have really been invested in.

His reasons for choosing the Wellington Fund seems to be that subjectively, he likes it. He mentions that "other than 1930-1932, the Wellington Fund never again had 3 consecutive down years." He doesn't say if this is actually remarkable or not. He says "it's the classic don't get killed fund." Again, is it much better than any similar balanced allocation?

If the Wellington Fund is really superior, and if our retirement success depends on it continuing to be really superior, then we need some good reason to think it will. If the Wellington Fund is not really superior, then why focus on it?

Another confusing point is that he presents two different withdrawal systems, both of which he created. The first is called (confusingly in my opinion) "The Barbell Retirement Plan."
So I came up with something called "The Barbell Retirement Plan" where you take four years of your expenses, put it in cash, and invest the rest. When the market is up, you pull your expenses from the investments. When the market is down you pull your expenses from cash. Simple.

I love the Barbell. It's simple. It eliminates the dreaded sequence of return risks when you're drawing down assets that are losing value because of market declines. And it works, most of the time. But I found The Barbell, using the Wellington Fund, does not work during a higher- than-normal inflationary time period. In fact, any portfolio that has bonds fails during high inflation times. Even though the Wellington Fund has only 1/ of its portfolio in bonds, it got decimated during the inflationary times of the late 1960s through early 1980s. Neither the Barbell nor the 4% rule held up when using the Wellington Fund during this time period.
And yet he devotes a good part of the book to describing it anyway. Why?

He then goes on to present a second plan that involves deliberately planning for lower and lower inflation-adjusted returns on the assumption that you'll spend less as you get older. I don't want to go down that rabbit hole except to say, as the Church Lady on Saturday Night Live used to say, "Very conveeeenient."

The Amazon preview does not let me read a chapter entitled "The Winner," in which he presumably commits himself as to which system is better--prompting the question of why he doesn't just present that one?
Last edited by nisiprius on Fri Nov 13, 2020 6:05 am, edited 2 times in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Grt2bOutdoors
Posts: 25625
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by Grt2bOutdoors »

Full Disclosure - I hold the Wellington fund in my retirement plan.

You don’t need the Wellington fund or any other “it” fund for it’s not the fund that will get you to retirement but the savings rate, time and discipline to stick with a reasonable allocation through the inevitable ups and downs of the markets. You could have more or less with the “it” fund but will having a bit more make your retirement that much better? I don’t know.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
loukycpa
Posts: 735
Joined: Wed Aug 05, 2020 9:52 am

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by loukycpa »

Hasn't Balanced Index (VBIAX) made a big comeback in terms of returns versus Wellington in recent years?

Having a bit of a value tilt as well foreign allocation I am guessing has hurt relative returns of Wellington versus the Balanced Index and the Wellington's benchmark indexes (65% S&P 500 and 35% investment grade bonds I think I recall) as well.

I think what folks like about the performance of Wellington and Wellesley, if they really dug in and compared they would find they really just love a balanced fund/portfolio period rather than these particular funds.
"The safe assumption for an investor is that over the next hundred years, the currency is going to zero." - Charlie Munger
dru808
Posts: 1662
Joined: Sat Oct 15, 2011 2:42 pm
Location: mid pac

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by dru808 »

Josh is an indexer with a soft spot for a few vanguard active funds, Wellington, Wellesley & Dividend growth.
1 fund
User avatar
darkhorse346
Posts: 235
Joined: Sat Jan 10, 2015 4:53 am

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by darkhorse346 »

Josh is a smart guy with many years of experience as a financial planner working with real, everyday folks. He has also worked for USAA, Vanguard, etc., in the past. He has some pretty good videos on YouTube, albeit low budget (which adds to their appeal.) He's one of the good guys and tries hard to teach people financial concepts. I found his videos on tax planning and retirement accounts helpful.

His books, including "Retire with the Wellington Fund", are worth a read. Very short and to the point. I do not agree with everything he says, but appreciate his perspective.
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by nisiprius »

loukycpa wrote: Tue Nov 10, 2020 11:53 am Hasn't Balanced Index (VBIAX) made a big comeback in terms of returns versus Wellington in recent years?
No. (And I've never owned Wellington, and Balanced Index was a core holding of mine for a long time).
Having a bit of a value tilt as well foreign allocation I am guessing has hurt relative returns of Wellington versus the Balanced Index and the Wellington's benchmark indexes (65% S&P 500 and 35% investment grade bonds I think I recall) as well.
Your guess does not seem to be correct.

If I look at Total Stock versus Total International I would say 2010-present was a period of severe international underperformance; if I look at Total Stock versus Value Index, a period of definite but not huge value underperformance, up through the end of 2019, with value really tanking just this year. Technically, Wellington underperformed Balanced Index over that time period, but it's hardly noticeable.

Source

Image
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
iamblessed
Posts: 1808
Joined: Sat Jun 09, 2018 11:52 am
Location: St. Louis

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by iamblessed »

I loved Josh's video on the Wellington https://www.youtube.com/watch?v=m3UuOLT1YZs
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by abuss368 »

I have not read it but looks interesting. The alternative strategies could be much worse at the end of the day.
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
Sandtrap
Posts: 19591
Joined: Sat Nov 26, 2016 5:32 pm
Location: Hawaii No Ka Oi - white sandy beaches, N. Arizona 1 mile high.

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by Sandtrap »

There are best investment finance strategies per each person......rather than best “funds” for everyone.

Unfortunately, many great sounding books and presentations might do more harm than good to the uninformed.

j🌺
Wiki Bogleheads Wiki: Everything You Need to Know
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by nisiprius »

As a general remark, John C. Bogle has a long, detailed, and interesting account of "the rise, the fall, and the renaissance" of the Wellington fund, in Clash of the Cultures: Investment vs. Speculation. I think the big take-home message for all investors in actively managed fund is this: would you have known not to be in the Wellington Fund during the 1965-1978, the "fall?" Perhaps more realistically, if you had spend a decade, 1965-1974, seeing $10,000 investment in Wellington lose $120--while Dodge & Cox made $2,447 and Fidelity made $6,228--would you have the patience to wait for "the renaissance?"

It seemed clear to John C. Bogle in 2012 that during 1965-1978, Wellington strayed from a culture of investment and embraced speculation; but would it have been clear to you, at the time? It is possibly worth noting that Wellington's current managers began their tenure in 2017. Performance e.g. this year suggests they know what they're doing, but whenever I think about active funds I always get drawn up short by the question: "if I don't think I can pick stocks, why do I think I can pick stock-pickers?"

Source

Image
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
loukycpa
Posts: 735
Joined: Wed Aug 05, 2020 9:52 am

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by loukycpa »

nisiprius wrote: Wed Nov 11, 2020 6:13 am
loukycpa wrote: Tue Nov 10, 2020 11:53 am Hasn't Balanced Index (VBIAX) made a big comeback in terms of returns versus Wellington in recent years?
No. (And I've never owned Wellington, and Balanced Index was a core holding of mine for a long time).
Having a bit of a value tilt as well foreign allocation I am guessing has hurt relative returns of Wellington versus the Balanced Index and the Wellington's benchmark indexes (65% S&P 500 and 35% investment grade bonds I think I recall) as well.
Your guess does not seem to be correct.

If I look at Total Stock versus Total International I would say 2010-present was a period of severe international underperformance; if I look at Total Stock versus Value Index, a period of definite but not huge value underperformance, up through the end of 2019, with value really tanking just this year. Technically, Wellington underperformed Balanced Index over that time period, but it's hardly noticeable.

Source

Image
Don't want to be argumentative, but going by Vanguard website YTD return of balanced index is almost 4% higher than wellington, and 1 year return is almost 5% higher. 3 and 5 years returns are higher as well. And due to recent this recent outperformance, the 10 year returns are basically identical. Wellington has not beat the index despite a slightly higher allocation to equities throughout the 10 year period. That was my assertion.

Anyone excited about the Wellington fund can't point to any recent outperformance as the reason.
"The safe assumption for an investor is that over the next hundred years, the currency is going to zero." - Charlie Munger
Grt2bOutdoors
Posts: 25625
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by Grt2bOutdoors »

loukycpa wrote: Wed Nov 11, 2020 11:46 am
nisiprius wrote: Wed Nov 11, 2020 6:13 am
loukycpa wrote: Tue Nov 10, 2020 11:53 am Hasn't Balanced Index (VBIAX) made a big comeback in terms of returns versus Wellington in recent years?
No. (And I've never owned Wellington, and Balanced Index was a core holding of mine for a long time).
Having a bit of a value tilt as well foreign allocation I am guessing has hurt relative returns of Wellington versus the Balanced Index and the Wellington's benchmark indexes (65% S&P 500 and 35% investment grade bonds I think I recall) as well.
Your guess does not seem to be correct.

If I look at Total Stock versus Total International I would say 2010-present was a period of severe international underperformance; if I look at Total Stock versus Value Index, a period of definite but not huge value underperformance, up through the end of 2019, with value really tanking just this year. Technically, Wellington underperformed Balanced Index over that time period, but it's hardly noticeable.

Source

Image
Don't want to be argumentative, but going by Vanguard website YTD return of balanced index is almost 4% higher than wellington, and 1 year return is almost 5% higher. 3 and 5 years returns are higher as well. And due to recent this recent outperformance, the 10 year returns are basically identical. Wellington has not beat the index despite a slightly higher allocation to equities throughout the 10 year period. That was my assertion.

Anyone excited about the Wellington fund can't point to any recent outperformance as the reason.
Investing is a marathon, not a sprint. I don't care about the short term, I care about 25-30 years from now, the fund is still around and is worth as much if not much more than today's value per share.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
columbia
Posts: 3023
Joined: Tue Aug 27, 2013 5:30 am

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by columbia »

This fund might might not seem so attractive once the older bonds mature. (??)
loukycpa
Posts: 735
Joined: Wed Aug 05, 2020 9:52 am

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by loukycpa »

Grt2bOutdoors wrote: Wed Nov 11, 2020 7:09 pm
Don't want to be argumentative, but going by Vanguard website YTD return of balanced index is almost 4% higher than wellington, and 1 year return is almost 5% higher. 3 and 5 years returns are higher as well. And due to recent this recent outperformance, the 10 year returns are basically identical. Wellington has not beat the index despite a slightly higher allocation to equities throughout the 10 year period. That was my assertion.

Anyone excited about the Wellington fund can't point to any recent outperformance as the reason.
Investing is a marathon, not a sprint. I don't care about the short term, I care about 25-30 years from now, the fund is still around and is worth as much if not much more than today's value per share.
[/quote]

I generally agree, and didn't mean to imply the comparison should be about performance chasing. What I do think is that when you own an actively managed balanced fund versus a passively managed balanced index fund, you have to be concerned about manager risk, concentration risk, additional credit risk, etc. You are betting that the skill of the manager of the fund will allow you to outperform the index.

When you look under the hood of Wellington vs. Balanced Index, you are a bit more exposed to the stock market (allocation to stocks of over 65% versus under 60%). On the bond side of the portfolio, Wellington has more credit risk (higher allocation to corporates versus treasuries) and interest rate risk (longer average maturity and duration is higher). In return for a bit more risk, investors in the fund have been rewarded in recent years with slight underperformance.

I don't see any compelling reason why the author's advice shouldn't be "Retire with the Vanguard Balanced Index" or "Retire with a Three Fund Portfolio".
Last edited by loukycpa on Thu Nov 12, 2020 7:50 am, edited 2 times in total.
"The safe assumption for an investor is that over the next hundred years, the currency is going to zero." - Charlie Munger
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by nisiprius »

loukycpa wrote: Thu Nov 12, 2020 5:43 am...I don't see any compelling reason why the author's advice shouldn't be "Retire with the Vanguard Balanced Index" or "Retire with a Three Fund Portfolio"...
Exactly, and regardless of the details of the withdrawal system--which need to be compared in some way with many other withdrawal systems--the fact that it is tied to a specific mutual fund makes it less convincing, rather than more.

Let me put it personally: I personally might consider a book on "how to retire with the Wellesley Income Fund," because that fund is specifically designed to produce income and has an asset allocation that is a much better match to my tastes. That is, I'd be curious to see someone else's take on what would have happened to people who put everything into Wellesley and set it up to pay the fund dividends into their checking account... with tips on how to manage paying monthly bills from quarterly payments and what happens with those end-of-year distributions.

Wellington is not specifically a retirement fund, it's just a general purpose balanced fund.

It is a pity that Morningstar's data for the Dodge & Cox Balanced Fund, DODBX, only goes back to 1960, as it is very nearly as old as Wellington--1931 for Dodge & Cox, 1929 for Wellington. I am not going to suggest that Dodge & Cox is a better fund, but I don't understand the unconditional love Wellington seems to get. It deserves credit as an obviously good fund, and it deserves credit for longevity, and as a useful touchstone for what can be achieved in the real world with real money, but it isn't magic, and we shouldn't forget the "fall" part of the "rise, fall, and renaissance" story.

The 1960 cutoff point is set by Morningstar's data limit on DODBX, and might be unfair to Wellington because it excludes the "rise" part of the Wellington "rise, fall, and renaissance" story.

Dodge & Cox Balanced versus Wellington

Image


I won't show an image for a comparison that includes the Fidelity Puritan Fund, FPURX, because it has a distinctly higher stock allocation than the others, but if you want to click:

Dodge & Cox Balanced, Wellington, Puritan, since 1960 (Morningstar limit on Dodge & Cox data)
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Brudha
Posts: 11
Joined: Wed Oct 29, 2014 6:36 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by Brudha »

Josh is a GREAT guy and highly intelligent in retirement scenarios!
User avatar
LadyGeek
Site Admin
Posts: 95696
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by LadyGeek »

Thread temporarily locked for moderator review.

Update: See below.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
User avatar
LadyGeek
Site Admin
Posts: 95696
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by LadyGeek »

The thread was locked due to a number of member posts which discussed the author's ban of his Bogleheads forum account. Those posts have been removed. See: Member Rights in a Dispute , 2nd paragraph.

In detail, the author may have missed an email explaining the reason for the ban. Regardless, (1) there is an appeal process (the 1st paragraph of Member Rights in a Dispute ) and (2) the moderators have an internal review process - this is not done in isolation.

Upon further internal review, the ban has been lifted and an email sent to Mr. Scandlen.

This thread is now unlocked to continue the discussion. Please stay on-topic. If there are any further questions regarding the book author's status, please PM me directly, don't post here.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
tj
Posts: 9368
Joined: Wed Dec 23, 2009 11:10 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by tj »

It looks like he has another book, "You Can Retire on Social Security"

it came up as a suggestion when I restarted a free trial membership of Kindle Unlimited:

https://www.amazon.com/gp/product/B07V9NKJN2
iamblessed
Posts: 1808
Joined: Sat Jun 09, 2018 11:52 am
Location: St. Louis

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by iamblessed »

Fan of Josh and the Wellington.
TakinItEz
Posts: 4
Joined: Sun Feb 14, 2021 5:35 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by TakinItEz »

tj wrote: Fri Apr 16, 2021 11:58 am It looks like he has another book, "You Can Retire on Social Security"

it came up as a suggestion when I restarted a free trial membership of Kindle Unlimited:

https://www.amazon.com/gp/product/B07V9NKJN2
I was happy that I bought this one. It's a short read but has a lot of very good info about Social Security. Helped with my planning and I expect I'll dust it off and go through it again when I get closer to that age.
iamblessed
Posts: 1808
Joined: Sat Jun 09, 2018 11:52 am
Location: St. Louis

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by iamblessed »

delete
User avatar
LadyGeek
Site Admin
Posts: 95696
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by LadyGeek »

I removed an off-topic post. As a reminder, see: General Etiquette
Attacks on individuals, insults, name calling, trolling, baiting or other attempts to sow dissension are not acceptable.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
bei22000
Posts: 175
Joined: Mon Jan 30, 2017 1:58 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by bei22000 »

Brudha wrote: Thu Nov 12, 2020 8:27 pm Josh is a GREAT guy and highly intelligent in retirement scenarios!
He is a great guy but unfortunately has been talking too much about politics (masks, vax, elections...) which annoys many of his youtube audiences. Some unsubed. his channels and left negative remarks.
namajones
Posts: 778
Joined: Sat Aug 08, 2020 12:41 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by namajones »

I don't know. I look at the top holdings of Wellington and see too much concentration in too few stocks, with the big fat tech companies and financial companies taking up a big chunk of that.

As someone else said, the overall "balance" part of the fund I like, but there must be better balanced balanced funds out there.

Also hate manager risk in general.
tj
Posts: 9368
Joined: Wed Dec 23, 2009 11:10 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by tj »

namajones wrote: Sat Oct 02, 2021 3:19 pm I don't know. I look at the top holdings of Wellington and see too much concentration in too few stocks, with the big fat tech companies and financial companies taking up a big chunk of that.

As someone else said, the overall "balance" part of the fund I like, but there must be better balanced balanced funds out there.

Also hate manager risk in general.
Wellington shifted it's strategy into the tech stocks in the last couple years.
namajones
Posts: 778
Joined: Sat Aug 08, 2020 12:41 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by namajones »

tj wrote: Wed Oct 06, 2021 9:37 am
Wellington shifted it's strategy into the tech stocks in the last couple years.
As many of us know, the trouble with market timing is that you have to be right twice: going in and coming out.

Would I trust some active manager to be right twice?

Nope.
Grt2bOutdoors
Posts: 25625
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by Grt2bOutdoors »

tj wrote: Wed Oct 06, 2021 9:37 am
namajones wrote: Sat Oct 02, 2021 3:19 pm I don't know. I look at the top holdings of Wellington and see too much concentration in too few stocks, with the big fat tech companies and financial companies taking up a big chunk of that.

As someone else said, the overall "balance" part of the fund I like, but there must be better balanced balanced funds out there.

Also hate manager risk in general.
Wellington shifted it's strategy into the tech stocks in the last couple years.
Where in the prospectus does it say they shifted strategy? Nowhere, I hold Wellington and I do read the prospectuses of all of my current and potential investments. You are making an assumption based on the holdings. Let me offer my own assumption- the current holdings meet the criteria of the screen they run based upon the official investment policy statement and charter of the fund.

Here’s the link https://investor.vanguard.com/mutual-fu ... olio/vwelx
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
User avatar
tennisplyr
Posts: 3703
Joined: Tue Jan 28, 2014 12:53 pm
Location: Sarasota, FL

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by tennisplyr »

namajones wrote: Wed Oct 06, 2021 9:44 am
tj wrote: Wed Oct 06, 2021 9:37 am
Wellington shifted it's strategy into the tech stocks in the last couple years.
As many of us know, the trouble with market timing is that you have to be right twice: going in and coming out.

Would I trust some active manager to be right twice?

Nope.
Well, a broken clock is right twice a day.
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by nisiprius »

tj wrote: Wed Oct 06, 2021 9:37 am...Wellington shifted its strategy into the tech stocks in the last couple years...
Did the change happen to coincide with the beginning of the tenure of the new managers?
Management

Loren L. Moran, CFA, Senior Managing Director
Portfolio manager.
Advised the fund since 2017.

Daniel J. Pozen, Senior Managing Director
Advised the fund since 2019.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
tibbitts
Posts: 23726
Joined: Tue Feb 27, 2007 5:50 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by tibbitts »

Grt2bOutdoors wrote: Wed Oct 06, 2021 3:15 pm Where in the prospectus does it say they shifted strategy? Nowhere, I hold Wellington and I do read the prospectuses of all of my current and potential investments. You are making an assumption based on the holdings. Let me offer my own assumption- the current holdings meet the criteria of the screen they run based upon the official investment policy statement and charter of the fund.

Here’s the link https://investor.vanguard.com/mutual-fu ... olio/vwelx
I would guess that any discussion of a strategy shift would be in the manager commentary, not in the prospectus. Back in the USmail/paper fund report era I enjoyed reading the manager commentaries, but haven't even looked for any lately. They used to make for interesting reading.
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by nisiprius »

tibbitts wrote: Wed Oct 06, 2021 8:01 pm
Grt2bOutdoors wrote: Wed Oct 06, 2021 3:15 pm Where in the prospectus does it say they shifted strategy? Nowhere, I hold Wellington and I do read the prospectuses of all of my current and potential investments. You are making an assumption based on the holdings. Let me offer my own assumption- the current holdings meet the criteria of the screen they run based upon the official investment policy statement and charter of the fund.

Here’s the link https://investor.vanguard.com/mutual-fu ... olio/vwelx
I would guess that any discussion of a strategy shift would be in the manager commentary, not in the prospectus. Back in the USmail/paper fund report era I enjoyed reading the manager commentaries, but haven't even looked for any lately. They used to make for interesting reading.
Does anyone have a paid Morningstar subscription? Does Morningstar have any commentary on the effect of the management change at Wellington?
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Grt2bOutdoors
Posts: 25625
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by Grt2bOutdoors »

tibbitts wrote: Wed Oct 06, 2021 8:01 pm
Grt2bOutdoors wrote: Wed Oct 06, 2021 3:15 pm Where in the prospectus does it say they shifted strategy? Nowhere, I hold Wellington and I do read the prospectuses of all of my current and potential investments. You are making an assumption based on the holdings. Let me offer my own assumption- the current holdings meet the criteria of the screen they run based upon the official investment policy statement and charter of the fund.

Here’s the link https://investor.vanguard.com/mutual-fu ... olio/vwelx
I would guess that any discussion of a strategy shift would be in the manager commentary, not in the prospectus. Back in the USmail/paper fund report era I enjoyed reading the manager commentaries, but haven't even looked for any lately. They used to make for interesting reading.
Here you go, from the 11/30/2020 annual report. What's telling, if anyone on this thread who wrote about a change in strategy, the investment adviser's commentary shows nothing has changed in strategy and this misconception that they are overly weighted towards technology must have overlooked the fact that the Wellington fund was actually underweighted in technology compared to that of the S&P 500 in the equity component of the fund. It's all in the details. Enjoy reading the manager's letter to the shareholders of the fund:

The fund’s positioning:
Over the intermediate term, our outlook for equity markets remains balanced. The uncertainty surrounding the 2020 presidential election is largely behind us—and, with multiple vaccine trials releasing positive data, we can begin to conceive of a post-COVID economy. However, we appreciate the logistical challenges of vaccine production and distribution, and we recognize the economic uncertainty that still lies ahead. At the portfolio level, we are enthusiastic about the prospects for many individual businesses. Large-cap financials Charles Schwab and JPMorgan Chase are showing strong underlying growth despite the challenging rate environment. Across sectors, businesses such as McDonald’s, HCA Healthcare, Facebook, Danaher, Blackstone Group, and Home Depot all have navigated the difficult conditions far better than expected. Large pharmaceutical company Pfizer has been one of the leaders in developing a COVID-19 vaccine. Technology companies like Alphabet and Microsoft continue to achieve success across a range of businesses, product, and shareholders. Over the course of the year, we initiated new positions in Facebook, Procter & Gamble, and Becton Dickinson. We believe Facebook has displayed excellent business resilience and has benefited from the accelerating shift to digital. The company is investing to extend their competitive advantage and still has a long runway for growth. Procter & Gamble has an excellent management team, with solid marketshare dynamics across key products that have continued to execute well. Nine out of ten of their product categories have grown organically despite the pandemic and its economic effects. Becton Dickinson is a medical supply company that makes a wide range of everyday products that are essential to the delivery of health care. The company has a stable demand profile, with a dominant market share across most categories.

While the portfolio remains overweight in financials, we significantly reduced our positioning in the sector during the period. We did this by eliminating positions in several companies for which we had decreased confidence in their ability to create value at an attractive rate over time. The portfolio remains underweight in information technology, although we added to the sector during the year by buying competitively advantaged, growing businesses with strong management teams. We remain committed to our investment philosophy and process to construct a portfolio of resilient businesses at reasonable valuations run by management teams that are likely to make value enhancing decisions. Our goal is for the portfolio to deliver a superior rate of economic growth (earnings plus dividends) over the long term and downside protection during difficult economic and market environments. On the fixed income side, we maintain a very modestly pro-cyclical risk posture. Our base case is for an improving economy and elevated volatility as the path of COVID-19 continues to develop. Recent economic data, however, indicates that the pace of this recovery may be slow and additional fiscal stimulus is uncertain. Going forward, we will be focused on continued COVID-19 outbreaks and associated economic shutdowns; the potential for, and magnitude of, fiscal stimulus; policy changes that may occur during the Biden administration; and any changes from the current status quo driven by Congressional election outcomes. The Fed’s purchase programs have been successful in restoring confidence and liquidity, and we generally expect that the central bank will continue to provide support in other ways following the cessation of most of these programs at year-end. We expect it to remain accommodative, pinning front-end rates while longer rates may respond to improvements in the economic outlook. Because of this, we have positioned the fund’s fixed income portion with a slightly short duration relative to the benchmark. While valuations are near median levels and less compelling, credit markets remain the main investment focus of the portfolio as they continue to provide attractive income, and we will keep looking for opportunities within the sector. We are underweight corporate credit relative to the all-credit benchmark, with a bias toward defensive sectors with lower earnings volatility while also looking for opportunities to move up in credit quality. In terms of industries, the portfolio is overweight less cyclical sectors like communications and utilities while remaining cautious on more cyclical sectors such as energy. We maintain an overweight to taxable municipals, given their diversification benefit, still-strong underlying credit quality, and relatively attractive valuations.

We also maintain out-of-benchmark allocations to U.S. government bonds and agency MBS. The latter provides strong liquidity, and we believe they are wellsupported by the Fed purchases, despite concerns around prepayment speeds. The portfolio holds an allocation to passthroughs, focusing on low-coupon TBAs to maintain carry and liquidity, as well as CMOs and a modest allocation to delegated underwriting and servicing bonds for their stable cash flows. The portfolio also holds out-of-benchmark allocations to high-quality securitized sectors, which remain protected from defaults. These include traditional assetbacked securities, collateralized loan obligations, commercial mortgage-backed securities, and non-agency residential mortgages. Consistent with our practices, we hold adequate liquidity in the fixed income portion of the fund, notably government bonds and agency MBS as our “allweather” liquidity buffer. This liquidity buffer should provide downside protection for shareholders if the economic cycle and/or the equity portfolio take an unfavorable turn. We continue to be disciplined in our application of our investment process, which allows us to create a balanced portfolio that we believe should perform well in a variety of environments. We remain focused on long-term, low-turnover investing—features that we believe have served the fund’s shareholders well.

Loren L. Moran, CFA, Senior Managing Director and Fixed Income Portfolio Manager Daniel J. Pozen Senior Managing Director and Equity Portfolio Manager Michael E. Stack, CFA, Senior Managing Director and Fixed Income Portfolio Manager
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
namajones
Posts: 778
Joined: Sat Aug 08, 2020 12:41 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by namajones »

tibbitts wrote: Wed Oct 06, 2021 8:01 pm
Grt2bOutdoors wrote: Wed Oct 06, 2021 3:15 pm Where in the prospectus does it say they shifted strategy? Nowhere, I hold Wellington and I do read the prospectuses of all of my current and potential investments. You are making an assumption based on the holdings. Let me offer my own assumption- the current holdings meet the criteria of the screen they run based upon the official investment policy statement and charter of the fund.

Here’s the link https://investor.vanguard.com/mutual-fu ... olio/vwelx
I would guess that any discussion of a strategy shift would be in the manager commentary, not in the prospectus. Back in the USmail/paper fund report era I enjoyed reading the manager commentaries, but haven't even looked for any lately. They used to make for interesting reading.
But this is one of the problems with active funds. You've got to keep up with manager changes--or just assume that whatever they do is for the best.
namajones
Posts: 778
Joined: Sat Aug 08, 2020 12:41 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by namajones »

Grt2bOutdoors wrote: Wed Oct 06, 2021 8:40 pm
tibbitts wrote: Wed Oct 06, 2021 8:01 pm
Grt2bOutdoors wrote: Wed Oct 06, 2021 3:15 pm Where in the prospectus does it say they shifted strategy? Nowhere, I hold Wellington and I do read the prospectuses of all of my current and potential investments. You are making an assumption based on the holdings. Let me offer my own assumption- the current holdings meet the criteria of the screen they run based upon the official investment policy statement and charter of the fund.

Here’s the link https://investor.vanguard.com/mutual-fu ... olio/vwelx
I would guess that any discussion of a strategy shift would be in the manager commentary, not in the prospectus. Back in the USmail/paper fund report era I enjoyed reading the manager commentaries, but haven't even looked for any lately. They used to make for interesting reading.
Here you go, from the 11/30/2020 annual report. What's telling, if anyone on this thread who wrote about a change in strategy, the investment adviser's commentary shows nothing has changed in strategy and this misconception that they are overly weighted towards technology must have overlooked the fact that the Wellington fund was actually underweighted in technology compared to that of the S&P 500 in the equity component of the fund. It's all in the details. Enjoy reading the manager's letter to the shareholders of the fund:

The fund’s positioning:
Over the intermediate term, our outlook for equity markets remains balanced. The uncertainty surrounding the 2020 presidential election is largely behind us—and, with multiple vaccine trials releasing positive data, we can begin to conceive of a post-COVID economy. However, we appreciate the logistical challenges of vaccine production and distribution, and we recognize the economic uncertainty that still lies ahead. At the portfolio level, we are enthusiastic about the prospects for many individual businesses. Large-cap financials Charles Schwab and JPMorgan Chase are showing strong underlying growth despite the challenging rate environment. Across sectors, businesses such as McDonald’s, HCA Healthcare, Facebook, Danaher, Blackstone Group, and Home Depot all have navigated the difficult conditions far better than expected. Large pharmaceutical company Pfizer has been one of the leaders in developing a COVID-19 vaccine. Technology companies like Alphabet and Microsoft continue to achieve success across a range of businesses, product, and shareholders. Over the course of the year, we initiated new positions in Facebook, Procter & Gamble, and Becton Dickinson. We believe Facebook has displayed excellent business resilience and has benefited from the accelerating shift to digital. The company is investing to extend their competitive advantage and still has a long runway for growth. Procter & Gamble has an excellent management team, with solid marketshare dynamics across key products that have continued to execute well. Nine out of ten of their product categories have grown organically despite the pandemic and its economic effects. Becton Dickinson is a medical supply company that makes a wide range of everyday products that are essential to the delivery of health care. The company has a stable demand profile, with a dominant market share across most categories.

While the portfolio remains overweight in financials, we significantly reduced our positioning in the sector during the period. We did this by eliminating positions in several companies for which we had decreased confidence in their ability to create value at an attractive rate over time. The portfolio remains underweight in information technology, although we added to the sector during the year by buying competitively advantaged, growing businesses with strong management teams. We remain committed to our investment philosophy and process to construct a portfolio of resilient businesses at reasonable valuations run by management teams that are likely to make value enhancing decisions. Our goal is for the portfolio to deliver a superior rate of economic growth (earnings plus dividends) over the long term and downside protection during difficult economic and market environments. On the fixed income side, we maintain a very modestly pro-cyclical risk posture. Our base case is for an improving economy and elevated volatility as the path of COVID-19 continues to develop. Recent economic data, however, indicates that the pace of this recovery may be slow and additional fiscal stimulus is uncertain. Going forward, we will be focused on continued COVID-19 outbreaks and associated economic shutdowns; the potential for, and magnitude of, fiscal stimulus; policy changes that may occur during the Biden administration; and any changes from the current status quo driven by Congressional election outcomes. The Fed’s purchase programs have been successful in restoring confidence and liquidity, and we generally expect that the central bank will continue to provide support in other ways following the cessation of most of these programs at year-end. We expect it to remain accommodative, pinning front-end rates while longer rates may respond to improvements in the economic outlook. Because of this, we have positioned the fund’s fixed income portion with a slightly short duration relative to the benchmark. While valuations are near median levels and less compelling, credit markets remain the main investment focus of the portfolio as they continue to provide attractive income, and we will keep looking for opportunities within the sector. We are underweight corporate credit relative to the all-credit benchmark, with a bias toward defensive sectors with lower earnings volatility while also looking for opportunities to move up in credit quality. In terms of industries, the portfolio is overweight less cyclical sectors like communications and utilities while remaining cautious on more cyclical sectors such as energy. We maintain an overweight to taxable municipals, given their diversification benefit, still-strong underlying credit quality, and relatively attractive valuations.

We also maintain out-of-benchmark allocations to U.S. government bonds and agency MBS. The latter provides strong liquidity, and we believe they are wellsupported by the Fed purchases, despite concerns around prepayment speeds. The portfolio holds an allocation to passthroughs, focusing on low-coupon TBAs to maintain carry and liquidity, as well as CMOs and a modest allocation to delegated underwriting and servicing bonds for their stable cash flows. The portfolio also holds out-of-benchmark allocations to high-quality securitized sectors, which remain protected from defaults. These include traditional assetbacked securities, collateralized loan obligations, commercial mortgage-backed securities, and non-agency residential mortgages. Consistent with our practices, we hold adequate liquidity in the fixed income portion of the fund, notably government bonds and agency MBS as our “allweather” liquidity buffer. This liquidity buffer should provide downside protection for shareholders if the economic cycle and/or the equity portfolio take an unfavorable turn. We continue to be disciplined in our application of our investment process, which allows us to create a balanced portfolio that we believe should perform well in a variety of environments. We remain focused on long-term, low-turnover investing—features that we believe have served the fund’s shareholders well.

Loren L. Moran, CFA, Senior Managing Director and Fixed Income Portfolio Manager Daniel J. Pozen Senior Managing Director and Equity Portfolio Manager Michael E. Stack, CFA, Senior Managing Director and Fixed Income Portfolio Manager
I really hate these kinds of letters. It just reminds me that humans are making the decisions, with all of the risk that entails.

I suppose some people like that. To me, it's just another form of stress.

One of these letters reads like the rest. Been there, seen that, no thanks. Index investing beats active management most of the time.

"Over the course of the year, we initiated new positions in Facebook, Procter & Gamble, and Becton Dickinson. We believe Facebook has displayed excellent business resilience and has benefited from the accelerating shift to digital."

Blah blah blah.

Yeah, and the next guy believes something else. Who's right?
Grt2bOutdoors
Posts: 25625
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by Grt2bOutdoors »

namajones wrote: Thu Oct 07, 2021 8:49 am
Grt2bOutdoors wrote: Wed Oct 06, 2021 8:40 pm
tibbitts wrote: Wed Oct 06, 2021 8:01 pm
Grt2bOutdoors wrote: Wed Oct 06, 2021 3:15 pm Where in the prospectus does it say they shifted strategy? Nowhere, I hold Wellington and I do read the prospectuses of all of my current and potential investments. You are making an assumption based on the holdings. Let me offer my own assumption- the current holdings meet the criteria of the screen they run based upon the official investment policy statement and charter of the fund.

Here’s the link https://investor.vanguard.com/mutual-fu ... olio/vwelx
I would guess that any discussion of a strategy shift would be in the manager commentary, not in the prospectus. Back in the USmail/paper fund report era I enjoyed reading the manager commentaries, but haven't even looked for any lately. They used to make for interesting reading.
Here you go, from the 11/30/2020 annual report. What's telling, if anyone on this thread who wrote about a change in strategy, the investment adviser's commentary shows nothing has changed in strategy and this misconception that they are overly weighted towards technology must have overlooked the fact that the Wellington fund was actually underweighted in technology compared to that of the S&P 500 in the equity component of the fund. It's all in the details. Enjoy reading the manager's letter to the shareholders of the fund:

The fund’s positioning:
Over the intermediate term, our outlook for equity markets remains balanced. The uncertainty surrounding the 2020 presidential election is largely behind us—and, with multiple vaccine trials releasing positive data, we can begin to conceive of a post-COVID economy. However, we appreciate the logistical challenges of vaccine production and distribution, and we recognize the economic uncertainty that still lies ahead. At the portfolio level, we are enthusiastic about the prospects for many individual businesses. Large-cap financials Charles Schwab and JPMorgan Chase are showing strong underlying growth despite the challenging rate environment. Across sectors, businesses such as McDonald’s, HCA Healthcare, Facebook, Danaher, Blackstone Group, and Home Depot all have navigated the difficult conditions far better than expected. Large pharmaceutical company Pfizer has been one of the leaders in developing a COVID-19 vaccine. Technology companies like Alphabet and Microsoft continue to achieve success across a range of businesses, product, and shareholders. Over the course of the year, we initiated new positions in Facebook, Procter & Gamble, and Becton Dickinson. We believe Facebook has displayed excellent business resilience and has benefited from the accelerating shift to digital. The company is investing to extend their competitive advantage and still has a long runway for growth. Procter & Gamble has an excellent management team, with solid marketshare dynamics across key products that have continued to execute well. Nine out of ten of their product categories have grown organically despite the pandemic and its economic effects. Becton Dickinson is a medical supply company that makes a wide range of everyday products that are essential to the delivery of health care. The company has a stable demand profile, with a dominant market share across most categories.

While the portfolio remains overweight in financials, we significantly reduced our positioning in the sector during the period. We did this by eliminating positions in several companies for which we had decreased confidence in their ability to create value at an attractive rate over time. The portfolio remains underweight in information technology, although we added to the sector during the year by buying competitively advantaged, growing businesses with strong management teams. We remain committed to our investment philosophy and process to construct a portfolio of resilient businesses at reasonable valuations run by management teams that are likely to make value enhancing decisions. Our goal is for the portfolio to deliver a superior rate of economic growth (earnings plus dividends) over the long term and downside protection during difficult economic and market environments. On the fixed income side, we maintain a very modestly pro-cyclical risk posture. Our base case is for an improving economy and elevated volatility as the path of COVID-19 continues to develop. Recent economic data, however, indicates that the pace of this recovery may be slow and additional fiscal stimulus is uncertain. Going forward, we will be focused on continued COVID-19 outbreaks and associated economic shutdowns; the potential for, and magnitude of, fiscal stimulus; policy changes that may occur during the Biden administration; and any changes from the current status quo driven by Congressional election outcomes. The Fed’s purchase programs have been successful in restoring confidence and liquidity, and we generally expect that the central bank will continue to provide support in other ways following the cessation of most of these programs at year-end. We expect it to remain accommodative, pinning front-end rates while longer rates may respond to improvements in the economic outlook. Because of this, we have positioned the fund’s fixed income portion with a slightly short duration relative to the benchmark. While valuations are near median levels and less compelling, credit markets remain the main investment focus of the portfolio as they continue to provide attractive income, and we will keep looking for opportunities within the sector. We are underweight corporate credit relative to the all-credit benchmark, with a bias toward defensive sectors with lower earnings volatility while also looking for opportunities to move up in credit quality. In terms of industries, the portfolio is overweight less cyclical sectors like communications and utilities while remaining cautious on more cyclical sectors such as energy. We maintain an overweight to taxable municipals, given their diversification benefit, still-strong underlying credit quality, and relatively attractive valuations.

We also maintain out-of-benchmark allocations to U.S. government bonds and agency MBS. The latter provides strong liquidity, and we believe they are wellsupported by the Fed purchases, despite concerns around prepayment speeds. The portfolio holds an allocation to passthroughs, focusing on low-coupon TBAs to maintain carry and liquidity, as well as CMOs and a modest allocation to delegated underwriting and servicing bonds for their stable cash flows. The portfolio also holds out-of-benchmark allocations to high-quality securitized sectors, which remain protected from defaults. These include traditional assetbacked securities, collateralized loan obligations, commercial mortgage-backed securities, and non-agency residential mortgages. Consistent with our practices, we hold adequate liquidity in the fixed income portion of the fund, notably government bonds and agency MBS as our “allweather” liquidity buffer. This liquidity buffer should provide downside protection for shareholders if the economic cycle and/or the equity portfolio take an unfavorable turn. We continue to be disciplined in our application of our investment process, which allows us to create a balanced portfolio that we believe should perform well in a variety of environments. We remain focused on long-term, low-turnover investing—features that we believe have served the fund’s shareholders well.

Loren L. Moran, CFA, Senior Managing Director and Fixed Income Portfolio Manager Daniel J. Pozen Senior Managing Director and Equity Portfolio Manager Michael E. Stack, CFA, Senior Managing Director and Fixed Income Portfolio Manager
I really hate these kinds of letters. It just reminds me that humans are making the decisions, with all of the risk that entails.

I suppose some people like that. To me, it's just another form of stress.

One of these letters reads like the rest. Been there, seen that, no thanks. Index investing beats active management most of the time.

"Over the course of the year, we initiated new positions in Facebook, Procter & Gamble, and Becton Dickinson. We believe Facebook has displayed excellent business resilience and has benefited from the accelerating shift to digital."

Blah blah blah.

Yeah, and the next guy believes something else. Who's right?
Why don’t you admit it? You are a die hard indexer and have zero interest in active management. But then don’t knock it when your stake in it is zero. We get it, you don’t like active management and you don’t like reading annual or adviser letters. It’s like going to a party that you really had no intention of going to other than to spoil it for others who do like the company they keep.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by nisiprius »

Grt2bOutdoors wrote: Thu Oct 07, 2021 10:04 am...don’t knock it when your stake in it is zero.
If we owned actively managed funds (as I did for years) they you would say we were hypocritical and unwilling to eat our own cooking.
...you don’t like reading annual or adviser letters...
It is perfectly legitimate to observe that people who invest in actively managed funds need to pay attention to fund management. Doesn't everyone agree to that?

So it is reasonable to ask people who choose to invest in them to explain how they track management, and how they decide whether and when to take action.

Barry Ritholtz will be interviewed by Rick Ferri in the next Bogleheads podcast, which has led me to reacquaint myself with Ritholtz's guide, When Should You Fire Your Mutual Fund Manager? Barry Ritholtz lays out these reasons:
  1. When they suffer from style drift...
  2. When they become too big: ... beyond a certain size — which can range from less than $1 billion to about $5 billion — they no longer can create alpha with that strategy...
  3. When they fight the dominant market trend: Bill Miller’s market-beating 15-year streak came to an end amid a value trap...
  4. When they seem to lose their edge: Whether it’s success or money or a loss of interest, managers sometimes lose the “fire in the belly.” Determining this is admittedly challenging. We often find out about some personal demons — divorce, alcohol, whatever — after the fact. Regardless, when whatever it was that made them a top stock picker starts to fade away, you should also.
  5. When they become a closet indexer: When a fund owns 100, 150, 200 names, it effectively becomes a high-cost index. Even if they have the top performing stocks, it will be in such small quantities as to not move the needle. This is an easy fix — you replace them with a low-cost, passive index.
So, since inception of the Balanced Index Fund, Wellington far outperformed Balanced Index up through 2009:
Source
Image

Since then, it has virtually duplicated Balanced Index:
Image

So, how would you answer these questions, based on your following of advisor letters?

1) Has Wellington become a "closet index fund" (point #5?)

2) By using a value tilt, is Wellington "fighting the dominant market trend?" (#3) Or is it virtuously avoiding "style drift?" (#1)

3) Did Wellington "seem to lose its edge" in 2010? Do the managers still have the "fire in the belly?" How the heck does any active fund owner evaluate a thing like that? (#4)
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
azanon
Posts: 3142
Joined: Mon Nov 07, 2011 9:34 am

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by azanon »

nisiprius wrote: Thu Oct 07, 2021 11:12 amSo, how would you answer these questions, based on your following of advisor letters?

1) Has Wellington become a "closet index fund" (point #5?)

2) By using a value tilt, is Wellington "fighting the dominant market trend?" (#3) Or is it virtuously avoiding "style drift?" (#1)

3) Did Wellington "seem to lose its edge" in 2010? Do the managers still have the "fire in the belly?" How the heck does any active fund owner evaluate a thing like that? (#4)
I started to look into this, and was immediately surprised to see that VG Wellington doesn't have a value tilt at all - if anything it's slightly leaning right of center towards growth looking at Morningstar's style boxes. Hmm, very surprising. Definitely a "style drift" if it used to lean value in the past.
MIretired
Posts: 1059
Joined: Fri Sep 06, 2013 12:35 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by MIretired »

azanon wrote: Thu Oct 07, 2021 12:34 pm
nisiprius wrote: Thu Oct 07, 2021 11:12 amSo, how would you answer these questions, based on your following of advisor letters?

1) Has Wellington become a "closet index fund" (point #5?)

2) By using a value tilt, is Wellington "fighting the dominant market trend?" (#3) Or is it virtuously avoiding "style drift?" (#1)

3) Did Wellington "seem to lose its edge" in 2010? Do the managers still have the "fire in the belly?" How the heck does any active fund owner evaluate a thing like that? (#4)
I started to look into this, and was immediately surprised to see that VG Wellington doesn't have a value tilt at all - if anything it's slightly leaning right of center towards growth looking at Morningstar's style boxes. Hmm, very surprising. Definitely a "style drift" if it used to lean value in the past.
Ditto, here.
On morn* for Jun30, 2021:
24 LV
40 LB
33 LG
0 M & S
5 faang stocks in top 8 of 68 stocks.
azanon
Posts: 3142
Joined: Mon Nov 07, 2011 9:34 am

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by azanon »

MIretired wrote: Thu Oct 07, 2021 12:56 pm
azanon wrote: Thu Oct 07, 2021 12:34 pm
nisiprius wrote: Thu Oct 07, 2021 11:12 amSo, how would you answer these questions, based on your following of advisor letters?

1) Has Wellington become a "closet index fund" (point #5?)

2) By using a value tilt, is Wellington "fighting the dominant market trend?" (#3) Or is it virtuously avoiding "style drift?" (#1)

3) Did Wellington "seem to lose its edge" in 2010? Do the managers still have the "fire in the belly?" How the heck does any active fund owner evaluate a thing like that? (#4)
I started to look into this, and was immediately surprised to see that VG Wellington doesn't have a value tilt at all - if anything it's slightly leaning right of center towards growth looking at Morningstar's style boxes. Hmm, very surprising. Definitely a "style drift" if it used to lean value in the past.
Ditto, here.
On morn* for Jun30, 2021:
24 LV
40 LB
33 LG
0 M & S
5 faang stocks in top 8 of 68 stocks.
Yeah that's unacceptable. It's been said many times, but my bottom line issue with Actives is not fees, rather its that almost all of them don't stick with or commit rigidly to a specific asset allocation and style. I'd much rather have an index balanced fund with a fixed asset allocation, and either no tilt or a very tight, fixed tilt, if any.
namajones
Posts: 778
Joined: Sat Aug 08, 2020 12:41 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by namajones »

IMO, everyone on this thread has spent more time on Wellington than any fund should require of any of us. And to what end? Is this fund beating inexpensive, passive index funds by a wide margin? More importantly, will it do that in the future?

It's all kind of silly, this active stuff, if you ask me. It's old news now that most (all) active managers are taking more of your money and giving you nothing for the extra dough. Wasn't it Vanguard who taught us that?

So why bother? Maybe you're getting some value out of reading the annual letters? Let me tell you, this annual letter quoted earlier from Wellington is a blueprint of every annual letter I've ever received in my younger, sillier days when I invested in active funds.

"We acquired xxxx because we believe blah blah blah. Although there is some concern about eblah hooblah deeblah, we believe the concern is overblown. Ribbit."

All nonsense. I'm sure these guys have an annual report template and they just fill in the highlighted parts with new stuff.

I can see it now. "Hey, Jim, you gonna take care of the annual letter this year?"

"Oh, okay. I'll work on it after Thanksgiving dinner. Who are you picking for today's game?"
6NDone
Posts: 153
Joined: Tue Sep 28, 2021 5:01 am

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by 6NDone »

namajones wrote: Thu Oct 07, 2021 2:01 pm IMO, everyone on this thread has spent more time on Wellington than any fund should require of any of us. And to what end? Is this fund beating inexpensive, passive index funds by a wide margin? More importantly, will it do that in the future?

It's all kind of silly, this active stuff, if you ask me. It's old news now that most (all) active managers are taking more of your money and giving you nothing for the extra dough. Wasn't it Vanguard who taught us that?

So why bother? Maybe you're getting some value out of reading the annual letters? Let me tell you, this annual letter quoted earlier from Wellington is a blueprint of every annual letter I've ever received in my younger, sillier days when I invested in active funds.

"We acquired xxxx because we believe blah blah blah. Although there is some concern about eblah hooblah deeblah, we believe the concern is overblown. Ribbit."

All nonsense. I'm sure these guys have an annual report template and they just fill in the highlighted parts with new stuff.

I can see it now. "Hey, Jim, you gonna take care of the annual letter this year?"

"Oh, okay. I'll work on it after Thanksgiving dinner. Who are you picking for today's game?"
Sometimes one must put aside dogma and a fixed mindset and look at the facts. As another poster has pointed out, Wellington has beaten, or matched a compostable allocation of index funds for a large part of its history. Actively managed funds are not inherently evil, especially one with as low an expense ratio as the Wellington.

Jack invested in Wellington and stated he had a special fondness for the fund, so it’s kind of fitting that forum named after him would want to discuss the fund.
100% US TSM
tj
Posts: 9368
Joined: Wed Dec 23, 2009 11:10 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by tj »

nisiprius wrote: Wed Oct 06, 2021 7:46 pm
tj wrote: Wed Oct 06, 2021 9:37 am...Wellington shifted its strategy into the tech stocks in the last couple years...
Did the change happen to coincide with the beginning of the tenure of the new managers?
Management

Loren L. Moran, CFA, Senior Managing Director
Portfolio manager.
Advised the fund since 2017.

Daniel J. Pozen, Senior Managing Director
Advised the fund since 2019.
I'm pretty sure it's been noted on the forums that it did.
sycamore
Posts: 6360
Joined: Tue May 08, 2018 12:06 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by sycamore »

MIretired wrote: Thu Oct 07, 2021 12:56 pm
azanon wrote: Thu Oct 07, 2021 12:34 pm
nisiprius wrote: Thu Oct 07, 2021 11:12 amSo, how would you answer these questions, based on your following of advisor letters?

1) Has Wellington become a "closet index fund" (point #5?)

2) By using a value tilt, is Wellington "fighting the dominant market trend?" (#3) Or is it virtuously avoiding "style drift?" (#1)

3) Did Wellington "seem to lose its edge" in 2010? Do the managers still have the "fire in the belly?" How the heck does any active fund owner evaluate a thing like that? (#4)
I started to look into this, and was immediately surprised to see that VG Wellington doesn't have a value tilt at all - if anything it's slightly leaning right of center towards growth looking at Morningstar's style boxes. Hmm, very surprising. Definitely a "style drift" if it used to lean value in the past.
Ditto, here.
On morn* for Jun30, 2021:
24 LV
40 LB
33 LG
0 M & S
5 faang stocks in top 8 of 68 stocks.
For what it's worth, Morningstar shows the last 5 years of a fund's style. Go to the M* portfolio page for Wellington, in the "Stock Style" section, click on "Historical".

Image

So sometime in 2019 or 2020 it switched from LV to LB. Of course it could be that its value tilt has been relatively light for a long time and only recently crossed some magical threshold that M* has for Value vs Blend.

Vanguard's VWELX page still shows the fund in the Large Value style box. Maybe they're using Lipper data for stock style?
Grt2bOutdoors
Posts: 25625
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by Grt2bOutdoors »

sycamore wrote: Thu Oct 07, 2021 3:33 pm
MIretired wrote: Thu Oct 07, 2021 12:56 pm
azanon wrote: Thu Oct 07, 2021 12:34 pm
nisiprius wrote: Thu Oct 07, 2021 11:12 amSo, how would you answer these questions, based on your following of advisor letters?

1) Has Wellington become a "closet index fund" (point #5?)

2) By using a value tilt, is Wellington "fighting the dominant market trend?" (#3) Or is it virtuously avoiding "style drift?" (#1)

3) Did Wellington "seem to lose its edge" in 2010? Do the managers still have the "fire in the belly?" How the heck does any active fund owner evaluate a thing like that? (#4)
I started to look into this, and was immediately surprised to see that VG Wellington doesn't have a value tilt at all - if anything it's slightly leaning right of center towards growth looking at Morningstar's style boxes. Hmm, very surprising. Definitely a "style drift" if it used to lean value in the past.
Ditto, here.
On morn* for Jun30, 2021:
24 LV
40 LB
33 LG
0 M & S
5 faang stocks in top 8 of 68 stocks.
For what it's worth, Morningstar shows the last 5 years of a fund's style. Go to the M* portfolio page for Wellington, in the "Stock Style" section, click on "Historical".

Image

So sometime in 2019 or 2020 it switched from LV to LB. Of course it could be that its value tilt has been relatively light for a long time and only recently crossed some magical threshold that M* has for Value vs Blend.

Vanguard's VWELX page still shows the fund in the Large Value style box. Maybe they're using Lipper data for stock style?
The question an active manager has to ponder is when do you sell or exit a position? It’s usually when the fundamentals of the underlying portfolio investment has deteriorated and is fully valued. Seeing as the markets are as most professional experts say are overvalued, what is your take on value stocks that have gone along for the ride with more heady p/e’s but has still not realized it’s full potential? This strict adherence could lead to throw the baby out with the bath water. My own look at Wellington on Morningstar indicates the fund has produce positive alpha of 1.66 and is rated as large value. That would make sense as p/e and p/b falls below that of large cap stocks even though this particular fund can also hold midcap stock. Further, the most important aspect for the individual investor is does the fund meet their needs, are they content with the way it’s managed and it’s returns? If it meets their criteria, then that is what counts not what I or you say. It may not be suitable for you, but your or my opinion really does not matter much. We each have our own objectives and as Taylor so aptly puts - there are many roads to Dublin. You take yours, I’ll take mine.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Nowizard
Posts: 4842
Joined: Tue Oct 23, 2007 5:33 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by Nowizard »

Not our only fund but definitely one with a substantial portion of our assets. Personally, we primarily use index funds but believe that selective, active funds do provide another type of diversification.

Tim
MIretired
Posts: 1059
Joined: Fri Sep 06, 2013 12:35 pm

Re: "Retire with the Wellington Fund" by Josh Scandlen?

Post by MIretired »

sycamore wrote: Thu Oct 07, 2021 3:33 pm
MIretired wrote: Thu Oct 07, 2021 12:56 pm
azanon wrote: Thu Oct 07, 2021 12:34 pm
nisiprius wrote: Thu Oct 07, 2021 11:12 amSo, how would you answer these questions, based on your following of advisor letters?

1) Has Wellington become a "closet index fund" (point #5?)

2) By using a value tilt, is Wellington "fighting the dominant market trend?" (#3) Or is it virtuously avoiding "style drift?" (#1)

3) Did Wellington "seem to lose its edge" in 2010? Do the managers still have the "fire in the belly?" How the heck does any active fund owner evaluate a thing like that? (#4)
I started to look into this, and was immediately surprised to see that VG Wellington doesn't have a value tilt at all - if anything it's slightly leaning right of center towards growth looking at Morningstar's style boxes. Hmm, very surprising. Definitely a "style drift" if it used to lean value in the past.
Ditto, here.
On morn* for Jun30, 2021:
24 LV
40 LB
33 LG
0 M & S
5 faang stocks in top 8 of 68 stocks.
For what it's worth, Morningstar shows the last 5 years of a fund's style. Go to the M* portfolio page for Wellington, in the "Stock Style" section, click on "Historical".

Image

So sometime in 2019 or 2020 it switched from LV to LB. Of course it could be that its value tilt has been relatively light for a long time and only recently crossed some magical threshold that M* has for Value vs Blend.

Vanguard's VWELX page still shows the fund in the Large Value style box. Maybe they're using Lipper data for stock style?
I think all VG funds are a set and constant style by them. You see the difference between m* styles on very many funds, including active bonds, or inside, like this, AA funds.
It's unnerving when VG calls it LV but there's nowhere on vwelx page on VG that would make you think strictly value-styled stocks. More like written in there managers report above; something like manager "adding value" stocks and fundamentally good valued. - something grt2b above, would probably say they are good at. - As nisi's charts show, they didn't fight the predominate trend come 2010 and since. Didn't style drift in 2000. ( Seems Ritholtz's #1 and #3 are 2 sides of the same coin.)
I am impressed with fund( lol), but you sure have to believe in the management or watch it like a hawk.
Post Reply