80-Year-Old Funds to Survive Wars, Depressions
BOSTON (TheStreet) -- Who do you want at the wheel of your ship in a hurricane when you're a mutual fund investor?
The hotshot with the yacht-club pedigree, white duck pants, cravat and the hat to match? Or the guy who's been around the world a few times, and quietly displays his confidence and can back it up with double-digit returns that go back a decade?
The answer should be clear by now: the steady, experienced hand with nothing to prove.
Here are three funds cited by Standard & Poor's as giving a series of market storms a run and have proven their skills over the decades. Their managers oversee "blended" mutual funds. That is, they invest across different asset classes. The funds offer investors the potential for capital appreciation, from the equities in the portfolio, as well as current income from the bonds, a combination that fits well in these turbulent times."The market turmoil in the past couple of years might make investors long for a fund that has navigated through these waters before," S&P analyst Dylan Cathers said in a research report Monday. The three funds that he highlights have been investing in stocks and bonds for over 70 years. "They have been around the proverbial block more than once, and we believe are worthy of consideration by investors looking for a growth-oriented blended mutual fund." He told TheStreet in an interview that, while stock funds have seen big redemptions, these blended funds haven't. They're meant to be a building block for a portfolio to provide all-weather security, "sort of a safe harbor." They're more conservative, so you wouldn't necessarily want them as the whole of your portfolio. Vanguard Wellington Fund (VWELX) has been around since four months before the Great Depression in 1929. The $57 billion fund (across all classes) has a 15-year annualized return of just under 8%, putting it in the top 7% in its large-blend category. It's down 2.1% this year versus the S&P 500 Index's 6.6% decline. The fund holds 667 securities in its portfolio, with stocks accounting for two-thirds of assets. The rest is bonds. Vanguard Wellington has a 12-month yield of 2.75%, which is more than 100 basis points above the peer group's average of 1.67%. Furthermore, the portfolio receives a positive score for S&P Stars, suggesting that S&P Equity Analysts have, on average, a favorable view of the fund's holdings. Its top two holdings are Exxon Mobil (XOM) and AT&T (T). In its rating, S&P says it looks highly upon its managers' relatively long tenures -- lead manager Edward Boussa since 2000 -- and as is typically the case with Vanguard funds, its costs are well below peers. The net expense ratio is 0.3% versus 1.04% for the category average, and it has no sales load.
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