The Vanguard Wellesley Income Fund (VWINX) is known as a highly conservative mutual fund composed of approximately 60% bonds and 40% equities.

In the current markets, this seems like a good conservative mix. But why is VWINX performing poorly over the last 6 months, as bond and equity prices have both increased?

  • 2
    "VWINX performing poorly" compared to what?
    – Dheer
    Feb 23 '18 at 8:35
  • I don't know what's in that fund, but the/an obvious answer is the "mix" might be fine (40%/60%), but the specific bonds and equities in each part might be the "wrong" ones (for some definition of "wrong" ... if they are looking for long-term gains, six month dips may not matter). In a similar vein, "performing poorly over the last 6 months" should be followed by "compared to what".
    – TripeHound
    Feb 23 '18 at 8:36
  • 6
    Bonds prices fall when interest rates rise, and interest rates have been rising.
    – RonJohn
    Feb 23 '18 at 11:13
  • 1
    The majority of bond ETFs are down this year. For example, the IShares 20+ Year Treasury Bond ETF (TLT) is down 7+ pct this year and nearly 10% in the past 6 months. Why would you expect VWINX with 60% exposure to fixed to perform well in such an environment? Feb 23 '18 at 12:52
  • Weak dollar, higher rates. It was all over the news for last year.
    – sanaris
    Feb 23 '18 at 20:08

I checked the graph and found a drop of $0.52 after the dividend of 15th December 2017. Since the dividend was $0.2145 that would explain half that drop. Perhaps someone else can explain the remainder.

Large drops have occurred at other VWINX dividend dates too. I have read that the drop as shares go ex.div can be reduced by the tax paid by a typical investor. But VWINX is behaving in the opposite way!

  • 2
    The distribution on 12/18/17 was 52 cents (Div + STCG + LTCG) and VWINX dropped 52 cents (adjusted close). Paragraph two is confusing. The drop isn't reduced by taxation. The value of your position is. Feb 24 '18 at 1:18
  • Yep. That explains the 15th December drop and the previous drops I saw. Confidence restored. I hope the questioner is happy with his distribution-:) Feb 24 '18 at 21:52

Over the past 6 months, VWINX has returned more than 2% better than a pure bond ETF like AGG (though both have negative return over this time period).

Since broad stock indices have done well over the last 6 months, it seems the VWINX is performing as expected.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.