Vanguard Wellington Continues to Serve Investors Well

Key Morningstar Metrics for Vanguard Wellington Fund

• Morningstar Medalist Rating
  : Gold
• Process Pillar
  : High
• People Pillar
  : Above Average
• Parent Pillar
  : High

Experienced managers backed by Wellington’s deep research platform steer Vanguard Wellington VWENX using a disciplined and proven approach. Its attractive fees and balanced construction have made it a reliable option for long-term investors.

Lead managers Daniel Pozen and Loren Moran have maintained the fund’s long history of excellence over their still-modest tenures in charge. Both ascended to their current roles after generational manager changes, which were smoothed over through thoughtful succession planning. Pozen, a two-decade Wellington veteran, began working on the strategy in 2015 and assumed sole responsibility for the equity sleeve after longtime manager Edward Bousa retired in 2020. Moran joined the firm and the team in 2014, comanaged the fund since 2017, and took charge of the bond sleeve in 2021 following a multiyear transition that saw seasoned managers retire in 2019 and 2021.

Moran and Pozen have the flexibility to move the stock/bond mix by up to 5 percentage points, but in practice, they keep the allocation tight around its strategic target of 65% equity/35% fixed income. Predicting short-term equity and bond outperformance is difficult, and this disciplined approach allows returns to be driven by the team’s skill in security selection rather than tactical asset allocation bets. This aligns with the team’s strength in fundamental analysis and has historically benefited long-term shareholders.

The team builds a high-conviction portfolio typically containing 50-80 stocks using an intrinsic-value framework to identify companies with strong earnings potential, long-term growth prospects, and competitive positioning within their sectors. The team invests across the largest US companies, given the fund’s sizable asset base to avoid liquidity concerns. Thoughtful risk management is embedded in the approach with a 10% cap on single-stock risk contribution, which helps keep risk diversified and safeguards against large benchmark stocks dominating the portfolio’s risk budget.

The fixed-income sleeve plays a few different roles in the portfolio, such as acting as ballast in turbulent equity markets and providing liquidity. It consists almost entirely of investment-grade bonds. Corporate credit has historically occupied around 60% of the sleeve, while asset-backed securities and taxable municipal bonds account for around 20%. US Treasuries and agency securities make up the final 20% and play an important role in liquidity management.

Vanguard Wellington Fund: Performance Highlights

This fund remains a standout performer. Since July 2021, when Moran and Pozen’s shared tenure as lead managers began, the fund’s 8.0% annualized gain outpaced the moderate-allocation Morningstar Category median of 6.6% and the Morningstar Moderate Target Risk Index’s 5.9% through February 2026. Additionally, the fund’s Sharpe ratio, a measure of risk-adjusted return, bested 89% of the category over the period. Long-term performance has been similarly impressive; the fund outpaced at least 90% of its peer group over the trailing 15- and 20-year periods.

Holding more equity than peers has aided the strategy’s relative performance. The fund’s average equity allocation of 65% of assets over the trailing 10-year period was greater than the typical peer’s 58%. The managers do not make top-down calls between stocks and bonds, which is hard to get consistently right, and the discipline to keep the fund’s allocation around its 65% equity/35% bond strategic weightings has benefited long-term shareholders.

The fund notched a strong year in 2025. Its 16.6% return eclipsed the category median and benchmark by 389 and 62 basis points, respectively, good enough to fall in the best decile of the category. Stocks soared during the year, so the fund’s overweighting compared with category rivals and the benchmark buoyed results, as did strong security selection. The fund’s large-cap bias also helped as large-cap stocks again bettered mid- and small-cap stocks.