Closest way to mimic Wellington?

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nasrullah
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Closest way to mimic Wellington?

Post by nasrullah »

Wellington is roughly a 60/40 fund but concentrated positions in the equities.

As a curiosity exercise, what would the closest way to mimic this fund with ETFs be?

VTI and VOO don't seem to be right, so VV (Vanguard Large-Cap ETF) plus bonds?

* I'm not planning on doing this, trying to learn and explore more things.

Thanks!
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Mike Scott
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Re: Closest way to mimic Wellington?

Post by Mike Scott »

Try the search box. It's been discussed many times.
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nasrullah
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Re: Closest way to mimic Wellington?

Post by nasrullah »

Also when you backtest these three they're effectively the same.
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nasrullah
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Re: Closest way to mimic Wellington?

Post by nasrullah »

Mike Scott wrote: Sun Dec 05, 2021 11:36 am Try the search box. It's been discussed many times.
Of course - I should have started there
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nasrullah
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Re: Closest way to mimic Wellington?

Post by nasrullah »

Is there a way to factor in expense ratios (and taxes) on a backtest?

Curious what the real world difference between these would really be.
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dru808
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Re: Closest way to mimic Wellington?

Post by dru808 »

It seems that over time Wellington went from a value tilted fund to a blend. Morningstar calls it a blend and vanguard considers it a value fund. Idk, the top 10 seem pretty close to any large cap blend fund you can find and maybe intermediate corporate for the bond portion.
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dru808
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Re: Closest way to mimic Wellington?

Post by dru808 »

nasrullah wrote: Sun Dec 05, 2021 11:54 am Is there a way to factor in expense ratios (and taxes) on a backtest?

Curious what the real world difference between these would really be.
Try swapping the total bond for intermediate corporate and go with a 65/35 allocation.
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Robot Monster
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Re: Closest way to mimic Wellington?

Post by Robot Monster »

I found an old post from 2017 answering this, link but since then the Wellington-mimic has severely underperformed Wellington, 8.23% vs 11.28%.
link
dru808
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Re: Closest way to mimic Wellington?

Post by dru808 »

Robot Monster wrote: Sun Dec 05, 2021 12:15 pm I found an old post from 2017 answering this, link but since then the Wellington-mimic has severely underperformed Wellington, 8.23% vs 11.28%.
link
What? How does anyone come up with the s&p 400 as the equity portion of Wellington? It’s nowhere near the megacap makeup of Wellington.
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inbox788
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Re: Closest way to mimic Wellington?

Post by inbox788 »

Robot Monster wrote: Sun Dec 05, 2021 12:15 pm I found an old post from 2017 answering this, link but since then the Wellington-mimic has severely underperformed Wellington, 8.23% vs 11.28%.
link
I didn't look very deep, but I assume Wellington had much more large and dividend paying stocks than the midcap index. You know what they say about past results and future performance. I'd bet on a similar investment style coming closer to a past curve fit.

Sounds like TSM without small caps, and since small caps isn't that significant market cap in TSM, it would be fairly close.
("The fund invests 60% to 70% of its assets in dividend-paying, and, to a lesser extent, non-dividend-paying common stocks of established medium-size and large companies.")

Code: Select all

Top 10 Holdings (6.19% of Total Assets)Get Quotes for Top Holdings
Name	Symbol	% Assets
Cognex Corp	CGNX	0.66%
Molina Healthcare Inc	MOH	0.66%
Signature Bank	SBNY	0.63%
SolarEdge Technologies Inc	SEDG	0.63%
Ceridian HCM Holding Inc	CDAY	0.62%
Camden Property Trust	CPT	0.61%
FactSet Research Systems Inc	FDS	0.60%
Repligen Corp	RGEN	0.60%
Williams-Sonoma Inc	WSM	0.60%
Masimo Corp	MASI	0.58%

Top 10 Holdings (25.82% of Total Assets)Get Quotes for Top Holdings
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Alphabet Inc A	GOOGL	4.98%
Microsoft Corp	MSFT	4.51%
Facebook Inc A	FB	2.65%
JPMorgan Chase & Co	JPM	2.35%
Charles Schwab Corp	SCHW	2.33%
McDonald's Corp	MCD	2.20%
Apple Inc	AAPL	2.15%
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alpenglow
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Re: Closest way to mimic Wellington?

Post by alpenglow »

After reading a few threads on W&W, my conclusion is that if you want a Wellington-like investment then just buy Wellington. The ER on Admiral Shares is quite reasonable for active management.
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nasrullah
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Re: Closest way to mimic Wellington?

Post by nasrullah »

alpenglow wrote: Sun Dec 05, 2021 1:00 pm After reading a few threads on W&W, my conclusion is that if you want a Wellington-like investment then just buy Wellington. The ER on Admiral Shares is quite reasonable for active management.
That's the exact same thing I've come up with.
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jeffyscott
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Re: Closest way to mimic Wellington?

Post by jeffyscott »

I think of Wellington as being quality/dividend growth for stocks (and managed by the Wellington Management co.) and mostly, but not exclusively, investment grade corporate bonds. And based on that have thought that 65% Dividend Growth (VDIGX) and 35% Intermediate Investment Grade (VFIDX) would be the best match and it is pretty clos. So, if looking for index funds, I would think Dividend Appreciation (VIG/VDADX) and Intermediate Corporate Bond (VICSX/VCIT) :?: .

https://www.portfoliovisualizer.com/bac ... tion5_3=35
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Whitefalcon
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Re: Closest way to mimic Wellington?

Post by Whitefalcon »

nasrullah wrote: Sun Dec 05, 2021 11:34 am Wellington is roughly a 60/40 fund but concentrated positions in the equities.

As a curiosity exercise, what would the closest way to mimic this fund with ETFs be?

VTI and VOO don't seem to be right, so VV (Vanguard Large-Cap ETF) plus bonds?

* I'm not planning on doing this, trying to learn and explore more things.

Thanks!
Wellington is a actively managed fund with a low expense ratio, that accordingly can change based on the Vanguard management team's strategy. You can certainly closely mimic the funds current position, but are you prepared to change every time it does? If you did, wouldn't it make more sense to just trust the funds management team?
iamblessed
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Re: Closest way to mimic Wellington?

Post by iamblessed »

The advantage I see is you control the taxes more if you want to do this idea in a taxable account. Some of us have to hold bonds in taxable because of lack of space other places.
Tommy
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Re: Closest way to mimic Wellington?

Post by Tommy »

Surprised me how often people ask this question. I believe I see this topic at least every year, sometimes more often. Why on earth you want to mimic Wellington? To save .1% in fee? or just for fun?
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anon_investor
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Re: Closest way to mimic Wellington?

Post by anon_investor »

Tommy wrote: Mon Dec 06, 2021 10:47 pm Surprised me how often people ask this question. I believe I see this topic at least every year, sometimes more often. Why on earth you want to mimic Wellington? To save .1% in fee? or just for fun?
Probably to be more tax efficient.
000
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Re: Closest way to mimic Wellington?

Post by 000 »

alpenglow wrote: Sun Dec 05, 2021 1:00 pm After reading a few threads on W&W, my conclusion is that if you want a Wellington-like investment then just buy Wellington. The ER on Admiral Shares is quite reasonable for active management.
^ This is the answer.
rich126
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Re: Closest way to mimic Wellington?

Post by rich126 »

jeffyscott wrote: Sun Dec 05, 2021 4:18 pm I think of Wellington as being quality/dividend growth for stocks (and managed by the Wellington Management co.) and mostly, but not exclusively, investment grade corporate bonds. And based on that have thought that 65% Dividend Growth (VDIGX) and 35% Intermediate Investment Grade (VFIDX) would be the best match and it is pretty clos. So, if looking for index funds, I would think Dividend Appreciation (VIG/VDADX) and Intermediate Corporate Bond (VICSX/VCIT) :?: .

https://www.portfoliovisualizer.com/bac ... tion5_3=35
That ends up only being back tested from 2011 which to me is fairly limited. Ideally I'd rather see something going back to at least the later 1990s.
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jeffyscott
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Re: Closest way to mimic Wellington?

Post by jeffyscott »

rich126 wrote: Tue Dec 07, 2021 4:29 am
jeffyscott wrote: Sun Dec 05, 2021 4:18 pm I think of Wellington as being quality/dividend growth for stocks (and managed by the Wellington Management co.) and mostly, but not exclusively, investment grade corporate bonds. And based on that have thought that 65% Dividend Growth (VDIGX) and 35% Intermediate Investment Grade (VFIDX) would be the best match and it is pretty clos. So, if looking for index funds, I would think Dividend Appreciation (VIG/VDADX) and Intermediate Corporate Bond (VICSX/VCIT) :?: .

https://www.portfoliovisualizer.com/bac ... tion5_3=35
That ends up only being back tested from 2011 which to me is fairly limited. Ideally I'd rather see something going back to at least the later 1990s.
You can get a few more years with intermediate investment grade in place of the corporate bond index, but still only back to 2006 due to VIG. And with VDIGX can get a few more, going back to 2003 when the utilities fund became divided growth.

I'm also basing it on the investment style. VDIGX and VFIDX are, I believe, very similar to Wellington's components, so then it's a matter of finding the closest index subs for those two.
Rasputin13
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Re: Closest way to mimic Wellington?

Post by Rasputin13 »

I don't understand the love for the Wellington fund. I'm all about making money. That's why I'm 100% VGT.
iamblessed
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Re: Closest way to mimic Wellington?

Post by iamblessed »

Rasputin13 wrote: Tue Dec 07, 2021 7:28 am I don't understand the love for the Wellington fund. I'm all about making money. That's why I'm 100% VGT.
Check out this
https://www.youtube.com/watch?v=m3UuOLT1YZs
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anon_investor
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Re: Closest way to mimic Wellington?

Post by anon_investor »

Rasputin13 wrote: Tue Dec 07, 2021 7:28 am I don't understand the love for the Wellington fun.d. I'm all about making money. That's why I'm 100% VGT.
How long have you had that allocation?
Rasputin13
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Re: Closest way to mimic Wellington?

Post by Rasputin13 »

anon_investor wrote: Tue Dec 07, 2021 11:30 am
Rasputin13 wrote: Tue Dec 07, 2021 7:28 am I don't understand the love for the Wellington fun.d. I'm all about making money. That's why I'm 100% VGT.
How long have you had that allocation?
A few years, my man.
balbrec2
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Re: Closest way to mimic Wellington?

Post by balbrec2 »

Why mimic it when you can just buy it?
mtmingus
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Re: Closest way to mimic Wellington?

Post by mtmingus »

Why mimic? Maybe don’t want to have a vanguard account.
Lastrun
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Re: Closest way to mimic Wellington?

Post by Lastrun »

balbrec2 wrote: Wed Dec 08, 2021 7:55 am Why mimic it when you can just buy it?
A fair question honestly but I can think of some reasons:

1. Not available to investor through their 401K, IRA, investment account etc. or high cost to buy
2. Would prefer ETF to mutual fund for whatever reason
3. Would prefer two funds to TLH
4. Would prefer to mimic through an index approach versus active approach (I realize this may be counter intuitive)
5. Is hyper cost sensitive and wants to try to mimic at lower cost

But yes, it is a good question.
Booogle
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Re: Closest way to mimic Wellington?

Post by Booogle »

NTSX is logically better than any 60/40 fund.
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Tony-S
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Re: Closest way to mimic Wellington?

Post by Tony-S »

Booogle wrote: Wed Dec 08, 2021 8:18 am NTSX is logically better than any 60/40 fund.
WisdomTree U.S. Efficient Core Fund (NTSX) started in 2018, right? Doesn't seem to have much of a track record.
Booogle
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Re: Closest way to mimic Wellington?

Post by Booogle »

Tony-S wrote: Wed Dec 08, 2021 8:30 am
Booogle wrote: Wed Dec 08, 2021 8:18 am NTSX is logically better than any 60/40 fund.
WisdomTree U.S. Efficient Core Fund (NTSX) started in 2018, right? Doesn't seem to have much of a track record.
Its a pretty simple fund.

I wouldn't worry that its new.
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anon_investor
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Re: Closest way to mimic Wellington?

Post by anon_investor »

Rasputin13 wrote: Wed Dec 08, 2021 6:50 am
anon_investor wrote: Tue Dec 07, 2021 11:30 am
Rasputin13 wrote: Tue Dec 07, 2021 7:28 am I don't understand the love for the Wellington fun.d. I'm all about making money. That's why I'm 100% VGT.
How long have you had that allocation?
A few years, my man.
Forward thinking! My VGT allocation has only been around 15% the last few years, but boy has it done well. :beer
sycamore
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Re: Closest way to mimic Wellington?

Post by sycamore »

Lastrun wrote: Wed Dec 08, 2021 8:05 am
balbrec2 wrote: Wed Dec 08, 2021 7:55 am Why mimic it when you can just buy it?
A fair question honestly but I can think of some reasons:

1. Not available to investor through their 401K, IRA, investment account etc. or high cost to buy
2. Would prefer ETF to mutual fund for whatever reason
3. Would prefer two funds to TLH
4. Would prefer to mimic through an index approach versus active approach (I realize this may be counter intuitive)
5. Is hyper cost sensitive and wants to try to mimic at lower cost

But yes, it is a good question.
+1

"4. Would prefer to mimic through an index approach versus active approach (I realize this may be counter intuitive)"

^^^ This has the potential to be a big advantage. In a taxable account, Wellington throws off sizable cap gain distributions. Most of that could be avoided with a passive indexing and use of ETFs.
Rasputin13
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Re: Closest way to mimic Wellington?

Post by Rasputin13 »

anon_investor wrote: Wed Dec 08, 2021 8:42 am
Rasputin13 wrote: Wed Dec 08, 2021 6:50 am
anon_investor wrote: Tue Dec 07, 2021 11:30 am
Rasputin13 wrote: Tue Dec 07, 2021 7:28 am I don't understand the love for the Wellington fun.d. I'm all about making money. That's why I'm 100% VGT.
How long have you had that allocation?
A few years, my man.
Forward thinking! My VGT allocation has only been around 15% the last few years, but boy has it done well. :beer
15%? Boy, you need to up your game.
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anon_investor
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Re: Closest way to mimic Wellington?

Post by anon_investor »

Rasputin13 wrote: Thu Dec 09, 2021 12:25 pm
anon_investor wrote: Wed Dec 08, 2021 8:42 am
Rasputin13 wrote: Wed Dec 08, 2021 6:50 am
anon_investor wrote: Tue Dec 07, 2021 11:30 am
Rasputin13 wrote: Tue Dec 07, 2021 7:28 am I don't understand the love for the Wellington fun.d. I'm all about making money. That's why I'm 100% VGT.
How long have you had that allocation?
A few years, my man.
Forward thinking! My VGT allocation has only been around 15% the last few years, but boy has it done well. :beer
15%? Boy, you need to up your game.
The BH in me says it's okay to have a "tilt" but all-in, maybe beyond my risk tolerance and I am ~95% equities. Kudos to you though, you definitely have done well.
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