Vanguard Wellington Fund (VWENX) – Market Timing

Vanguard Wellington Fund (VWENX) is an excellent market timer with a track record of increasing exposures to factors that subsequently generate larger-than-typical returns.

Over the past 10 years, the fund returned approximately 7% solely through varying its factor exposures. This compares to an approximately 4% market-timing loss for the average medium turnover U.S. equity mutual fund:

Chart of the historical return due to market timing of Vanguard Wellington Fund (VWENX)

Vanguard Wellington Fund (VWENX) Market Timing Return History

VWENX’s 3-year marker timing return (βReturn3) is well ahead of the group:

Chart of the return distribution of market timing returns of medium turnover U.S. Mutual Funds

U.S. Mutual Fund Market Timing Return Distribution

Given the excellent market-timing performance, VWENX’s bets are worth watching.

Chart of the historical factor exposures of Vanguard Wellington Fund (VWENX)

Vanguard Wellington Fund (VWENX) Historical Factor Exposures

  • The fund’s exposures to finance sector, health sector, and large-caps are larger than typical.
  • The fund’s exposures to consumer sector, energy sector, and utilities are smaller than typical.

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