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When it comes to choosing an investment strategy, there are many options to consider. Two popular choices in the realm of balanced funds are Vanguard Wellesley Income Fund and Fidelity Strategic Real Return Fund. Both funds offer a mix of stocks and bonds, but they employ different approaches to achieve their investment objectives. In this article, we will compare the two funds in terms of their investment strategies, performance, and other important considerations.
Vanguard Wellesley Income Fund is a conservative allocation fund that seeks to provide a high level of income and moderate long-term capital appreciation. The fund achieves this by investing about 60-65% of its assets in high-quality, investment-grade corporate bonds, U.S. Treasury and government agency securities, and mortgage-backed securities. The remaining 35-40% of the fund is invested in high-quality, large-cap stocks that have the potential for long-term capital appreciation.
On the other hand, Fidelity Strategic Real Return Fund takes a different approach. The fund seeks to provide a high level of after-tax real return by investing in a mix of inflation-protected securities, commodities, and real estate-related investments. This fund aims to protect against inflation and provide a return that exceeds the rate of inflation over time. The fund’s asset allocation can change over time based on the investment manager’s view of the current market and economic conditions.
In terms of performance, Vanguard Wellesley Income Fund has a long track record of delivering consistent returns to investors. Over the past 10 years, the fund has provided an average annual return of around 6%, outperforming its benchmark index and many of its peers. The fund has also demonstrated relatively low volatility, making it an attractive option for risk-averse investors.
Fidelity Strategic Real Return Fund, on the other hand, has a shorter track record as it was launched in 2011. However, the fund has also delivered competitive returns and has outperformed its benchmark index over the past few years. The fund’s unique approach to investing in inflation-protected securities and real assets has allowed it to provide investors with a hedge against inflation and potential for real returns over time.
When considering these two funds, investors should also take into account other factors such as fees, risk tolerance, and investment approach. Vanguard Wellesley Income Fund has a lower expense ratio compared to Fidelity Strategic Real Return Fund, making it a more cost-effective option for investors. Additionally, investors should consider their risk tolerance and investment objectives when choosing between these two funds. Vanguard Wellesley Income Fund is more suitable for conservative investors seeking income and capital preservation, while Fidelity Strategic Real Return Fund may be more suitable for investors looking for inflation protection and potential for real returns.
In conclusion, both Vanguard Wellesley Income Fund and Fidelity Strategic Real Return Fund offer unique investment strategies and have delivered competitive returns to investors. Investors should carefully consider their investment objectives, risk tolerance, and other important factors when choosing between the two funds. Consulting with a financial advisor can also help investors make an informed decision based on their individual circumstances and long-term financial goals.
What if we have funds at fidelity, what it a good fund?
You can do a bit better than Wellesley by creating your own 60/40 fund with FTBFX (60%) and FXAIX (40%)…
Low expenses and index funds in taxable accounts and bond funds or active stock funds in non taxable accounts. Then Diversification, but the most important thing is not wealth but health is because once you lose that all the money cannot buy it!
This is what Fidelity did to me many years ago in a fund called Asset Manager, it was loaded up with Mexican debt that went bad. Janus screwed me too.
Heavily in VWINX and VBIAX, along with some large value and high dividend funds. Was not hitting the outsize returns over the last few years, but also not getting crushed during the current downturn. Most importantly I am not losing sleep over the market gyrations either, and that is the most important factor of all.
Stop chasing returns is the big message for everyone. Most of the time the return isn't what holding people back. Most people just don't save enough money and because they don't they try to squeeze more return out of their portfolio.
Great comparison, Josh. I'd love to see what your thoughts are on Vanguard Value Index Fund Admiral Shares (VVIAX) compared to Wellesley. The expense ratio for VVIAX is less than VWINX (0.05% vs 0.22%). Should that be a consideration?
The expense ratio of the Fidelity fund would be an absolute deal killer for me. I mean here we are in 2022 and they are charging 0.70% to own this fund. No.
Excellent work Josh. Thank You
Good, quick, and clear analysis. Thank you.
Josh — Thanks for the advice! Always great to hear your thoughts!
Wells all the way! Good analysis!
Wow! I was just comparing these two funds last night. Josh, thanks for sharing this.
You can’t fool old Josh!
I am a 46 year old man on SSDI From crush injury at work. I do have a small annuity for rest of my life. My small house is paid off. Kids taken care of. I have $70k in Roth and $185k in brokerage. I like Wellington and Wellesley. But not sure what to do in this situation. Curious on your thoughts. Thanks
Hard to argue with a successful 50+ year history. They don't hit a lot of homeruns but they do hit a lot of singles and doubles. Works for me and it's what we are putting our Roth money into.
I've been heavily in VWINX for over 15 years in my Fidelity IRA and brokerage account. My only complaint is that my Fidelity charges a $75 transaction fee to buy VWINX.