Can someone fact-check the claims in the following article? I have found that is very concerning for Vanguard to publish misleading numbers or advertisements for their mutual funds. I do not which company I can trust now. Maybe the lesson in finance is really trusting nobody an putting your money into multiple baskets.
https://www.bondsavvy.com/fixed-income- ... mfxx-yield
KEY TAKEAWAYS
The much-advertised VMFXX 7 day yield misleads investors. It takes the fund's accrued interest over the last week and multiplies it by 52. The VMFXX yield does not accurately represent an investor's expected annual return in the way bond yields do.
According to the September 2023 Fed dot plot, the US Federal Reserve is projecting the fed funds rate to decline by nearly three percentage points by the end of 2026. Should this occur, Vanguard VMFXX investors would see their income plunge and would not benefit from the rising bond prices that would likely accompany such a move.
Vanguard VMFXX is not as safe as investors believe it is, as only 27.9% of its investments were in US Treasury obligations as of August 31, 2023. The rest were in repurchase agreements and agency obligations, two sectors previously bailed out by the US government.
Vanguard VMFXX is not a fixed income investment given its ultra-short-term nature and the lack of visibility investors have in its future income distributions. As of February 28, 2023, 68% of VMFXX's investments had maturity dates between one and seven days, creating significant reinvestment risk.
The VMFXX management fee is understated, as it does not include the significant transaction costs VMFXX incurs to buy and sell securities. Owning individual bonds can drive significant savings compared to the recurring fees and costs incurred by VMFXX.
In June 2023, Vanguard was fined and censured by the Financial Industry Regulatory Authority (FINRA) for overstating projected yields and annual income on nine money market funds along with other errors that went uncorrected despite 100 customer complaints.
The Vanguard VMFXX website misleads investors by indicating that, as of August 31, 2023, 30.8% of VMFXX holdings were "Government Obligations," when, instead, these investments were Federal Home Loan Banks bonds and Federal Farm Credit Banks bonds, which are not guaranteed by the US government.
There are compelling alternatives to VMFXX that offer investors higher potential returns, fixed coupons for long durations, lower fees, and a higher level of transparency.
https://www.bondsavvy.com/fixed-income- ... mfxx-yield
KEY TAKEAWAYS
The much-advertised VMFXX 7 day yield misleads investors. It takes the fund's accrued interest over the last week and multiplies it by 52. The VMFXX yield does not accurately represent an investor's expected annual return in the way bond yields do.
According to the September 2023 Fed dot plot, the US Federal Reserve is projecting the fed funds rate to decline by nearly three percentage points by the end of 2026. Should this occur, Vanguard VMFXX investors would see their income plunge and would not benefit from the rising bond prices that would likely accompany such a move.
Vanguard VMFXX is not as safe as investors believe it is, as only 27.9% of its investments were in US Treasury obligations as of August 31, 2023. The rest were in repurchase agreements and agency obligations, two sectors previously bailed out by the US government.
Vanguard VMFXX is not a fixed income investment given its ultra-short-term nature and the lack of visibility investors have in its future income distributions. As of February 28, 2023, 68% of VMFXX's investments had maturity dates between one and seven days, creating significant reinvestment risk.
The VMFXX management fee is understated, as it does not include the significant transaction costs VMFXX incurs to buy and sell securities. Owning individual bonds can drive significant savings compared to the recurring fees and costs incurred by VMFXX.
In June 2023, Vanguard was fined and censured by the Financial Industry Regulatory Authority (FINRA) for overstating projected yields and annual income on nine money market funds along with other errors that went uncorrected despite 100 customer complaints.
The Vanguard VMFXX website misleads investors by indicating that, as of August 31, 2023, 30.8% of VMFXX holdings were "Government Obligations," when, instead, these investments were Federal Home Loan Banks bonds and Federal Farm Credit Banks bonds, which are not guaranteed by the US government.
There are compelling alternatives to VMFXX that offer investors higher potential returns, fixed coupons for long durations, lower fees, and a higher level of transparency.
Statistics: Posted by alexL — Mon Dec 04, 2023 9:44 pm — Replies 0 — Views 38