Advertisement
Kip 25

The Stodgy Vanguard Wellington Fund Still Delights Investors

Wellington, a balanced fund, is almost 100 years old.

The world has changed considerably since Vanguard Wellington (VWELX) opened to investors in July 1929, months before the stock market crashed. But the fund’s objective, to provide growth and income with a mix of 65% stocks and 35% bonds, has remained constant. It's a member of the Kiplinger 25, the list of favorite low-fee funds.

Assessing the performance of a balanced fund is tricky. You can’t directly compare Wellington’s returns with those of Standard & Poor’s 500-stock index, and a professionally managed index consisting of 65% U.S. stocks and 35% U.S. bonds doesn’t exist. The best measure, then, is to pit Wellington against its peer group, the lyrically named (by Morningstar) “allocation—50% to 70% equity” category. Over the past year, Wellington outpaced its average rival by 1.7 percentage points.

Advertisement - Article continues below

Edward Bousa picks Wellington’s stocks. Big gains in Wellington’s financial holdings, particularly in the early stretch of the period, boosted results, as did shares of some industrial, consumer, energy and materials companies. At last report, the fund had 25% of its assets in financial stocks, well above their 14% weight in the S&P 500.

Wellington’s bond holdings, chosen by John Keogh, Loren Moran and Michael Stack, consist mostly of high-quality corporate and government debt. Rising interest rates over the past 12 months (the benchmark 10-year Treasury bond, which yielded as little as 1.5% in September 2016, paid 2.1% on August 31) posed a “huge headwind” for Wellington’s fixed-income holdings, says Moran. She and her colleagues buy mostly government-backed bonds and corporate debt rated single-A or better. But Wellington got a boost over the past year from a healthy dose of corporates rated triple-B (the lowest investment-grade rating), which benefited from an improving economy. The fund recently had 18% of its bond holdings in triple-Bs.

Advertisement
Advertisement - Article continues below

Discovery discovery. Several readers have told us that when they tried to invest in T. Rowe Price International Discovery through their Schwab accounts, they were told that the fund was closed. In fact, the fund is open to new individual investors but closed to advisers who want to buy the fund for the first time. Individual investors who want to make an initial investment in Discovery through Schwab must call 800-435-4000 to buy shares.

Advertisement

Most Popular

HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
2020 Stock Market Holidays and Bond Market Holidays
Markets

2020 Stock Market Holidays and Bond Market Holidays

Is the market open today? Take a look at which holidays the stock markets and bond markets take off in 2020.
July 1, 2020
Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020

Recommended

10 Stocks to Invest in the Health Care Revolution
healthcare stocks

10 Stocks to Invest in the Health Care Revolution

These companies are fighting disease and improving our standard of care.
July 2, 2020
Cash In With This Gaming ETF
Technology

Cash In With This Gaming ETF

Cash in on the video gaming craze with this fund.
July 1, 2020
13 Best Vanguard Funds for the Next Bull Market
mutual funds

13 Best Vanguard Funds for the Next Bull Market

Optimistic that the bounce since March is indeed the start of the next bull market? Here are the 13 best Vanguard funds to help you make the most of i…
June 25, 2020
A Mid-Cap Fund With Big Gains
mutual funds

A Mid-Cap Fund With Big Gains

The fund’s best performers over the past year were software firms.
June 24, 2020