Wellesley GB

[ppnewbie]

Interesting Combo. Add Wellesley instead of Cash or SCHO.

Wellesley_GB.png (333 KiB) Viewed 2811 times

[Kevin K.]

Unsurprising but all you're doing with this substitution is getting rid of cash - which is invaluable for rebalancing, living off of and a fair amount of inflation protection - with a slice of large-cap value stocks and intermediate corporate bonds, while also injecting an actively-managed fund subject to manager risk (W just changed managers, BTW).

Rather than adding a trivial amount of Wellesley only to screw up the elegant construction of the GB why not consider going all-in with the "Golden Wellesley"?:

viewtopic.php?f=10&t=11196

[ppnewbie]

After backtesting (alot) I could not really justify a sliver of gold into the Wellesley without just going all in on Wellesley. The gold did not improve the portfolio that much (could be wrong).

Also I get all the portfolio manager risk etc and the fact that it’s Large cap dividend paying stocks and corporate bonds. But it behaves so beautifully (at least up until now). Almost like a bank account paying 6ish percent (after taxes).

It would be extremely useful if Tyler ever added the Wellesley as an option to portfoliocharts.com.

[ppnewbie]

Also exchanging Wellesley with cash in a HBPP performs beautifully.

[Don]

Wellesley works best in a tax deferred account.

[ppnewbie]

Wellesley works best in a tax deferred account.

Thanks. I saw that the Tax Cost Ratio and the Expense Ratio basically shave off about 1.66 percent of the 7.5ish percent yearly returns. So basically in a taxable account its about 6 percent returns.

[dualstow]

Also exchanging Wellesley with cash in a HBPP performs beautifully.

There have been cash-free portfolio ideas here since at least 2010, but what about what Kevin said above? Cash does perform a specific function.

[ppnewbie]

But what if viewed it as cash returning 6 percent per year. I get that there is added risk but cash in itself has risk.

[dualstow]

But what if viewed it as cash returning 6 percent per year.

I’d say you were fibbing to yourself. It’s an instrument returning 6%, but cash, it ain’t.

[vnatale]

But what if viewed it as cash returning 6 percent per year.

I’d say you were fibbing to yourself. It’s an instrument returning 6%, but cash, it ain’t.

Exactly!

[ppnewbie]

It’s clear it’s not cash. It’s dividend paying large caps and bonds. But it’s managed so well. On a good day I lose 2.5 percent on my cash on a bad day 7.5 percent.

The two main reasons I can think of not using it are manager risk and stocks and bonds losing their negative correlations. But it has a 50 year track record.

[ppnewbie]

Maybe if I asked the question this way. Does replacing cash with Wellesley increase returns, reduce drawdowns, and decrease the ulcer index?

Not sure on this. I think I need to use the Simba spreadsheet to fully backtest.