"Balanced funds offer stability, income, and the potential for growth," notes Genia Turanova.
In the industry-leading advisory service, The Leeb Income Performance Report, she contends, "Vanguard Wellesley Income (VWINX) offers shelter from the storm." Here is her review.
"The continuing stock market turmoil has been relatively gentle to so-called balanced funds—funds that contain stocks and fixed income securities alike.
"This shouldn’t surprise anyone who knows how strong fixed income investments have been as investors, seeking haven in the relative safety of bonds, have put money into these instruments and driven up their price.
"Balanced funds appeal both to investors who mainly are looking for income as well as to risk-averse types who want stability along with some current income.
"Our model fund portfolio holds Vanguard Wellesley Income, which belongs to the 'conservative allocation category'. Among balanced funds, these more conservative peers generally dedicate about half their assets to bonds.
"Vanguard Wellesley Income has been even more cautious than the norm: as of its latest filing, nearly 60% of its holdings were in bonds. With an additional 5% in cash, the fund has nicely sheltered its investments from the ongoing stock market storm.
"This year, the fund outperformed better than 80% of its conservative counterparts, which is in line with its excellent long-term record.
"Over the past 10 years, the fund has been in the top 7% of the conservative allocation category, and it has been in the top 5% for the latest three-year period. Further demonstrating its consistency, it has outperformed its peers in eight of the last 10 years.
"Given this long-term record of year-after-year outperformance, it’s not surprising that the fund is one of the best respected in its group, with assets under management that top $7.5 billion.
"Other positives include ultra-low investment costs of 0.25% per year, low turnover of 21 percent, and the nearly 5% yield.
"And we certainly applaud its equity picks: four of its top five holdings— FPL, AT&T, General Electric, and Chevron—are in our Growth or Income Portfolios.
:"Vanguard Wellesley Income is sub-advised by Boston-based Wellington Management Company. Its two portfolio managers, although new at the helm of this particular fund, are seasoned at their craft.
"John C. Keogh managed fixed income portfolios for Wellington Management for 25 years, while Michael W. Reckmeyer worked alongside Vanguard Wellesley Income’s previous manager. We are comfortable with the change of management and continue to recommend the fund."*
