At first glance, Vanguard’s Wellington mutual fund and its Balanced Index fund appear to be very similar. Both have an asset allocation of around 60 percent stocks and 40 percent bonds and have similar short-term returns. Investors looking for both growth and income in one mutual fund, though, should be aware of several differences which, over the long-run, appear to make Wellington a better choice.
Vanguard Balanced Index has been available to investors since 1992. Wellington has a lengthy history dating back to its founding in 1929.
Wellington has a slightly better long-term rate of return over the Balanced Index fund, thanks in part to its ability to invest portions of its portfolio into international stocks. Balanced holds only U.S. stocks.
Wellington has a higher minimum investment requirement, $10,000, as opposed to Balanced, $3,000. Wellington’s expenses are slightly higher at .35 percent as opposed to Balanced, .19 percent.
Beginning investors who desire a balanced stock/bond approach should consider placing funds in Balanced Index due to its lower minimum. Investors who can meet Wellington’s higher minimum should utilize that fund for its longevity and diversity.
Both Balanced Index and Wellington will benefit investors who desire a mix of stocks and bonds in a single fund, with Wellington edging out Balanced for higher long-term performance.