By Sam Mamudi (WSJ)

The first balanced mutual-fund celebrates its 80th birthday this month, and eight decades after its launch is reaping the benefits of one of the longest and steadiest strategies in the business.

Vanguard Wellington Fund (symbol: VWELX) isn’t showing signs of age — the fund is in the top 5% of its category for five- and 10-year returns, according to Morningstar Inc.

An investment in Wellington at its launch in July 1929 would have brought average annualized returns of 8% through June 30 of this year. A $10,000 stake in Wellington at inception — holding through the Great Depression, World War II and other challenging markets, including the current one — would be worth $4.8 million today. Wellington has achieved those returns while for most of its history maintaining a conservative, balanced approach, with roughly 35% of the portfolio in fixed-income securities.

The fund, the seventh mutual-fund ever launched, now stands in size terms head and shoulders above its older brethren, with $40 billion in assets.

“We use a value-oriented, defensive strategy,” said Edward Bousa, co-manager of Wellington Fund, who oversees the stock portion of the portfolio. The balanced strategy makes it “a very practical fund, which I think encourages people to stay in it for a long time,” he added.

Wellington Fund was up 5.1% in the first six months of the year after losing 22% in 2008. From Oct 9, 2007, to March 29, 2009, it lost about 20%, according to Morningstar — less than the 23% fall the average fund in its category sustained or the 34% loss in the broad stock market during that period.

The fund has faced challenges over the years. After what Jack Bogle, Vanguard founder and Wellington Fund’s chairman for 27 years, called a “lost decade” from 1967 to 1977, when the fund adopted a more aggressive approach, it returned to its more conservative roots.

Since then, results have been impressive. From 1978 to 2008, Wellington Fund saw average annual returns of 11.5% and cumulative returns of 2,500%, compared to the average balanced fund annual return of 8.7% and cumulative return of 1,109%.

Founded by Walter Morgan as Industrial & Power Securities Co., the fund was renamed Wellington Fund in 1935 after the English duke who defeated Napoleon at the Battle of Waterloo. Among the first companies the fund owned were Union Pacific Corp., U.S. Steel Corp., Westinghouse and Curtis Publishing.

Launched as the bull market of the Roaring ’20s was peaking, Wellington Fund began largely as it has continued — by holding back. By September 1929, it had reduced its common stock holdings to 42% from 78% two months earlier.

The timing of the fund’s launch shaped an approach that still helps investors today.

“As the fund commenced operations … we came to a conservative and common sense conclusion in an era of speculation: that the prices stocks commanded were just ‘not in the wood,’” Mr. Morgan wrote in the 1960s.

As such, it was decided to not just invest in stocks, but “we should have ‘an anchor to windward’ in the form of a large position in fixed-income securities.”

The first balanced fund was born. “From the very outset, Wellington Fund’s three-fold objective has remained constant,” wrote Mr. Bogle in a booklet to celebrate the fund’s 80th year. “Conservation of capital, reasonable current income and profits without undue risk.”

As of May 31, the fund held 107 stocks and 426 bonds. Its three largest stock holdings were AT&T Inc., IBM Corp. and Chevron Corp.