Bond fund mysteries

[wabmester]

I hold some Vanguard Intermediate Bond Index fund (VBIIX). Vanguard quotes the yield as 4.1%, but they list the YTM as 4.5% and the ER as 0.2%. What happened to the other 0.2%?

[wzd]

I would assume it is the same as with a bond. A bond could have a price of 99, and a yield of 4%. If it were to mature in 2 years, then it pays 100 in 2 years, for an additional 1% to be distributed over those 2 years which gives a YTM of approximately 4.5%.

If no bond market changes were to occur, I would that missing .2% to show up as capital gains over the next few years.

Wayne

[wabmester]

Wayne, you're right that the YTM includes cap gains/losses. But looking into the quoted yield a bit more, I find that it is the SEC 30-day yield, which supposedly does include cap gains/losses just like the standard YTM. I assume that Vanguard's listed YTM is a daily snapshot, while the SEC yield is a monthly snapshot, so that may account for the difference.

[charlie]

Wab,

Recently I was checking on the earnings growth rate
of Vanguard's Total Stock Market. The Investor class
shares showed 5.2% and the Admiral showed 8.3%

I complained by E-mail that one of those was wrong
and got a stupid reply saying that the difference was
due to the difference in expense ratios. I checked
the fund again a few days later and they had changed
the Admiral to 5.2%.

The moral of this story is to take thier numbers on
the web with a grain of salt. Their system for updating
information seems to be suspect.

The 2nd moral is that some the lower level peons at
Vanguard are one brick short of a load.

Regards,

Charlie

[cute fuzzy bunny]

Vanguard already acknowledged they have a problem with customer service due to the infamous "we're being too successful" and cant hire enough good people.

I have two issues with this, one is about companies who plan to expand and succeed, then when it happens they almost seem surprised and unprepared to handle success. The other is for someone to explain to me why in a time of high unemployment and available outsourcing opportunities, a company cant fix this problem in a matter of months.

I've seen some real doozies as far as goofy numbers reported, particularly by msn's moneycentral and also by vanguard admiral funds. One admiral fund I looked at had different distribution numbers on every web financial site I looked at, and moneycentral didnt report any. Vanguards numbers at least were there and correct.

My favorite screwup is with moneycentral. Works like this: you buy a stock, hold it for 3 years, it pays you a dividend each year. You sell the stock, and 2 years later buy it back. If you ask moneycentral what your gain is on that stock, it tells you any appreciation, plus current dividends, plus all the accumulated dividends for the three years that you previously held it. Their response: we know it does that, it says so in the help (sort of), and it will continue to work that way.

[Bob_Smith]

Charlie, I couldn't agree more. I have had several messed up transactions at Vanguard. I thought maybe it was just my luck. They always acknowledge their errors and fix them, but it's a hassle. I haven't found another company that offers the investments they have for the price they charge, so I put up with it. But sometimes I think those guys would screw up a two car funeral.

[cute fuzzy bunny]

To be fair to vanguard, when I was with American Express I honestly believe they screwed up every transaction I did with them, and Ameritrade had a fair share of screw ups. AMEX did fix theirs with some prodding; ameritrade didnt seem very interested.

I don't have many good things to say about Vanguard Customer service either. Just finished a go around with them. - They were asking me for verification of a Schwab Bank Account and claimed Schwab would not give it to them.

When I explained that Schwab had not only verified the account but transferred $75K to them, they still insisted that I needed to jump through a certain verification hoop. This persisted until I got a person from Schwab on the line and asked the Vanguard person exactly what they needed. At that point they decided that they had everything and my account was verified to do transfers. :

I have never received more paper from any company than Vanguard. I'm thinking that they could cut their costs even farther by eliminating this. Schwab did this by E-statements.

I too put up with this mess, because of the Vanguard Reputation. I thought it was only me, but they clearly have a problem and I hope things will get better. I hope someday that they will get Automatic Bill pay direct from my Brokerage account there - and then I can drop Schwab altogether (Too bad, because Schwab has fairly decent customer service - Probably; you get what you pay for here syndrome.)

[cute fuzzy bunny]

I noticed the same thing as far as the paperwork, and everything seems to take a couple of days to execute.

My thinking (and perhaps I'm being generous) is that this is their way of discouraging snap movements and market timers, by inducing a layer of paperwork and no instant executions of their funds.

[BunsGettingFirm]

Quote:

II have never received more paper from any company than Vanguard. I'm thinking that they could cut their costs even farther by eliminating this. Schwab did this by E-statements. I too put up with this mess, because of the Vanguard Reputation. I thought it was only me, but they clearly have a problem and I hope things will get better. I hope someday that they will get Automatic Bill pay direct from my Brokerage account there - and then I can drop Schwab altogether (Too bad, because Schwab has fairly decent customer service - Probably; you get what you pay for here syndrome.)

Did you do the transaction through Vanguard's website? If so, then you can go to your personal settings and request that they hold EVERY piece of mail to you except for your tax documents. They are required by law to send you -DIV and -INT tax statements.

BOV,

Thanks, just went to the Vanguard Website and took care of that info and hopefully a couple of trees

[bongo2]

Wow. I've had Vanguard for years, and have never had a single problem. I hope I haven't been cheated and not noticed it!

[cute fuzzy bunny]

Well I guess if you dont do a lot, you probably wont have a lot of opportunity for problems. I've had few, mostly questions that were answered rather half-assedly and after I figured it out myself.

Although as a mentor once said "You can run across the highway 10 times with a bag over your head and nothing bad will happen. Doesnt mean running across the road with a bag on your head is a good idea".

I was reading some of Paul Terhorsts web site this afternoon and was reminded of that when he was commenting on travelling to unstable countries and feeling that there was no big deal to it. A pair of couples I used to work with took a safari trip to a very modestly troubled country about 5-6 years ago. In the middle of the night 'rebels' attacked their camp, hacked one of the couples to death with machetes, and the other couple ony survived by cutting a hole in the back of their tent and wiggling through the underbrush on their bellies for some distance in the middle of the night. I would bet they would all beg to differ with the "ah nothing bad ever happened to me..." line of thinking. But to be fair, you're probably more likely to be attacked by a shark or hit by lightning than killed by rebels. And somewhat more likely to have problems with an understaffed, overworked mutual fund company that has been surprised by their own success...

[unclemick]

In America we used to call it getting behind the wheel and turning on the ignition. Also we don't stay for hurricanes. Common sense helps but there are no sure things. 15 yrs with Vanguard AND I even read the paper they send me and don't use the webstite - still a little retro.

Although I never travel overseas (hell, I don't even fly)
I do know people who have traveled into very primitive
parts of the world and emerged without so much as a tummy ache. I also know people who have lived for years in unstable countries without serious troubles.
I take my chances in the boat and on the motorcycle.
That's about as risky as I want to get at my age,
I am reminded of an old saying though. Three things can happen when you get on a horse and two of them are bad!

John Galt

[unclemick]

I expect to be dealing with Vanguard sometime this year(when I get unlazy) - small 401k rollover and possibly a mini Roth conversion. I plan to give them three ways to irritate me: snail mail, telephone and internete - big believer in redundancy.

In LA our insurance commissioners are either in jail or running for office(a minor form of entertainment) until last march when homeowners/flood/jacuzi/waterfront insurance became a big deal. In june with perfect timing the new lawyers/swamp land management co decided we camp owners needed all kinds of home insurance - after a lot of yelling my lawyer - your lawyer and dealing with our totally worthless insurance commision and my neighbor's daugher works for a congressman(US) - and insurance co's refusing to write. An indepedant agent(also a camp owner) and it turns out a neighbor(1/4 mile up the road) found an obscure industrial type policy(junkyards, parking lots, building sites ,etc) liability only which was acceptable to everybody. 5 months of thrills and chills gave me a less than wonderful attitude toward politicians, lawyers, insurance industry, and owning real estate in general. But this too shall pass.