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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Vanguard Global Wellington

This week our MFO poster, Lewis Brahram wrote about a relatively new Vanguard Global Wellington fund, VGWLX with the two new managers, Nataliya Kofman and Loren Moran. The investment process, top 10 holdings and the 3-year performance versus world allocation category were discussed.

Please note Vanguard Wellington is still open to new investors at Vanguard. It may not be available in other brokerages such as Fidelity and Schwab.

https://barrons.com/articles/vanguard-global-wellington-stock-bond-fund-51626277810

For disclosure, we invested with this fund several years ago and continue to build to the target allocation.

Comments

  • $75 TF at Fidelity.
  • Each brokerages have different fee structures. The Transaction fee funds on Fidelity's FundsNetworks costs $49.95 to buy, but none for selling.
    https://fidelity.com/mutual-funds/all-mutual-funds/fees

    If you already using Vanguard brokerage, there is no fee to buy or sell. The other approach is buy large block of the fund at Fidelity and use their automatic investment to add in the future, $5 per transaction.
  • I don't mind acknowledging that while I had initial concerns (see my 2017 post here), the fund has performed as well as one might have hoped for a Vanguard/Wellington fund, which is to say admirably.

    Given that many of its stocks are culled from "the usual suspects", I'd be careful about using this with another large cap fund. ITSM that it would better be paired with funds that invest in less well known companies - mid or small cap, or EM companies (100% of its foreign holdings are in developed markets).

    I'm not disregarding Lewis' observation that some of the fund's holdings benefit from EM business. Rather I'm suggesting how to look for funds that don't overlap too much with this one.
  • I remember we had that discussion several years ago. Since this fund focuses on large cap value stocks, I pair this fund with Vanguard International Growth (a large cap growth) and Grandeur Peaks Int’l Stalwart (small int’l growth). Few overlaps between these funds and they perform quite differently in the last 3 years.
  • beebee
    edited July 19
    @Sven
    VWIGX
    GISOX

    Maybe PRIDX as a Small Cap International choice as well.

    I try to take a long term view when I venture internationally / globally due to volatility concerns. Volatility management led me to VMVFX (a Min Vol Fund). Charting funds against VMVFX offers one way of determining whether volatility is trending up or down against say a low vol fund such as VMVFX (a global fund).

    Here's GISOX compared to VMVFX...more "positive volatility" exhibited by GISOX since inception.
    image
  • edited July 19
    @bee, thank you. Should included the ticker symbols in my discussion.

    Thanks for remindering VMVFX. I left the fund when the original manager left and the portfolio underwent considerable changes that did not make sense. Moved the asset to a growth oriented international small cap several years ago. More volatile for sure, but the fund has a shorter recovery period and about the same % drawdown as VMVFX in 2020. GISOX has a hard close when the fund is held outside of Grandeur Peaks.

    PRIDX is closed to new investors. There are not many good international small cap funds.
  • edited July 19
    Sweet article.

    Thank you Lewis and Sven for sharing.

    Glad to see the fund coming into its own.

    Here's comparison of a D&C "equivalent" portfolio (60 / 40 DODWX / DODLX) with VGWAX, since the latter's launch. Better overall return and indeed less volatility.

    image

  • Would it be an equal comparison to RPGAX?
  • Good one Bobpa. So far, numbers quite comparable ...

    image
  • Thanks Charles. Great comparison.

    RPGAX invests 10% in hedge fund while VGWAX has none. This is also reflected in the lower ER with VGWAX, 0.34% (Admiral shares) vs. 0.95%.

    The equity portion of RPGAX invested in both value and growth stocks or "blend" style. VGWAX is traditionally a value fund.
  • I really like TRP, but still not sure how I feel about that 10% or so RPGAX puts into that Blackstone fund....
  • edited July 20
    I like RPGAX too. I believe the Blackstone investment serves as a hedge against black swan events as in March 2020. Other than cash all asset classes fell in that time period. A few rebounded quickly and the others followed after the Fed intervened. So I question the value of the 10% Blackstone investment versus having the equivalent amount in cash. Also how much Blackstone contributes to the total return over say a 10 year period.

    This fund is more growth oriented than Vanguard. If rotation from growth to value style holds, VGWAX will stay competitive. For now I have too many overlapp with the top 10 holdings of TRP. Thus I will stay with VGWAX.
  • Sven said:

    I like RPGAX too. I believe the Blackstone investment serves as a hedge against black swan events as in March 2020. Other than cash all asset classes fell in that time period. A few rebounded quickly and the others followed after the Fed intervened. So I question the value of the 10% Blackstone investment versus having the equivalent amount in cash. Also how much Blackstone contributes to the total return over say a 10 year period.

    This fund is more growth oriented than Vanguard. If rotation from growth to value style holds, VGWAX will stay competitive. For now I have too many overlapp with the top 10 holdings of TRP. Thus I will stay with VGWAX.

    Does TRP say *what* that 10% hedge fund black box is? Hedge? Risk premia? Long/Short? etc....
  • It was mentioned in one of their annual report, but there was not enough detail. Like to stick close to the original source for accuracy.

    Any of these strategies are not cheap. So it must derive some form of value to the fund.
  • T. Rowe Price uses the same hedge fund in some of its other allocation funds, notably TRPBX and TRSGX. Much of my Roth IRA is invested in TRPBX but I’m not sure what to think about the hedge fund. Both of these Spectrum allocation funds also hold substantial amounts in foreign stocks and bonds, almost as much as RPGAX. TRPBX has more foreign assets than some global funds.
  • Just looking at the numbers on PV it would appear that global wellington is a less good version of regular wellington.
  • I suspect that has more to do with international vs us market performance since VGWAX's launch. c
  • Certainly its international component has a lot to do with VGWAX's relative performance. But the differences go beyond that. One can't just look at names and make assumptions.

    Though there's a perception of Wellington Management as a value house, their funds wander over much of the "map". For example, HGIYX meanders along the blend/growth boundary, currently holding more assets in growth than in blend securities.

    Lately, VWELX's portfolio has been solidly blend. 46% LCblend, 27% LCG, 24% LCV. Of its top four holdings (14.5% of its portfolio), three companies are LCG, one is LCV.

    In contrast, VGWAX has a discernable value tilt: 42% LCV, 35% LC blend, 13% LCG (virtually all the rest is MC blend). Of its top four holdings (7.2% of its portfolio), three companies are LCV, one is LCG.

    These style differences could account for much of the difference in performance. Over the lifetime of VGWAX, the Russell 1000 Value Index (IWD) has averaged 9.8% return, while the Russell 1000 Index (IWB) has averaged 16.96%.
    Comparisons on Portfolio Visualizer.

  • One important difference between the two funds aside from the international exposure is credit risk. VGWAX takes on more credit risk than VWELX in its bond portfolio because it has a different benchmark for bonds that has more BBB rated debt exposure. Everything is still investment grade, but VWELX has a higher quality and in a normal environment, which we're not in now bond-wise, lower yielding bond portfolio.
  • Though VWELX may be wandering into LB now, but that is not something it did regularly in the past. It was a solid LV balanced fund for a long time, at least since I started watching it from 2005. The trend of Value managers buying growth stocks (making the fund LB) is something that has become common in the last 10 years or so. There are many value managers doing that now. One that comes to my mind is Bill Nygren of Oakmark. These managers are following Buffet's mantra (I believe it was Charlie Munger who convinced him to do that)

    “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren Buffett

  • If you read some PM commentary of Wellington's VWINX for example, the buys they are most content with are those growth stocks that have short term news flow problems affecting stock price such that they fall into the value designation. They are not altering their investment philosophy growth vs value.
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