Vanguard has admitted to bungling statements sent to clients about the firm’s money market products for close to a year, according to news reports.
The company said it provided clients with statements containing inaccurate data about estimated yields and estimated annual income across eight money market funds that together hold $390 billion, the Financial Times writes. That represents most of Vanguard’s money market fund offerings, according to the newspaper.
Daniel P. Wiener, the editor of the Independent Adviser for Vanguard Investors newsletter, was the first to bring attention to the matter, the FT writes. Vanguard’s website showed the Vanguard New York Municipal Money Market fund’s SEC yield as ranging from 0.05% to 2.88% from October 2019 to September 2020, for example, according to the paper. But Wiener demonstrated that his monthly statements from Vanguard showed an estimated yield of 1.27% — unchanged during the entire period, the FT writes.
“It is a good thing I wasn’t relying on Vanguard to tell me what kind of income to expect. Otherwise, I would have been sorely disappointed with the reality,” said Wiener, who is also chairman and co-founder of Adviser Investments, a Massachusetts-based wealth manager using Vanguard funds to build client portfolios, according to the publication.
Vanguard says that “there was no impact to clients’ fund holdings, distributions, or account balances,” according to the FT.
And a money fund analyst who asked to remain unnamed tells the paper that investors haven’t been expecting returns “much above zero” in the current environment, and that they also knew that their actual earnings from money market funds would deviate from estimates.
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