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Vanguard Global Wellington Looks As Strong As We Suspected It Would

Dave Dierking, CFA profile picture
Dave Dierking, CFA


  • Vanguard Global Wellington is now four months old, and we can finally examine the composition of the fund.
  • The fund is about 1/3 U.S. stocks, 1/3 foreign stocks and 1/3 fixed income. That's heavier on the foreign side than most balanced funds.
  • The stock portfolio is overweight in financials and healthcare, two areas of the market that I expect to do well in 2018.
  • The bond portfolio is heavily towards corporates, but the risk is managed, while boosting yield.
  • The fund is smartly constructed, and there's no reason investors shouldn't consider it as an "all-in-one" solution for their portfolios.

When I first profiled the Vanguard Global Wellington Fund (MUTF:VGWLX) right when it launched back in November, a lot of the analysis was based on what the fund might look like. We knew that it would probably have a similar look and feel to the original Vanguard Wellington Fund (VWELX), but the fact that it was going to invest globally, instead of just in the United States, left some speculation as to where it might invest, how risky the international component might look and how risk within the fixed income allocation might factor in.

The fund is about four months old now, so we can finally answer some of those questions! As a refresher, Global Wellington, at a high level, will look a lot like Wellington. It'll maintain an allocation of around 2/3 stocks and 1/3 bonds, focusing mainly on high quality, mature large-cap stocks, and investment-grade bonds of all maturities. The fund has already accumulated more than $850 million in assets, so investors have taken to the fund, as has largely been expected.

The fund is fairly evenly distributed between domestic equities, foreign equities and fixed income.

On the equity side, Global Wellington invests more heavily overseas than many of its balanced counterparts. I view this as a positive. The U.S. market is more richly valued than many overseas markets, and, in my opinion, presents a more attractive risk/reward opportunity right now.

According to Morningstar, the fund has 95% of its equity assets invested in giant- and large-cap names. Its focus on companies that appear undervalued relative to their peers shows itself in most valuation metrics.

For comparison sake, the S&P 500 (SPY) trades at a forward P/E ratio of around 18, not a huge premium to the equity portfolio of VGWLX. The value nature of the portfolio is much

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This article was written by

Dave Dierking, CFA profile picture
Editor of ETF Focus on TheStreet.com. A top 5 Seeking Alpha contributor in ETFs. Speaker at events, such as MoneyShow Orlando 2018. To receive notifications of new articles and blog posts as soon as they're published, click on the orange Follow button and become a real-time follower.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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