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.