Vanguard Wellington™ Fund

Scorecard
5 / 5 Stars
Lipper
5 5 4 5 1
Zacks Investment Research
4 (Sell)
Standard & Poor's
5 / 5 Stars
TheStreet.com
B- (Buy)

U.S. News evaluated 233 Moderate Allocation Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Note: Profile written for different share class.

Performance

The fund has returned 17.26 percent over the past year, 12.41 percent over the past three years, 14.04 percent over the past five years, and 8.61 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 6.5%
1 Year 17.3%
3 Years (Annualized) 12.4%
5 Years (Annualized) 14.0%
10 Years (Annualized) 8.6%

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Summary

Not many funds can say they survived the stock market crash of 1929, but Vanguard Wellington was created just four months before the collapse sent the markets into one of the worst downturns the world has ever seen. As the Vanguard family’s oldest fund, Vanguard Wellington has produced returns averaging more than 8 percent since its opening through March. It invests in a portfolio tilted towards dividend-paying stocks of established companies along with income-producing bonds.

As of July 03, 2014, the fund has assets totaling $85.29 billion. Its portfolio consists of roughly two-thirds stocks and one-third bonds with a modest percentage of non-U.S. holdings.

Some of its largest holdings include household names like AT&T and IBM. It also invests a great deal in oil giants Chevron and Exxon Mobil as well banking meltdown survivor JPMorgan Chase. Along with the addition of Wells Fargo, the fund has added to its health-care holdings with companies like Pfizer. According to its prospectus, the fund can invest up to 25 percent of its total assets in foreign securities. Generally, the fund’s equity manager, Ed Bousa, places an emphasis on finding value stocks. The fund has returned 17.26 percent over the past year and 12.41 percent over the past three years.

The legendary founder and retired CEO of Vanguard, Jack Bogle, ran the fund for 27 years. Wellington has seen its share of ups and downs in its 80 years, none worse than the period in the 1970s when the fund tried a more aggressive approach and lost badly. Since then, the fund has stayed true to its original mantra of a balanced exposure to stocks and bonds. Because it maintains a balance between relatively conservative stocks and bonds, the fund is designed to weather bear markets, but it may not perform as well as more aggressive funds during market rallies. Generally, the fund appeals to investors with a long-term outlook. The fund has returned 14.04 percent over the past five years and 8.61 percent over the past decade.

Investment Strategy

According to the fund’s prospectus, it invests between 60 and 70 percent of its total assets in common stocks of mostly large-cap companies. On the whole, managers favor value stocks. The remainder of the fund’s assets are invested in fixed-income securities, mainly income-producing U.S. corporate bonds.

Role in Portfolio

Morningstar describes the fund as filling a “core” role saying, “With a focus on valuations and dividends to steady the stock portion, plus a stake in high-quality bonds, the fund capably fills the core-holding niche.”

Management

Ed Bousa has headed the equity portfolio since 2002, and John Keogh of Wellington Management, the fund’s subadviser, is the fixed-income manager.

Fees

Vanguard Wellington™ Fund has an expense ratio of 0.18 percent.

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Risk

The fund is a classic balanced fund that has relatively low levels of risk associated with it because it invests in a diversified mix of U.S. stocks and bonds.

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Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 3 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 4 for one year, 3 for five years, and 2 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Risk Rank, a measure of volatility, is 2 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-06-11

The fund appears on the 2011 Money 70 list of recommended mutual and exchange-traded funds.

Money 70

In the November 2009 edition of Louis Rukeyser's Mutual Funds, Benjamin Shepard says, "Supply and demand analysis is one of their key gauges. Industries often blow up because of overinvestment, which leads to excess supply. The fund tends to avoid the 'it' sector of the day, instead making contrarian bets on ailing industries. Financial and health care names represent the fund's biggest sector bets of late."

2010-02-17

In the 2009 Award Winners edition of The Independent Adviser for Vanguard Investors, Dan Wiener says, "The fund, which is more than three-quarters of a century old, has been stalwart through some of the worst stock and bond bear markets in history. Like the Energizer bunny, however, it just keeps going."

2010-01-26

In the annual Lipper/Barron’s Fund Families Survey of 2009, Vanguard ranks 40th out of 61 fund families surveyed.

In the 2009 Award Winners edition of The Independent Adviser for Vanguard Investors, Dan Wiener says, "The fund, which is more than three-quarters of a century old, has been stalwart through some of the worst stock and bond bear markets in history. Like the Energizer bunny, however, it just keeps going."

2010-01-26

In the annual Lipper/Barron’s Fund Families Survey of 2009, Vanguard ranks 40th out of 61 fund families surveyed.

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