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By Alec Lucas, Ph.D. | 01-26-2016 12:00 AM

Strong Defense Wins the War for Vanguard Wellesley

Named for defensive-minded British Gen. Arthur Wellesley, the 2015 Morningstar Allocation Fund Manager of the Year emphasizes high-quality investments and keeps its allocations in a tight range.

Alec Lucas: Hi, I'm Alec Lucas, an analyst for Morningstar's Manager Research team. Today I'm joined by Mike Stack of Wellington Management. Mike is part of the management team for Vanguard Wellesley, which won the 2015 Allocation Fund Manager of the Year Award.

Mike, congrats to you and the team, and thanks for joining us.

Mike Stack: Thanks, Alec. It's great to be here to represent the Vanguard Wellesley PM team, and we certainly appreciate the recognition of the consistent performance through the years of the fund.

Lucas: You come from the fixed-income side, and there is also an equity side. Can you talk about how the overall team works together?

Stack: There are two teams. There is a fixed-income team led by John Keogh and an equity team led by Mike Reckmeyer. The fixed-income team works with 10 investment-grade fixed-income analysts as well as four sector specialists who help support our investment decisions. Meanwhile, Mike's team includes seven individuals who work on bottom-up security selection.

Importantly, both of these teams are supported by 600 investment professionals at Wellington. And while in some investment firms, people can be siloed, the culture at Wellington is one that really emphasizes collaboration. That's important for our investment process, because we can tap into the views and opinions across geographies and across asset classes of all these people that are doing investment research.

Lucas: Wellesley is a distinctive kind of fund. It's named for the British General Arthur Wellesley, who helped to defeat Napoleon and was known for his defensive style of warfare. The fund takes a defense-minded approach to investing. Can you talk about the fund's investment approach in general?

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