VWENX underperforming

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
ODB
Posts: 8
Joined: Wed Apr 27, 2022 6:55 pm

VWENX underperforming

Post by ODB »

Hello Bogleheads,
My only investment that I have left since I retired last year Is Wellington admiral
Everything else I moved into fixed income fidelity federal money markets from old employer 401a & 403b accounts couple months ago. I was thinking of getting out of Vwenx end of this month. All traditional accounts . I will not need Vwenx for awhile but not comfortable being in market anymore,I am 64yr collecting social security combined with Roth IRA $400 withdrawals ,all advice will be helpful and appreciated
Thank you
ODB
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: VWENX underperforming

Post by dbr »

Depending on your withdrawal rate from your portfolio as a whole, it can be that a portfolio with no stocks cannot sustain as large a withdrawal for as long a time as a portfolio that contains some stocks.

An example of this is that portfolio of 40% stocks has over the past had a 97% chance of taking withdrawals for 30 years at 4% of original portfolio value increased by inflation every year. In that same data a portfolio of 0% stocks has had a 52% rate of running out of money before 30 years, in some cases before 20 years. In that context, with those numbers, retiring and being retired with no investment in stocks would be suicidal. At other rates of spending and lengths of time the results vary accordingly. At less spending no stocks might be fine, for example.

A secondary note is that VWENX is not underperforming. Investment returns are variable by nature meaning in some period of time they will be greater and in other periods of time they will be worse. Underperforming means something has lower returns than it should given what the investment is supposed to be. Underperforming could result from too high management costs or management errors in an active fund. An index fund with low costs pretty much can't underperform by definition unless something strange has happened. I don't think VWENX, even being an active fund, is failing to do what it should given the returns in the relevant markets.
rkhusky
Posts: 17764
Joined: Thu Aug 18, 2011 8:09 pm

Re: VWENX underperforming

Post by rkhusky »

Wellington is about 60/40 stocks/bonds. Both stocks and bonds did poorly last year. If you compare Wellington to other 60/40 funds, you might find that it actually over performed, like it has for many years.
User avatar
arcticpineapplecorp.
Posts: 15081
Joined: Tue Mar 06, 2012 8:22 pm

Re: VWENX underperforming

Post by arcticpineapplecorp. »

ODB wrote: Tue Jun 06, 2023 11:46 am Hello Bogleheads,
My only investment that I have left since I retired last year Is Wellington admiral
Everything else I moved into fixed income fidelity federal money markets from old employer 401a & 403b accounts couple months ago. I was thinking of getting out of Vwenx end of this month. All traditional accounts . I will not need Vwenx for awhile but not comfortable being in market anymore, I am 64yr collecting social security combined with Roth IRA $400 withdrawals ,all advice will be helpful and appreciated
Thank you
ODB
If you're not comfortable being in the market anymore, you probably shouldn't be in the market anymore.

The amount of risk one should take is based on one's need, ability and willingness to take risk. It sounds like you're not willing to take the risk even though you have the ability to (you don't "need" money from vwenx so you may not have the need, you may have the ability, but not the willingness to deal with the risk).

Even if you get out of the market because you're not comfortable, you might create a new problem for yourself, that being a portfolio that doesn't keep pace with inflation because it's not "in the market anymore". Life's about tradeoffs. You might accomplish one goal with a decision but create a different problem as a result.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
tibbitts
Posts: 23726
Joined: Tue Feb 27, 2007 5:50 pm

Re: VWENX underperforming

Post by tibbitts »

ODB wrote: Tue Jun 06, 2023 11:46 am ...all advice will be helpful and appreciated
You should say why you feel it's been underperforming. A quick glance seems to indicate it hasn't, at least not recently. I no longer hold the fund and haven't for a while, but based on what I'm seeing, I wouldn't be unhappy with the performance (except to the extent I am with the performance of the economy in general, that is.)
User avatar
Artsdoctor
Posts: 6063
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: VWENX underperforming

Post by Artsdoctor »

ODB wrote: Tue Jun 06, 2023 11:46 am Hello Bogleheads,
My only investment that I have left since I retired last year Is Wellington admiral
Everything else I moved into fixed income fidelity federal money markets from old employer 401a & 403b accounts couple months ago. I was thinking of getting out of Vwenx end of this month. All traditional accounts . I will not need Vwenx for awhile but not comfortable being in market anymore,I am 64yr collecting social security combined with Roth IRA $400 withdrawals ,all advice will be helpful and appreciated
Thank you
ODB
Last year was a good year to assess your risk tolerance so it's possible that VWENX was not an appropriate fund for you. It has 65% equities so you'll need to make sure that you're comparing it to a valid benchmark. When you say it underperformed, the question should be "compared to what?"

The bigger question is what you mention regarding "everything else" moved to money market funds. This is the definition of market timing and highlights a much larger problem than just assessing Wellington. If you're 64, you're still looking at quite a long time for your portfolio to perform. You can't put your entire retirement portfolio in money market funds so it's a good opportunity to take a step back and ask yourself how you're going to meet your investment goals throughout your retirement.
User avatar
Beensabu
Posts: 5657
Joined: Sun Aug 14, 2016 3:22 pm

Re: VWENX underperforming

Post by Beensabu »

As of one year ago:
ODB wrote: Mon Jun 13, 2022 12:23 pm 401a has jpmorgan target retirement 2025 $140k
403b fidelity puritan $160k
Ira vanguard Wellington $190k
Roth IRA $30k cash
Each account is down at least 15%
My wife working she is 56yrs so we don’t need to withdraw from anything now but I am concerned
I get $1500 from social security $375 month from Roth IRA
Everything besides the $190k in the IRA is now currently cash.

So your port is ~$515k right now, and your AA is about 24% stocks / 13% bonds / 63% cash.

That's already really, really, really conservative. That's about the lowest stock allocation you can get away with if you don't have enough cash to pay for your entire retirement. I would just leave it alone. You have more than enough cash to wait out any market volatility for years on end.

Your Roth IRA has been spent down to ~$25k, and you're spending it down by ~$5k/year while your wife is still working.

How much do you guys spend a month? And what will your wife get from social security at both early retirement age and full retirement age?
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Topic Author
ODB
Posts: 8
Joined: Wed Apr 27, 2022 6:55 pm

Re: VWENX underperforming

Post by ODB »

Thank you all for great comments, I appreciate your advice & time.
Last year I retired @ 62 start collecting SS 63yrs , I left my investments alone from advice of Fidelity work retirement specialist , $140k in 401a Vanguard 2025 VTTVX ,$160k in 403b Fidelity FPURX & personal traditional IRA vanguard Wellington $190k , I retired in January 2022 & saw my investments take hit of 20%+ & not contributing to anything was too much for me to take so I liquidated in April this year after little comeback into fidelity’s money markets except for VWENX. They are paying almost 5% now so I can sleep at night. Still not 100% sure if I’m going to get out of Wellington [Off-topic comment removed - moderator ClaycordJCA].
Thank you
ODB
friar1610
Posts: 2331
Joined: Sat Nov 29, 2008 8:52 pm
Location: MA South Shore

Re: VWENX underperforming

Post by friar1610 »

I don’t really know how to insert graphs so you may have to type in the fund symbols to see this.

But I compared 3 60/40 funds from 2020 to the present on Portfolio Vizualizer: VWENX, VBIAX (Balanced Index) and VSMGX (Life Strategy Moderate Growth). Their results are very similar, so I don’t think it’s fair to say VWENX underperformed the market. It may have underperformed your expectations, but not the market.

https://www.portfoliovisualizer.com/bac ... sisResults
Friar1610 | 50-ish/50-ish - a satisficer, not a maximizer
Northern Flicker
Posts: 15363
Joined: Fri Apr 10, 2015 12:29 am

Re: VWENX underperforming

Post by Northern Flicker »

To create a link to a filled-in backtest on PV, hit the link labeled "Link" in the results header after generating the result.

https://www.portfoliovisualizer.com/bac ... ion2_2=100
friar1610
Posts: 2331
Joined: Sat Nov 29, 2008 8:52 pm
Location: MA South Shore

Re: VWENX underperforming

Post by friar1610 »

Thanks, Northern Flicker.
Friar1610 | 50-ish/50-ish - a satisficer, not a maximizer
User avatar
Kenkat
Posts: 9549
Joined: Thu Mar 01, 2007 10:18 am
Location: Cincinnati, OH

Re: VWENX underperforming

Post by Kenkat »

I’m going to be a jerk here and ask a question. If the market and your investments hadn’t gone down last year, would we be having this conversation? I fear you are making an emotional decision based on the fact that the market dropped. But that happens. My investments went down too. But you should be looking at the long run, not what happened last year. One bad year should not cause a radical shift in your strategy. I know people will give reasons why they are changing strategy now, after a bad year, but for the most part, I’m not buying it. One of the most important things John Bogle ever taught was “Stay the Course”.
GaryA505
Posts: 2907
Joined: Wed Feb 08, 2017 1:59 pm
Location: New Mexico

Re: VWENX underperforming

Post by GaryA505 »

ODB, based on your original post and your follow-ups, I suggest using the services of a low-cost or hourly advisor. Sometimes DIY investors can be their own worst enemy, basing their decisions on predictions and emotions. If you don't feel comfortable being in the market anymore, I have to ask how comfortable would you be if you ran out of money because you invested too conservatively? You may live to be 95, and 30 years is a long time.

You might start with Mark Zoril at PlanVision https://planvisionmn.com/
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
GaryA505
Posts: 2907
Joined: Wed Feb 08, 2017 1:59 pm
Location: New Mexico

Re: VWENX underperforming

Post by GaryA505 »

Kenkat wrote: Tue Jun 06, 2023 6:14 pm I’m going to be a jerk here and ask a question. If the market and your investments hadn’t gone down last year, would we be having this conversation? I fear you are making an emotional decision based on the fact that the market dropped. But that happens. My investments went down too. But you should be looking at the long run, not what happened last year. One bad year should not cause a radical shift in your strategy. I know people will give reasons why they are changing strategy now, after a bad year, but for the most part, I’m not buying it. One of the most important things John Bogle ever taught was “Stay the Course”.
Dang, you beat me to it. Basing decisions on emotions is not a good investment strategy.
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
Topic Author
ODB
Posts: 8
Joined: Wed Apr 27, 2022 6:55 pm

Re: VWENX underperforming

Post by ODB »

Thank everyone for your advice & I appreciate all responses , unfortunately I cannot stay in the market when everything going on tells me Get Out Now
Thanks ODB
User avatar
Cheez-It Guy
Posts: 4007
Joined: Sun Mar 03, 2019 3:20 pm

Re: VWENX underperforming

Post by Cheez-It Guy »

What is "everything going on"?
Northern Flicker
Posts: 15363
Joined: Fri Apr 10, 2015 12:29 am

Re: VWENX underperforming

Post by Northern Flicker »

ODB wrote: Tue Jun 06, 2023 9:39 pm Thank everyone for your advice & I appreciate all responses , unfortunately I cannot stay in the market when everything going on tells me Get Out Now
Thanks ODB
If you are uncomfortable with the risk of stocks, you should not be in them. But that also means giving up superior returns when they materialize.

The uncertainties around stock returns are why stocks have superior expected returns. There always is stuff going on that could cause stocks to sink if things play out unfavorably. When some of them subside can at times be when stocks have the most robust returns, but by the time you know, it is too late to jump in to harvest those gains. To make money in stocks, you have to be in them.

If the performance was near certain, the market would bid up the prices to reflect the lower risk.
User avatar
Miriam2
Posts: 4387
Joined: Fri Nov 14, 2014 10:51 am

Re: VWENX underperforming

Post by Miriam2 »

ODB wrote: Tue Jun 06, 2023 9:39 pm Thank everyone for your advice & I appreciate all responses , unfortunately I cannot stay in the market when everything going on tells me Get Out Now
Thanks ODB
If you stay invested and slowly buy more shares of stock funds, or even just buy more shares by reinvesting the dividends and capital gains, you are buying those shares at a much lower price - on sale! - and when the stock market goes up, your shares will be worth even more because you bought them on sale. One good reason to have at least a tolerable percent of your portfolio in stocks.
User avatar
Wiggums
Posts: 7051
Joined: Thu Jan 31, 2019 7:02 am

Re: VWENX underperforming

Post by Wiggums »

ODB wrote: Tue Jun 06, 2023 9:39 pm Thank everyone for your advice & I appreciate all responses , unfortunately I cannot stay in the market when everything going on tells me Get Out Now
Thanks ODB
You probably shouldn’t be in the market. Try to lock in the 5.x% interest rates with a longer duration than your federal money market fund.

We are close to your age, but we have taken a different approach. We don’t check our balance often, and we don’t follow the daily stock market news. The market goes up and down. Especially when you are recovering from a pandemic, supply chain issues, and the Fed making big interest rate changes. We definitely know what happened to cause the market movements.

Normally I would suggest 30% stock (Wellesley, for example), but I get the sense that you just want to sit in cash for now.
"I started with nothing and I still have most of it left."
Exchme
Posts: 1335
Joined: Sun Sep 06, 2020 3:00 pm

Re: VWENX underperforming

Post by Exchme »

OP:
Have you done the basic things to see if your portfolio can sustain you in retirement? If you are not going to be in the stock market, then you need to count on zero gains vs. inflation or even worse (for 40 years from the 1940s to the 1980s bonds lost significantly to inflation, high inflation environments are bad, bad, bad for bondholders).

We don't have enough data, but you are already drawing $4k from your $450K (or so) portfolio while your wife is working and you are drawing $18K in SS benefits. That is a red flag to me that you are spending more than you can afford, especially if you are not in the stock market to get some positive returns. It's a simple exercise to plug in your spending vs. the sum of your SS benefits and calculate a portfolio draw. Check how many years that could sustain you with zero growth or worse. Then ask yourself how it works once one of you passes and their SS benefit disappears. I think you will find that by de-risking your market returns, you are increasing your chances of running out of money.

I encourage you to hire a one-time-fee advisor to go over your plan.
User avatar
goingup
Posts: 4910
Joined: Tue Jan 26, 2010 12:02 pm

Re: VWENX underperforming

Post by goingup »

The OP has to reach a comfort level with his portfolio. Not many on this forum go to 100% cash/bonds, but there are a few. :oops:

It is something of a phenomenon, though, that recent retirees start to obsess over their portfolio in a way they never did while working. I've seen it many times on this forum and no amount of jawboning by BH veterans can prevent the subsequent dash to safety.
tibbitts
Posts: 23726
Joined: Tue Feb 27, 2007 5:50 pm

Re: VWENX underperforming

Post by tibbitts »

goingup wrote: Wed Jun 07, 2023 9:00 am The OP has to reach a comfort level with his portfolio. Not many on this forum go to 100% cash/bonds, but there are a few. :oops:

It is something of a phenomenon, though, that recent retirees start to obsess over their portfolio in a way they never did while working. I've seen it many times on this forum and no amount of jawboning by BH veterans can prevent the subsequent dash to safety.
I think it's the same with any loss of income, and I don't think "BH veterans" are exempt, except to the extent that they may have already achieved some level of financial independence. It's just a different experience when you see the market going down but you feel secure because you're earning the same income from your employment, maybe even with regular increases for inflation. But if you lose your job and can't find anything even roughly comparable, you aren't going to have the same attitude about market losses.
dobieg
Posts: 68
Joined: Sat Apr 16, 2022 12:28 pm

Re: VWENX underperforming

Post by dobieg »

Wiggums wrote: Wed Jun 07, 2023 1:29 am
You probably shouldn’t be in the market. Try to lock in the 5.x% interest rates with a longer duration than your federal money market fund.

We are close to your age, but we have taken a different approach. We don’t check our balance often, and we don’t follow the daily stock market news. The market goes up and down. Especially when you are recovering from a pandemic, supply chain issues, and the Fed making big interest rate changes. We definitely know what happened to cause the market movements.

Normally I would suggest 30% stock (Wellesley, for example), but I get the sense that you just want to sit in cash for now.

You can get a 20 year JPM bond with a 5.625% coupon right around par. If you're patient it seems to take a dip below par every week or so. Non callable. Cusip 46625HJM3.
dobieg
Posts: 68
Joined: Sat Apr 16, 2022 12:28 pm

Re: VWENX underperforming

Post by dobieg »

Wiggums wrote: Wed Jun 07, 2023 1:29 am
You probably shouldn’t be in the market. Try to lock in the 5.x% interest rates with a longer duration than your federal money market fund.

We are close to your age, but we have taken a different approach. We don’t check our balance often, and we don’t follow the daily stock market news. The market goes up and down. Especially when you are recovering from a pandemic, supply chain issues, and the Fed making big interest rate changes. We definitely know what happened to cause the market movements.

Normally I would suggest 30% stock (Wellesley, for example), but I get the sense that you just want to sit in cash for now.

You can get a 20 year JPM bond with a 5.625% coupon right around par. If you're patient it seems to take a dip below par every week or so. Non callable. Cusip 46625HJM3.
smectym
Posts: 1530
Joined: Thu May 26, 2011 5:07 pm

Re: VWENX underperforming

Post by smectym »

Beensabu wrote: Tue Jun 06, 2023 4:44 pm As of one year ago:
ODB wrote: Mon Jun 13, 2022 12:23 pm 401a has jpmorgan target retirement 2025 $140k
403b fidelity puritan $160k
Ira vanguard Wellington $190k
Roth IRA $30k cash
Each account is down at least 15%
My wife working she is 56yrs so we don’t need to withdraw from anything now but I am concerned
I get $1500 from social security $375 month from Roth IRA
Everything besides the $190k in the IRA is now currently cash.

So your port is ~$515k right now, and your AA is about 24% stocks / 13% bonds / 63% cash.

That's already really, really, really conservative. That's about the lowest stock allocation you can get away with if you don't have enough cash to pay for your entire retirement. I would just leave it alone. You have more than enough cash to wait out any market volatility for years on end.

Your Roth IRA has been spent down to ~$25k, and you're spending it down by ~$5k/year while your wife is still working.

How much do you guys spend a month? And what will your wife get from social security at both early retirement age and full retirement age?
+1 to beensabu, and also, perhaps expect stalwarts such as Wellington and Wellesley to start to show better performance as their bond portfolios roll over to higher rates.

Investing is the long game. You can’t be spooked by short-term squiggles.
Topic Author
ODB
Posts: 8
Joined: Wed Apr 27, 2022 6:55 pm

Re: VWENX underperforming

Post by ODB »

Thank you all. No mortgage
We pay $500 hoa no car payments & kids have moved on
Covers water & trash & insurance
Wife has 5yrs more working until 62
We plan on moving from so cal after
Thanks for help
ODB
Post Reply