PP vs VWINX

[dlauth]

I am wondering if anyone has compared both the perm portfolio and vwinx?

Ive done some back testing and it seems for any time period, vwinx has outperformed the pp in both return and in lower risk.

Setup:
using Kwanti for backtesting
PP ( $cash, VGLT, IAU, VTI )

[buddtholomew]

Others have reported a desire to hold VWINX to complement the PP. With that said, the objective is not to backtest for the ideal portfolio, but invest in an allocation that meets your specific retirement objectives. There are other factors to consider besides returns. VWINX is a conservative portfolio with an overweighting to fixed income. The PP does not overweight any of its assets.

[dualstow]

You could do a lot worse than Wellesely (VWINX). Perhaps someone out there has a permanent portfolio and Wellesley as their vp.

[Reub]

Wellesley throws off a ton of dividends that are taxable, which doesn't make it ideal for taxable accts. With the PP you could keep most bonds and some stocks in tax deferred accts and hold your gold ETF's and cash in taxable, which is very efficient if you're not selling.

[KevinW]

The comparison has been made numerous times.

IMO: Wellesley is a fine fund. It is a conservative portfolio of roughly 1/3 value stocks and 2/3 intermediate corporate bonds. Like any other conservative stock/bond portfolio, it has low volatility and low-to-moderate returns. I am uncomfortable with the fact that all its assets are in US companies and are actively managed.

If I were buying a one-fund stock/bond portfolio I'd prefer something like LifeStrategy Conservative Growth which is all indexed, includes foreign stocks, and a lot of Treasuries via the total bond market.

Alternatively you could get an asset allocation like Wellesley's, but free of my objections, with 1/3 Value Index and 2/3 Intermediate-Term Treasury index.

Ultimately I think the PP is better diversified than any of these alternatives, and its returns are adequate to meet my goals.

[MachineGhost]

If Wellesly doesn't contain any Treasury bonds, then it can simply replace 25% of the PP.  Intermediate corporate bonds aren't really impacted by rising rates since its more about credit quality.

[Reub]

Someone had it replacing the cash portion of the PP with excellent results.

[ozzy]

Someone had it replacing the cash portion of the PP with excellent results.

That's me, and here's the results: http://www.tightwadweb.com/customportfolio.html

The PP and VWINX go together like chocolate and peanut butter.

[Ad Orientem]

VWINX has benefited greatly from the 30+ year bull market in bonds. Im not sure how well it will do in a rising interest rate environment.

[Alanw]

Wellesley throws off a ton of dividends that are taxable, which doesn't make it ideal for taxable accts. With the PP you could keep most bonds and some stocks in tax deferred accts and hold your gold ETF's and cash in taxable, which is very efficient if you're not selling.

My LTT's and VWINX along with some VTI is all held in tax deferred. Gold, cash and some VTI is held in taxable. Works out very well.  Of course being an active fund, we never have to rebalance VWINX. The PP portion has been rebalanced twice in the last 3 years. Both times out of LTT's and into stocks/gold. 

[Alanw]

VWINX has benefited greatly from the 30+ year bull market in bonds. Im not sure how well it will do in a rising interest rate environment.

Not sure about the rising interest rate environment.  Even with rising rates, Wellesley still pays about 3%.  If I never sell, do I really care if rates rise.

[MachineGhost]

The PP and VWINX go together like chocolate and peanut butter.

49% in equities -- not counting non-Treasury bonds -- really???  My point was to replace the 25% of equites with 100% of Wellesley less Treasury exposure which looks to be only 12.45% of the 58.68% in bonds.  Corporate bonds, Agencies, Municipal, etc. are Prosperity exposure.  In other words, you have a 31.0415% exposure to Prosperity with Wellesly on top of the 35%.  This is an extreme bastardization of the PP.

[dualstow]

I just keep VCIT (corporate bond mix) in my retirement account. Nice yield, indexed not managed.
Definitely a vp positition, though.

[Ad Orientem]

VWINX has benefited greatly from the 30+ year bull market in bonds. Im not sure how well it will do in a rising interest rate environment.

Not sure about the rising interest rate environment.  Even with rising rates, Wellesley still pays about 3%.  If I never sell, do I really care if rates rise.

That 3% is not hard. Owning VWINX is not like owning binds directly. If the value of the fund's shares drop it can affect the yield.

[Alanw]

VWINX has benefited greatly from the 30+ year bull market in bonds. Im not sure how well it will do in a rising interest rate environment.

Not sure about the rising interest rate environment.  Even with rising rates, Wellesley still pays about 3%.  If I never sell, do I really care if rates rise.

That 3% is not hard. Owning VWINX is not like owning binds directly. If the value of the fund's shares drop it can affect the yield.

Agree. In most cases if share price drops yields go up. No guarantee of course.  VWINX comprises about 20% of our total portfolio and is held separately from PP holdings for rebalancing purposes.  I still like this conservative actively managed fund with respectable historical returns.  I know, past performance is no guarantee.................