Wellesley Gives TSM/TBM a Smackdown
- Charles Joseph
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Wellesley Gives TSM/TBM a Smackdown
Even in the midst of this bear market, Wellesley Income Fund continues to grind out an impressive outperformance compared to a similar TSM/TBM portfolio, going back to 1993.
Portfolio Initial Balance Final Balance CAGR Stdev Best Year Worst Year Max. Drawdown Sharpe Ratio
Portfolio 1 $100,000 $889,667 7.69% 6.31% 28.91% -10.03% -18.82% 0.86
Portfolio 2 $100,000 $704,182 6.84% 6.21% 24.87% -14.63% -18.18% 0.74
The same goes for S&P 500/TBM, going back to 1987.
Of course the thread subject is tongue in cheek, but any thoughts on the reasons for this consistent outperformance of Wellesley?
Portfolio Initial Balance Final Balance CAGR Stdev Best Year Worst Year Max. Drawdown Sharpe Ratio
Portfolio 1 $100,000 $889,667 7.69% 6.31% 28.91% -10.03% -18.82% 0.86
Portfolio 2 $100,000 $704,182 6.84% 6.21% 24.87% -14.63% -18.18% 0.74
The same goes for S&P 500/TBM, going back to 1987.
Of course the thread subject is tongue in cheek, but any thoughts on the reasons for this consistent outperformance of Wellesley?
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
- willthrill81
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Re: Wellesley Gives TSM/TBM a Smackdown
Yes, Wellesley's value tilt has helped this year. Through June, it was down -10%, whereas a 60/40 AA of TSM/TBM was down -14.3%.
The Sensible Steward
Re: Wellesley Gives TSM/TBM a Smackdown
Yep; value index is down ~9% vs Total Stock -20
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
- Charles Joseph
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Re: Wellesley Gives TSM/TBM a Smackdown
Yes and the outperformance over a 35-year period compared to a two- or three-fund portfolio is very impressive.willthrill81 wrote: ↑Tue Jul 05, 2022 6:35 pm Yes, Wellesley's value tilt has helped this year. Through June, it was down -10%, whereas a 60/40 AA of TSM/TBM was down -14.3%.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
Re: Wellesley Gives TSM/TBM a Smackdown
Yes--but Wellesley probably isn't appropriate for investors who are in the accumulation phase and can take more risk.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Wellesley Gives TSM/TBM a Smackdown
It is a well managed fund; bond duration a bit long for my blood and the yield is too high for me at 3% -- I like to keep it down under 2% overall.Charles Joseph wrote: ↑Tue Jul 05, 2022 7:52 pmYes and the outperformance over a 35-year period compared to a two- or three-fund portfolio is very impressive.willthrill81 wrote: ↑Tue Jul 05, 2022 6:35 pm Yes, Wellesley's value tilt has helped this year. Through June, it was down -10%, whereas a 60/40 AA of TSM/TBM was down -14.3%.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: Wellesley Gives TSM/TBM a Smackdown
and has placement issues for taxable/advantaged for people who need to keep equity all in taxable. It is not a great fund for taxable accounts.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
- Charles Joseph
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Re: Wellesley Gives TSM/TBM a Smackdown
It may also simply be the corporate bonds that has helped longterm performance, which of course entail more risk.willthrill81 wrote: ↑Tue Jul 05, 2022 6:35 pm Yes, Wellesley's value tilt has helped this year. Through June, it was down -10%, whereas a 60/40 AA of TSM/TBM was down -14.3%.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
Re: Wellesley Gives TSM/TBM a Smackdown
I seem to recall that the duration of the bonds in Wellesley was significantly higher than TBM; has been a while since I looked at the portfolio of either.Charles Joseph wrote: ↑Wed Jul 06, 2022 1:44 pmIt may also simply be the corporate bonds that has helped longterm performance, which of course entail more risk.willthrill81 wrote: ↑Tue Jul 05, 2022 6:35 pm Yes, Wellesley's value tilt has helped this year. Through June, it was down -10%, whereas a 60/40 AA of TSM/TBM was down -14.3%.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
- Charles Joseph
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Re: Wellesley Gives TSM/TBM a Smackdown
Yes, it used to be over eight years. In an interview I heard last year, the fund managers said they would shorten duration if interest rates were to rise. I just checked and since then, the duration has dropped to 7.4 years. So you're right, still higher than TBM.jebmke wrote: ↑Wed Jul 06, 2022 1:56 pmI seem to recall that the duration of the bonds in Wellesley was significantly higher than TBM; has been a while since I looked at the portfolio of either.Charles Joseph wrote: ↑Wed Jul 06, 2022 1:44 pmIt may also simply be the corporate bonds that has helped longterm performance, which of course entail more risk.willthrill81 wrote: ↑Tue Jul 05, 2022 6:35 pm Yes, Wellesley's value tilt has helped this year. Through June, it was down -10%, whereas a 60/40 AA of TSM/TBM was down -14.3%.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
Re: Wellesley Gives TSM/TBM a Smackdown
Yes, Wellesley is a fine fund. You know, there aren’t as many Bogleheads on this site as one might think. Oh well, each to his own, I guess. Perhaps, we should become Bogleheadsandothers.
- Charles Joseph
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Re: Wellesley Gives TSM/TBM a Smackdown
I see that. It appears as though it's a big tent here.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
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Re: Wellesley Gives TSM/TBM a Smackdown
Wellesley Income Fund has a long track record of excellent risk adjusted returns for conservative income oriented investors. It is expected to weather equity bear markets better than TSM and perhaps better than TSM/TBM. It is managed by Wellington Management which also manages Vanguard's Wellington Fund. Both have produced decades of excellent risk adjusted returns.
True investing skill is IMO very rare among individuals even more rare among financial firms, but Wellington Management has succeeded in outperforming in a risk adjusted manner comparable benchmarks for so long that it is unlikely to be just luck. They succeed not by using models that computers spit out like traditional balanced index funds and factor based funds but instead with in depth analysis of each specific holding done by knowledgeable and experienced professionals. That is precisely what investing skill is and it doesn't come from a computer mathematical analysis of reported numbers like PE, PB, PCF. Those reported numbers are subject to accounting practice manipulation in various degrees to make the numbers look better and raise stock prices. Secondly, those numbers are always backward looking rather than anticipating their future. Thirdly, those numbers are carefully scrutinized by all fund managers, private equity, and hedge funds. All have that same reported information. How likely is it that demonstrable bargains based on these numbers in risk adjusted terms will not quickly be arbitraged away? Higher returns, less risk is precisely what they're all looking for. If it's in the numbers, it doesn't last long.
For conservative income oriented investors who are looking at balanced funds, Wellington Income or Wellesley (which holds a higher percentage of equity relative to bonds) are IMO excellent choices. They are not sexy but they are as solid and reliable as it gets for that type of investor.
Garland Whizzer
True investing skill is IMO very rare among individuals even more rare among financial firms, but Wellington Management has succeeded in outperforming in a risk adjusted manner comparable benchmarks for so long that it is unlikely to be just luck. They succeed not by using models that computers spit out like traditional balanced index funds and factor based funds but instead with in depth analysis of each specific holding done by knowledgeable and experienced professionals. That is precisely what investing skill is and it doesn't come from a computer mathematical analysis of reported numbers like PE, PB, PCF. Those reported numbers are subject to accounting practice manipulation in various degrees to make the numbers look better and raise stock prices. Secondly, those numbers are always backward looking rather than anticipating their future. Thirdly, those numbers are carefully scrutinized by all fund managers, private equity, and hedge funds. All have that same reported information. How likely is it that demonstrable bargains based on these numbers in risk adjusted terms will not quickly be arbitraged away? Higher returns, less risk is precisely what they're all looking for. If it's in the numbers, it doesn't last long.
For conservative income oriented investors who are looking at balanced funds, Wellington Income or Wellesley (which holds a higher percentage of equity relative to bonds) are IMO excellent choices. They are not sexy but they are as solid and reliable as it gets for that type of investor.
Garland Whizzer
- burritoLover
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Re: Wellesley Gives TSM/TBM a Smackdown
TSM/TBM is not a comparable benchmark. Wellesley takes on more risk on the equity and bond sides. BND has nearly the same percentage in treasuries as Wellesley has in corporates.
- Charles Joseph
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Re: Wellesley Gives TSM/TBM a Smackdown
TSM/TBM is riskier.burritoLover wrote: ↑Wed Jul 06, 2022 3:19 pm TSM/TBM is not a comparable benchmark. Wellesley takes on more risk on the equity and bond sides. BND has nearly the same percentage in treasuries as Wellesley has in corporates.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
- Charles Joseph
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Re: Wellesley Gives TSM/TBM a Smackdown
Great summary and analysis of the W's and Wellington Management. Very helpful. Thanks Garland Whizzer.garlandwhizzer wrote: ↑Wed Jul 06, 2022 3:06 pm Wellesley Income Fund has a long track record of excellent risk adjusted returns for conservative income oriented investors. It is expected to weather equity bear markets better than TSM and perhaps better than TSM/TBM. It is managed by Wellington Management which also manages Vanguard's Wellington Fund. Both have produced decades of excellent risk adjusted returns.
True investing skill is IMO very rare among individuals even more rare among financial firms, but Wellington Management has succeeded in outperforming in a risk adjusted manner comparable benchmarks for so long that it is unlikely to be just luck. They succeed not by using models that computers spit out like traditional balanced index funds and factor based funds but instead with in depth analysis of each specific holding done by knowledgeable and experienced professionals. That is precisely what investing skill is and it doesn't come from a computer mathematical analysis of reported numbers like PE, PB, PCF. Those reported numbers are subject to accounting practice manipulation in various degrees to make the numbers look better and raise stock prices. Secondly, those numbers are always backward looking rather than anticipating their future. Thirdly, those numbers are carefully scrutinized by all fund managers, private equity, and hedge funds. All have that same reported information. How likely is it that demonstrable bargains based on these numbers in risk adjusted terms will not quickly be arbitraged away? Higher returns, less risk is precisely what they're all looking for. If it's in the numbers, it doesn't last long.
For conservative income oriented investors who are looking at balanced funds, Wellington Income or Wellesley (which holds a higher percentage of equity relative to bonds) are IMO excellent choices. They are not sexy but they are as solid and reliable as it gets for that type of investor.
Garland Whizzer
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
Re: Wellesley Gives TSM/TBM a Smackdown
My entire IRA is now Wellesley and Wellington, a tad more in Wellesely. I sleep easy at night. Will never get a huge bump but won't get killed either. You pays your money and takes your choice.
Re: Wellesley Gives TSM/TBM a Smackdown
By what definition of risk (I'd ask both of you the same question). Per https://www.portfoliovisualizer.com/bac ... on3_2=61.5 Wellesley has a *very* slightly higher standard deviation over its lifetime, and a *very* slightly bigger max drawdown. But really basically a tie in terms of those risk measures. And Wellesley has had higher historic returns. Clearly Wellesley has done well in the past.Charles Joseph wrote: ↑Wed Jul 06, 2022 3:31 pmTSM/TBM is riskier.burritoLover wrote: ↑Wed Jul 06, 2022 3:19 pm TSM/TBM is not a comparable benchmark. Wellesley takes on more risk on the equity and bond sides. BND has nearly the same percentage in treasuries as Wellesley has in corporates.
The part I don't know about, as with any actively managed fund that has had a long successful run, is whether it will continue to be more successful than a comparable index fund (or here composite funds) in the future.
- Charles Joseph
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Re: Wellesley Gives TSM/TBM a Smackdown
Wellesley has had a slighter higher risk adjusted return. Usual disclaimers about past performance.Da5id wrote: ↑Wed Jul 06, 2022 4:57 pmBy what definition of risk (I'd ask both of you the same question). Per https://www.portfoliovisualizer.com/bac ... on3_2=61.5 Wellesley has a *very* slightly higher standard deviation over its lifetime, and a *very* slightly bigger max drawdown. But really basically a tie in terms of those risk measures. And Wellesley has had higher historic returns. Clearly Wellesley has done well in the past.Charles Joseph wrote: ↑Wed Jul 06, 2022 3:31 pmTSM/TBM is riskier.burritoLover wrote: ↑Wed Jul 06, 2022 3:19 pm TSM/TBM is not a comparable benchmark. Wellesley takes on more risk on the equity and bond sides. BND has nearly the same percentage in treasuries as Wellesley has in corporates.
The part I don't know about, as with any actively managed fund that has had a long successful run, is whether it will continue to be more successful than a comparable index fund (or here composite funds) in the future.
I give burritoLover the last word. Going out for some Tex Mex.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
Re: Wellesley Gives TSM/TBM a Smackdown
Higher risk adjusted return doesn't mean "not riskier". Just by some thoughts "better". You said "TSM/TBM is riskier", I guess you didn't mean that?Charles Joseph wrote: ↑Wed Jul 06, 2022 5:08 pmWellesley has had a slighter higher risk adjusted return. Usual disclaimers about past performance.Da5id wrote: ↑Wed Jul 06, 2022 4:57 pmBy what definition of risk (I'd ask both of you the same question). Per https://www.portfoliovisualizer.com/bac ... on3_2=61.5 Wellesley has a *very* slightly higher standard deviation over its lifetime, and a *very* slightly bigger max drawdown. But really basically a tie in terms of those risk measures. And Wellesley has had higher historic returns. Clearly Wellesley has done well in the past.Charles Joseph wrote: ↑Wed Jul 06, 2022 3:31 pmTSM/TBM is riskier.burritoLover wrote: ↑Wed Jul 06, 2022 3:19 pm TSM/TBM is not a comparable benchmark. Wellesley takes on more risk on the equity and bond sides. BND has nearly the same percentage in treasuries as Wellesley has in corporates.
The part I don't know about, as with any actively managed fund that has had a long successful run, is whether it will continue to be more successful than a comparable index fund (or here composite funds) in the future.
I give burritoLover the last word. Going out for some Tex Mex.
- Charles Joseph
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Re: Wellesley Gives TSM/TBM a Smackdown
TSM/TBM took on more risk to earn its returns than did Wellesley. Therefore it is perfectly reasonable to say it was riskier.Da5id wrote: ↑Wed Jul 06, 2022 5:10 pmHigher risk adjusted return doesn't mean "not riskier". Just by some thoughts "better". You said "TSM/TBM is riskier", I guess you didn't mean that?Charles Joseph wrote: ↑Wed Jul 06, 2022 5:08 pmWellesley has had a slighter higher risk adjusted return. Usual disclaimers about past performance.Da5id wrote: ↑Wed Jul 06, 2022 4:57 pmBy what definition of risk (I'd ask both of you the same question). Per https://www.portfoliovisualizer.com/bac ... on3_2=61.5 Wellesley has a *very* slightly higher standard deviation over its lifetime, and a *very* slightly bigger max drawdown. But really basically a tie in terms of those risk measures. And Wellesley has had higher historic returns. Clearly Wellesley has done well in the past.Charles Joseph wrote: ↑Wed Jul 06, 2022 3:31 pmTSM/TBM is riskier.burritoLover wrote: ↑Wed Jul 06, 2022 3:19 pm TSM/TBM is not a comparable benchmark. Wellesley takes on more risk on the equity and bond sides. BND has nearly the same percentage in treasuries as Wellesley has in corporates.
The part I don't know about, as with any actively managed fund that has had a long successful run, is whether it will continue to be more successful than a comparable index fund (or here composite funds) in the future.
I give burritoLover the last word. Going out for some Tex Mex.
Edit: it's not perfectly reasonable to say it was riskier. It's correct to say so.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
Re: Wellesley Gives TSM/TBM a Smackdown
Short term treasuries are riskier than stocks by this measure. Not how people often mean risk when comparing allocations.Charles Joseph wrote: ↑Wed Jul 06, 2022 5:17 pmTSM/TBM took on more risk to earn its returns than did Wellesley. Therefore it is perfectly reasonable to say it was riskier.Da5id wrote: ↑Wed Jul 06, 2022 5:10 pmHigher risk adjusted return doesn't mean "not riskier". Just by some thoughts "better". You said "TSM/TBM is riskier", I guess you didn't mean that?Charles Joseph wrote: ↑Wed Jul 06, 2022 5:08 pmWellesley has had a slighter higher risk adjusted return. Usual disclaimers about past performance.Da5id wrote: ↑Wed Jul 06, 2022 4:57 pmBy what definition of risk (I'd ask both of you the same question). Per https://www.portfoliovisualizer.com/bac ... on3_2=61.5 Wellesley has a *very* slightly higher standard deviation over its lifetime, and a *very* slightly bigger max drawdown. But really basically a tie in terms of those risk measures. And Wellesley has had higher historic returns. Clearly Wellesley has done well in the past.
The part I don't know about, as with any actively managed fund that has had a long successful run, is whether it will continue to be more successful than a comparable index fund (or here composite funds) in the future.
I give burritoLover the last word. Going out for some Tex Mex.
- whodidntante
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Re: Wellesley Gives TSM/TBM a Smackdown
The value factor has had positive returns lately, while the market factor has not. You do not capture the value factor if you invest in TSM funds.
- burritoLover
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Re: Wellesley Gives TSM/TBM a Smackdown
It is a common active management tactic to take on much more credit and/or duration risk than the benchmark- you have to equalize for these factors before you make claims that outperformance is due to alpha. It seems there’s some mythical qualities that are spouted by many about Wellesley - as if outperformance is some permanent feature of the fund that is not subject to manager risk in the future.
Re: Wellesley Gives TSM/TBM a Smackdown
Close?Charles Joseph wrote: ↑Tue Jul 05, 2022 6:22 pm Even in the midst of this bear market, Wellesley Income Fund continues to grind out an impressive outperformance compared to a similar TSM/TBM portfolio, going back to 1993.
Portfolio Initial Balance Final Balance CAGR Stdev Best Year Worst Year Max. Drawdown Sharpe Ratio
Portfolio 1 $100,000 $889,667 7.69% 6.31% 28.91% -10.03% -18.82% 0.86
Portfolio 2 $100,000 $704,182 6.84% 6.21% 24.87% -14.63% -18.18% 0.74
The same goes for S&P 500/TBM, going back to 1987.
Of course the thread subject is tongue in cheek, but any thoughts on the reasons for this consistent outperformance of Wellesley?
- willthrill81
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Re: Wellesley Gives TSM/TBM a Smackdown
Nope. Wellesley only has 35% stock exposure, not 50%. Change that to 35/40/25, and you'll see that Wellesley was ahead by about .45% annualized.Logan Roy wrote: ↑Wed Jul 06, 2022 6:01 pmClose?Charles Joseph wrote: ↑Tue Jul 05, 2022 6:22 pm Even in the midst of this bear market, Wellesley Income Fund continues to grind out an impressive outperformance compared to a similar TSM/TBM portfolio, going back to 1993.
Portfolio Initial Balance Final Balance CAGR Stdev Best Year Worst Year Max. Drawdown Sharpe Ratio
Portfolio 1 $100,000 $889,667 7.69% 6.31% 28.91% -10.03% -18.82% 0.86
Portfolio 2 $100,000 $704,182 6.84% 6.21% 24.87% -14.63% -18.18% 0.74
The same goes for S&P 500/TBM, going back to 1987.
Of course the thread subject is tongue in cheek, but any thoughts on the reasons for this consistent outperformance of Wellesley?
The Sensible Steward
Re: Wellesley Gives TSM/TBM a Smackdown
I'm reading that the remit is 30-50% equity, so I'd assumed they'd changed over time, and that bonds have included perpetuals and convertibles that may behave a bit more like equities. But looking at their portfolio today, I like the focus on quality value. Unlike TSM and TBM, there's really nothing speculative in it – I think that's been a good approach.willthrill81 wrote: ↑Wed Jul 06, 2022 6:04 pm Nope. Wellesley only has 35% stock exposure, not 50%. Change that to 35/40/25, and you'll see that Wellesley was ahead by about .45% annualized.
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Re: Wellesley Gives TSM/TBM a Smackdown
Morningstar shows Wellesley at 38% equities right now. I think that they've stayed really close to 35% for a long time.Logan Roy wrote: ↑Wed Jul 06, 2022 6:21 pmI'm reading that the remit is 30-50% equity, so I'd assumed they'd changed over time, and that bonds have included perpetuals and convertibles that may behave a bit more like equities. But looking at their portfolio today, I like the focus on quality value. Unlike TSM and TBM, there's really nothing speculative in it – I think that's been a good approach.willthrill81 wrote: ↑Wed Jul 06, 2022 6:04 pm Nope. Wellesley only has 35% stock exposure, not 50%. Change that to 35/40/25, and you'll see that Wellesley was ahead by about .45% annualized.
The Sensible Steward
- Charles Joseph
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Re: Wellesley Gives TSM/TBM a Smackdown
I haven't seen any "mythical qualities that are spouted by many about Wellesley" on here.burritoLover wrote: ↑Wed Jul 06, 2022 5:49 pm It seems there’s some mythical qualities that are spouted by many about Wellesley...
Could you cite them and share them in the thread?
Thanks.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
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Re: Wellesley Gives TSM/TBM a Smackdown
burritoLover wrote: ↑Wed Jul 06, 2022 5:49 pm ... It seems there’s some mythical qualities that are spouted by many about Wellesley....
Definition of mythical https://www.merriam-webster.com/dictionary/mythical
1 : based on or described in a myth especially as contrasted with history
2 usually mythical : existing only in the imagination : fictitious, imaginary
Can you please explain how reporting a fund's performance contrasts with history? Or its returns are fictitious or imaginary?
Retirement is best when you have a lot to live on, and a lot to live for. * None of what I post is investment advice.* |
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- burritoLover
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Re: Wellesley Gives TSM/TBM a Smackdown
“MythAlwaysLearningMore wrote: ↑Wed Jul 06, 2022 7:12 pmburritoLover wrote: ↑Wed Jul 06, 2022 5:49 pm ... It seems there’s some mythical qualities that are spouted by many about Wellesley....
Definition of mythical https://www.merriam-webster.com/dictionary/mythical
1 : based on or described in a myth especially as contrasted with history
2 usually mythical : existing only in the imagination : fictitious, imaginary
Can you please explain how reporting a fund's performance contrasts with history? Or its returns are fictitious or imaginary?
a widely held but false belief or idea.”
It gets the active management pass here as if it is some special alpha generating fund for all time. Maybe this thread isn’t as overt in these claims as others but it has hints of the same overtones.
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Re: Wellesley Gives TSM/TBM a Smackdown
Which threads? Which comments?burritoLover wrote: ↑Wed Jul 06, 2022 7:23 pm Maybe this thread isn’t as overt in these claims as others but it has hints of the same overtones.
Where are the "mythical qualities that are spouted by many about Wellesley" on here?
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
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Re: Wellesley Gives TSM/TBM a Smackdown
Wellesley and its 65/35 sibling Wellington are superb actively managed funds and have been for decades. The only reason I’m in Vanguard’s balanced index fund (VBIAX) instead of Wellington is b/c of management risk and to a much lesser extent, a slightly lower expense ratio. But the fact remains that Wellesley and Wellington continue to best similarly allocated index fund competitors. Pretty darn impressive.
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Re: Wellesley Gives TSM/TBM a Smackdown
viewtopic.php?t=209617Charles Joseph wrote: ↑Wed Jul 06, 2022 7:31 pmWhich threads? Which comments?burritoLover wrote: ↑Wed Jul 06, 2022 7:23 pm Maybe this thread isn’t as overt in these claims as others but it has hints of the same overtones.
Where are the "mythical qualities that are spouted by many about Wellesley" on here?
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Re: Wellesley Gives TSM/TBM a Smackdown
I see no mythical attributes applied to Wellesley on that thread. Please support your claim about "mythical qualities that are spouted by many about Wellesley."burritoLover wrote: ↑Wed Jul 06, 2022 7:47 pmviewtopic.php?t=209617Charles Joseph wrote: ↑Wed Jul 06, 2022 7:31 pmWhich threads? Which comments?burritoLover wrote: ↑Wed Jul 06, 2022 7:23 pm Maybe this thread isn’t as overt in these claims as others but it has hints of the same overtones.
Where are the "mythical qualities that are spouted by many about Wellesley" on here?
Please share the comments you are referencing.
Thanks.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
- willthrill81
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Re: Wellesley Gives TSM/TBM a Smackdown
It seems that there may be confusion about the terms 'incredible' and 'mythical'.Charles Joseph wrote: ↑Wed Jul 06, 2022 7:50 pmI see no mythical attributes applied to Wellesley on that thread. Please support your claim about "mythical qualities that are spouted by many about Wellesley."burritoLover wrote: ↑Wed Jul 06, 2022 7:47 pmviewtopic.php?t=209617Charles Joseph wrote: ↑Wed Jul 06, 2022 7:31 pmWhich threads? Which comments?burritoLover wrote: ↑Wed Jul 06, 2022 7:23 pm Maybe this thread isn’t as overt in these claims as others but it has hints of the same overtones.
Where are the "mythical qualities that are spouted by many about Wellesley" on here?
Please share the comments you are referencing.
Thanks.
The Sensible Steward
- burritoLover
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Re: Wellesley Gives TSM/TBM a Smackdown
In the current thread, I’d say calling a fund of 60-ish value stocks and a bond allocation with a boatload of corporates as less risky than total stock/bond is pretty mythical as far as funds go. Or maybe that’s just “incredible”.Charles Joseph wrote: ↑Wed Jul 06, 2022 7:50 pmI see no mythical attributes applied to Wellesley on that thread. Please support your claim about "mythical qualities that are spouted by many about Wellesley."burritoLover wrote: ↑Wed Jul 06, 2022 7:47 pmviewtopic.php?t=209617Charles Joseph wrote: ↑Wed Jul 06, 2022 7:31 pmWhich threads? Which comments?burritoLover wrote: ↑Wed Jul 06, 2022 7:23 pm Maybe this thread isn’t as overt in these claims as others but it has hints of the same overtones.
Where are the "mythical qualities that are spouted by many about Wellesley" on here?
Please share the comments you are referencing.
Thanks.
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Re: Wellesley Gives TSM/TBM a Smackdown
Someone correct me if I’m misinformed. But I’m under the impression that the managers at Wellesley have the freedom to pick individual stocks and bonds at any point in time eg. With respect to new or expected changes in interest rates. If I had studied what they did in school and learned on the job what they learned, I bet I could do about as well.
Indexed portfolio holdings have no such freedom to move in and out of individual securities. That active managers might appear to exhibit slight skill over long period of time could explain much of the performance difference. But there is no guarantee it will continue for Wellesley like it has.
But I prefer a fixed allocation of index funds that I control and select, that backrests long term performance just close enough to Wellesley for my purposes with slightly slower drawdown risk and is close in standard deviation of returns. Yet I also avoid manager risk and style drift risk.
Some arbitrary periods, Wellesley does better. Sometimes not.
Indexed portfolio holdings have no such freedom to move in and out of individual securities. That active managers might appear to exhibit slight skill over long period of time could explain much of the performance difference. But there is no guarantee it will continue for Wellesley like it has.
But I prefer a fixed allocation of index funds that I control and select, that backrests long term performance just close enough to Wellesley for my purposes with slightly slower drawdown risk and is close in standard deviation of returns. Yet I also avoid manager risk and style drift risk.
Some arbitrary periods, Wellesley does better. Sometimes not.
Last edited by Mr. Buzzkill on Wed Jul 06, 2022 8:43 pm, edited 1 time in total.
A strategy that works only in bull markets isn’t much of a strategy. Anyway, four dollars a pound.
- willthrill81
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Re: Wellesley Gives TSM/TBM a Smackdown
It's certainly seems to have been no more risky as a strategy over the last 50+ years.burritoLover wrote: ↑Wed Jul 06, 2022 8:15 pmIn the current thread, I’d say calling a fund of 60-ish value stocks and a bond allocation with a boatload of corporates as less risky than total stock/bond is pretty mythical as far as funds go. Or maybe that’s just “incredible”.Charles Joseph wrote: ↑Wed Jul 06, 2022 7:50 pmI see no mythical attributes applied to Wellesley on that thread. Please support your claim about "mythical qualities that are spouted by many about Wellesley."burritoLover wrote: ↑Wed Jul 06, 2022 7:47 pmviewtopic.php?t=209617Charles Joseph wrote: ↑Wed Jul 06, 2022 7:31 pmWhich threads? Which comments?burritoLover wrote: ↑Wed Jul 06, 2022 7:23 pm Maybe this thread isn’t as overt in these claims as others but it has hints of the same overtones.
Where are the "mythical qualities that are spouted by many about Wellesley" on here?
Please share the comments you are referencing.
Thanks.
Contrary to what many believe (not necessarily saying you), it's not necessary to own TSM in order to largely remove idiosyncratic risk.
The Sensible Steward
Re: Wellesley Gives TSM/TBM a Smackdown
Just a thought but just maybe the good people at Wellington are very good at what they do.
They have a system that has worked well for many years and they are sticking to it.
Is it really that hard to believe?
They have a system that has worked well for many years and they are sticking to it.
Is it really that hard to believe?
K.I.S.S........so easy to say so difficult to do.
- burritoLover
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Re: Wellesley Gives TSM/TBM a Smackdown
Generally the consensus is about 100 stocks covering the broad market to mitigate idiosyncratic risk. But we have 60-ish stocks concentrated in dividend payers. It isn’t ARKK but I think we can say the equity side it is riskier than TSM and 60% or whatever corporates on bond side is riskier than roughly the samewillthrill81 wrote: ↑Wed Jul 06, 2022 8:25 pmIt's certainly seems to have been no more risky as a strategy over the last 50+ years.burritoLover wrote: ↑Wed Jul 06, 2022 8:15 pmIn the current thread, I’d say calling a fund of 60-ish value stocks and a bond allocation with a boatload of corporates as less risky than total stock/bond is pretty mythical as far as funds go. Or maybe that’s just “incredible”.Charles Joseph wrote: ↑Wed Jul 06, 2022 7:50 pmI see no mythical attributes applied to Wellesley on that thread. Please support your claim about "mythical qualities that are spouted by many about Wellesley."burritoLover wrote: ↑Wed Jul 06, 2022 7:47 pmviewtopic.php?t=209617Charles Joseph wrote: ↑Wed Jul 06, 2022 7:31 pm
Which threads? Which comments?
Where are the "mythical qualities that are spouted by many about Wellesley" on here?
Please share the comments you are referencing.
Thanks.
Contrary to what many believe (not necessarily saying you), it's not necessary to own TSM in order to largely remove idiosyncratic risk.
% in treasuries in BND.
- Charles Joseph
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Re: Wellesley Gives TSM/TBM a Smackdown
Okay, so we'll just accept that you can't support your claim about "mythical qualities that are spouted by many about Wellesley" and be done with it.burritoLover wrote: ↑Wed Jul 06, 2022 8:15 pmIn the current thread, I’d say calling a fund of 60-ish value stocks and a bond allocation with a boatload of corporates as less risky than total stock/bond is pretty mythical as far as funds go. Or maybe that’s just “incredible”.Charles Joseph wrote: ↑Wed Jul 06, 2022 7:50 pmI see no mythical attributes applied to Wellesley on that thread. Please support your claim about "mythical qualities that are spouted by many about Wellesley."burritoLover wrote: ↑Wed Jul 06, 2022 7:47 pmviewtopic.php?t=209617Charles Joseph wrote: ↑Wed Jul 06, 2022 7:31 pmWhich threads? Which comments?burritoLover wrote: ↑Wed Jul 06, 2022 7:23 pm Maybe this thread isn’t as overt in these claims as others but it has hints of the same overtones.
Where are the "mythical qualities that are spouted by many about Wellesley" on here?
Please share the comments you are referencing.
Thanks.
Thanks.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
- willthrill81
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Re: Wellesley Gives TSM/TBM a Smackdown
Then why hasn't that risk manifested itself in 50+ years?burritoLover wrote: ↑Wed Jul 06, 2022 8:37 pmGenerally the consensus is about 100 stocks covering the broad market to mitigate idiosyncratic risk. But we have 60-ish stocks concentrated in dividend payers. It isn’t ARKK but I think we can say the equity side it is riskier than TSM and 60% or whatever corporates on bond side is riskier than roughly the samewillthrill81 wrote: ↑Wed Jul 06, 2022 8:25 pmIt's certainly seems to have been no more risky as a strategy over the last 50+ years.burritoLover wrote: ↑Wed Jul 06, 2022 8:15 pmIn the current thread, I’d say calling a fund of 60-ish value stocks and a bond allocation with a boatload of corporates as less risky than total stock/bond is pretty mythical as far as funds go. Or maybe that’s just “incredible”.Charles Joseph wrote: ↑Wed Jul 06, 2022 7:50 pmI see no mythical attributes applied to Wellesley on that thread. Please support your claim about "mythical qualities that are spouted by many about Wellesley."
Please share the comments you are referencing.
Thanks.
Contrary to what many believe (not necessarily saying you), it's not necessary to own TSM in order to largely remove idiosyncratic risk.
% in treasuries in BND.
The Sensible Steward
Re: Wellesley Gives TSM/TBM a Smackdown
Sometimes you have to accept that maybe Wellington knows something you don’t and there is more than one way to be successful with all due respect.burritoLover wrote: ↑Wed Jul 06, 2022 8:37 pmGenerally the consensus is about 100 stocks covering the broad market to mitigate idiosyncratic risk. But we have 60-ish stocks concentrated in dividend payers. It isn’t ARKK but I think we can say the equity side it is riskier than TSM and 60% or whatever corporates on bond side is riskier than roughly the samewillthrill81 wrote: ↑Wed Jul 06, 2022 8:25 pmIt's certainly seems to have been no more risky as a strategy over the last 50+ years.burritoLover wrote: ↑Wed Jul 06, 2022 8:15 pmIn the current thread, I’d say calling a fund of 60-ish value stocks and a bond allocation with a boatload of corporates as less risky than total stock/bond is pretty mythical as far as funds go. Or maybe that’s just “incredible”.Charles Joseph wrote: ↑Wed Jul 06, 2022 7:50 pmI see no mythical attributes applied to Wellesley on that thread. Please support your claim about "mythical qualities that are spouted by many about Wellesley."
Please share the comments you are referencing.
Thanks.
Contrary to what many believe (not necessarily saying you), it's not necessary to own TSM in order to largely remove idiosyncratic risk.
% in treasuries in BND.
K.I.S.S........so easy to say so difficult to do.
Re: Wellesley Gives TSM/TBM a Smackdown
In its long history (which includes many difficult times) Wellesley hasn't been particularly risky in terms of standard deviation and max drawdown compared to a comparable TSM+BND holding (I posted a link above). Your definition of risk seems rather ad hoc and based on your opinion. Maybe you are right about its future risk, but I don't think you can say it with such confidence.burritoLover wrote: ↑Wed Jul 06, 2022 8:37 pmGenerally the consensus is about 100 stocks covering the broad market to mitigate idiosyncratic risk. But we have 60-ish stocks concentrated in dividend payers. It isn’t ARKK but I think we can say the equity side it is riskier than TSM and 60% or whatever corporates on bond side is riskier than roughly the samewillthrill81 wrote: ↑Wed Jul 06, 2022 8:25 pmIt's certainly seems to have been no more risky as a strategy over the last 50+ years.burritoLover wrote: ↑Wed Jul 06, 2022 8:15 pmIn the current thread, I’d say calling a fund of 60-ish value stocks and a bond allocation with a boatload of corporates as less risky than total stock/bond is pretty mythical as far as funds go. Or maybe that’s just “incredible”.Charles Joseph wrote: ↑Wed Jul 06, 2022 7:50 pmI see no mythical attributes applied to Wellesley on that thread. Please support your claim about "mythical qualities that are spouted by many about Wellesley."
Please share the comments you are referencing.
Thanks.
Contrary to what many believe (not necessarily saying you), it's not necessary to own TSM in order to largely remove idiosyncratic risk.
% in treasuries in BND.
- jeffyscott
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Re: Wellesley Gives TSM/TBM a Smackdown
According to the prospectus:Logan Roy wrote: ↑Wed Jul 06, 2022 6:21 pmI'm reading that the remit is 30-50% equity, so I'd assumed they'd changed over time, and that bonds have included perpetuals and convertibles that may behave a bit more like equities. But looking at their portfolio today, I like the focus on quality value. Unlike TSM and TBM, there's really nothing speculative in it – I think that's been a good approach.willthrill81 wrote: ↑Wed Jul 06, 2022 6:04 pm Nope. Wellesley only has 35% stock exposure, not 50%. Change that to 35/40/25, and you'll see that Wellesley was ahead by about .45% annualized.
Principal Investment Strategies
The Fund invests approximately 60% to 65% of its assets in investment-grade fixed income securities...
The remaining 35% to 40% of Fund assets are invested in common stocks...
So I'd treat it as 37.5% equity. But the fund has always used 65% bonds and 35% stocks as it's benchmark, according to Vanguard's performance comparison footnotes.
Re: Wellesley Gives TSM/TBM a Smackdown
Burrito:
Because broad market Indexes are capitalization weighted, their performance is determined by far fewer than 100 stocks. For example, in 2021, the 5 faang stocks represented 23% of the Standard & Poor’s 500 capitalization.Generally the consensus is about 100 stocks covering the broad market to mitigate idiosyncratic risk. But we have 60-ish stocks concentrated in dividend payers.
Re: Wellesley Gives TSM/TBM a Smackdown
But the discussion was on risk. What are you now arguing about performance?dual wrote: ↑Wed Jul 06, 2022 10:57 pm Burrito:Because broad market Indexes are capitalization weighted, their performance is determined by far fewer than 100 stocks. For example, in 2021, the 5 faang stocks represented 23% of the Standard & Poor’s 500 capitalization.Generally the consensus is about 100 stocks covering the broad market to mitigate idiosyncratic risk. But we have 60-ish stocks concentrated in dividend payers.
Re: Wellesley Gives TSM/TBM a Smackdown
How do you define risk? If you define it by standard deviation for example, that is the standard deviation of performance by my definition of performance.Da5id wrote: ↑Wed Jul 06, 2022 11:22 pmBut the discussion was on risk. What are you now arguing about performance?dual wrote: ↑Wed Jul 06, 2022 10:57 pm Burrito:Because broad market Indexes are capitalization weighted, their performance is determined by far fewer than 100 stocks. For example, in 2021, the 5 faang stocks represented 23% of the Standard & Poor’s 500 capitalization.Generally the consensus is about 100 stocks covering the broad market to mitigate idiosyncratic risk. But we have 60-ish stocks concentrated in dividend payers.
Re: Wellesley Gives TSM/TBM a Smackdown
I posted a link PV link up thread that showed that Wellesley has comparable risk to a similar holding of VTI and BND. Where risk is standard deviation as well as max drawdown. I took to you to be instead discussing performance (% return, or CAGR).dual wrote: ↑Wed Jul 06, 2022 11:25 pmHow do you define risk? If you define it by standard deviation for example, that is the standard deviation of performance by my definition of performance.Da5id wrote: ↑Wed Jul 06, 2022 11:22 pmBut the discussion was on risk. What are you now arguing about performance?dual wrote: ↑Wed Jul 06, 2022 10:57 pm Burrito:Because broad market Indexes are capitalization weighted, their performance is determined by far fewer than 100 stocks. For example, in 2021, the 5 faang stocks represented 23% of the Standard & Poor’s 500 capitalization.Generally the consensus is about 100 stocks covering the broad market to mitigate idiosyncratic risk. But we have 60-ish stocks concentrated in dividend payers.