Our investors know Vanguard Wellington Fund Investor Shares (VWELX) and Vanguard Wellington Fund Admiral™ Shares (VWENX) for the fund’s impressive, consistent performance. It’s outlived the Great Depression and the 2008 global financial crisis.
What many investors don’t know is that the Wellington Fund is the oldest of its kind—a U.S. balanced fund that’s always held a carefully selected mix of high-quality stocks and bonds.
The lasting success of the Wellington Fund across a wide range of market conditions offers time-tested lessons for all investors.
Here are 3 of our favorites:
1. Expert management makes a difference
Wellington Fund is an actively managed fund. Its fund managers select each underlying investment with the goal of outperforming a benchmark. The Wellington Fund has consistently achieved this goal over its long history. In fact, it’s earned more than an 8% average annual return over its long life.
Average annual returns, June 30, 2019
Since inception 7/01/1929
Wellington Fund Investor Shares
The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so investors’ shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance.
Here’s an example of how the fund performed against its benchmark:
Say an investor bought $10,000 of the Wellington Fund in July 1973 (the year Vanguard began benchmarking the fund). It would have grown to $893,742 in 2019 if all dividends were reinvested. If the same investor purchased $10,000 in the fund’s benchmark, the initial investment would now be worth $715,607. The difference: $178,135.*
The key to that outperformance: Talented, disciplined management.
For the Wellington Fund, expert management started with a man named Walter Morgan. He was the founder of Wellington fund, and also the man that our founder, Jack Bogle, described as his mentor throughout his career. (We even have a building on campus named after Mr. Morgan.)
When Bogle started Vanguard, he made a deal with Morgan. He’d bring Wellington Fund to Vanguard as its first fund offering. But Wellington Management Company would continue to manage the fund’s assets. The partnership is an arrangement that thrives today. It also serves as a model for our external partnerships with other top fund managers around the globe.
Our approach of using both internal hires and external partners gives us access to the top fund managers. And because we tie managers’ compensation to the long-term performance of the funds they oversee, we ensure their primary goal is creating value for our investors.
From day one, Vanguard has employed expert management. We continue to develop an environment that attracts exceptional talent, leading to a lineup of competitive, diverse active funds.
2. Balance is key to weathering volatility
No other fund highlights the potential benefits of balanced funds like Wellington Fund. It was launched a few months before the stock market crash of 1929. Its balanced, conservative approach, which included both stocks and bonds, helped it survive and grow in the last half of that year.
Nearly a century later, the Wellington Fund maintains that balance. It currently holds about 64.26% in stocks and 34% in bonds.
Today, balanced investing is considered a fundamental part of building a portfolio. It’s critical to managing market volatility, helping to smooth the ups and downs of investing. We believe so strongly in balanced investing that we launched a global version: Vanguard Global Wellington Fund Investor Shares.
Whether you build your own portfolio or choose an all-in-one fund, a balanced approach is a timeless principle.
3. Low costs contribute to outperformance
Bogle first joined Wellington Management in 1951. At the time, the fund had a 0.55% expense ratio, already well below the 0.74% ratio of its balanced fund peers.**
When the Wellington Fund started operating under Vanguard in 1975, the fee began to drop dramatically. Vanguard Wellington Fund expense ratios now stand at 0.25% and 0.17%,*** depending on the size of your investment.
Vanguard’s scale allows us to offer fees among the lowest in the industry. That’s especially true of our active funds. Our average actively managed fund expense ratio is 71% less than the industry average.†
Low fees give us another advantage over other active funds in the market. Those lower fees can help make it easier for our fund managers to outperform their funds’ peers and benchmarks.
The result: When you invest in an active fund at Vanguard, you get access to some of the top fund managers in the world at a great value.
We’ve built on the lessons the Wellington Fund’s taught us, and you can too
Since the introduction of the “blue blazer” Wellington Fund, Vanguard has branched out far beyond that first balanced fund. Now there’s something for everyone—funds focused on growth, income, diversification, and more.
You can still count on Vanguard Wellington Fund for a balanced portfolio. Or learn more about Vanguard’s entire lineup of balanced funds and actively managed funds. Then decide which strategy and which funds work for your individual situation.
*Source: Vanguard calculations using the Wellington Composite Index as the benchmark. The benchmark consisted of 65% S&P 500 Index and 35% Lehman U.S. Long Credit AA or Better Bond Index through February 29, 2000. It consists of 65% S&P 500 Index and 35% Bloomberg Barclays U.S. Credit A or Better Bond Index thereafter. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.
**Source: A Brief History of Wellington Fund, December 27, 2008.
***As of March 28, 2019.
†Vanguard average active fund expense ratio: 0.19%. Industry average active fund expense ratio: 0.66%. All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2018.
All investing is subject to risk, including the possible loss of the money you invest.
Diversification does not ensure a profit or protect against a loss.
There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
Investments in bonds are subject to interest rate, credit, and inflation risk.
Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.