UPDATE [October 14, 2021]: Vanguard has confirmed to me that this issue was caused by a bug in a software update they released to their web site and then fixed a day later. See the end of this blog posting for their response.
Executive summary
Some time between 6:00am US/Eastern on September 14, 2021 and 24 hours later, Vanguard rolled out an update to their web site which rewrote the historical value of some customer holdings and claimed that their holdings had gone up in value dramatically overnight. In my case, that meant that the value of one of my holdings was suddenly showing up as nearly 19% higher than it had when I looked at it a day earlier, making my retirement savings suddenly seem tends of thousands of dollars larger than it was. Later the same day, Vanguard silently rolled back the change. There has been no explanation or announcement about either change, and when I spoke to a Vanguard representative on the phone about it before it was rolled back, he was unaware of it.
Discovering the problem
I run a Selenium script at 6:00am Tuesday through Saturday to pull down the value of my Vanguard retirement holdings from the web site as of the close of trading the previous day and save the data in a CSV so that I can easily perform analysis on it. This script emails me the new figures and shows the delta from the previous day’s.
On the morning of Wednesday, September 14, the email from the script claimed that the value of my holdings in one of my funds, Vanguard Target Retirement 2040 Fund (VFORX), had gone up by overnight by over 18.8%, which would obviously be a rather remarkable increase, especially given that on Tuesday both the Dow Jones Industrial Average and the S&P 500 went down.
It would be extraordinarily remarkable for the value of a diversified Vanguard mutual fund to go up by that much on a day when the markets went down, but that wasn’t the only remarkable thing. When I asked the Vanguard site to show me the value of my holdings for days prior to September 14, the values shown by the site no longer matched the values that had previously been fetched from the site by my script. For example, when I checked on September 15 for the value of my holdings as of September 13, I got a much higher value than when my script performed the same check on September 14.
A closer examination of the data made it clear that pretty much the entire jump in value could be explained by ridiculously large values for “accrued dividends” displayed on the site for VFORX. By “ridiculously large,” I mean that if those values were accurate, then the fund was looking forward to an end-of-year dividend ten times or more larger than its dividend in any previous year since its inception. While this wasn’t entirely impossible, it certainly seemed highly improbable.
Attempting to get to the root of the problem
I called Vanguard to ask them what was going on. The first time I called, it took me about ten minutes of navigating their phone system and waiting on hold before I was finally connected to a person who could help me. I started to explain the problem to him, and when I paused in my explanation and waited for him to acknowledge what I was saying, there was silence on the line — it hadn’t disconnected, it was just completely silent — I asked several times if anyone was there and received no response, so I gave up and hung up. Whee!
My second attempt to call Vanguard resulted in a 38-minute call which was a combination of navigating their phone system, waiting on hold to speak to a person, explaining the problem to him, and waiting on hold again for quite a while while he went and checked with two other departments (or so he said) about what was going on. Finally he came back on the line and claimed to me that everything was working properly and the displayed accrued dividends were correct, but he couldn’t explain why there was such a large jump overnight or why my historical account values had changed.
Working around the problem
The Vanguard representative’s explanation was not particularly satisfying, but at this point I had no choice but to assume that the data now being displayed on the site was correct and the values that had been displayed up until yesterday were wrong, which meant that I was going to have to put a bunch of effort into revamping my script for pulling data daily off of the site as well as my script for various automated analyses I do of the data every day, to account for these accrued dividends that were suddenly showing up even though they never had in the past. It was not going to be fun.
While this was unfortunate in that it meant a bunch of work for me to update my tooling, it was also rather fortunate because it meant my retirement savings were significantly more valuable than I had previously thought. Woohoo!
I set to work making the changes.
Easy come, easy go
Several hours later, I was nearly done with the changes to the data scraping script, when suddenly my new changes mysteriously stopped working. Lo and behold, the big accrued dividends had disappeared; in fact, the accrued dividends for VFORX were now showing up as “$0.00”. The Vanguard site was no longer rewriting historical holding values, and there was no longer an 18.8% jump overnight in the value of VFORX. The change disappeared as silently and without explanation as when it appeared.
It sure would be nice to know what the heck happened here, and which data was actually a correct reflection of the value of my holdings. It would also be very nice to know if there are large accrued dividends that I will lose if I sell my VFORX holdings before the end of the year!
Vanguard owes its customers an explanation of what happened.
Vanguard comes clean, at least to me
I’d been asking Vanguard for a month for an explanation of what happened, before they finally got back to me on October 14, 2021:
Dear Mr. Kamens,
I am writing with an update regarding the issue we discussed last week
regarding your “Balances by date” page.
What you picked up on was an actual software issue that happened during our
most recent elevation. The issue was as we discussed: accrued dividends for
stock funds were appearing in the “Accrued dividends” column when they
shouldn’t be. The effect is, as you noted, an inflated value of your
portfolio before the dividends were transitioned from “Accrued” to “Paid”.
Our Web Technical Support Services has “rolled back and fixed” this bit of
code that was causing the trouble. We shouldn’t see this issue going
forward.
We really appreciate you not only taking the time to contact us about the
issue you found, but your patience and support during troubleshooting was
instrumental in finding a resolution. Thanks again for your help with this.
Sincerely,
[elided]
Registered Representative
Vanguard Retail Investor Group
I wish they had posted some sort of public acknowledgment about what happened, as opposed to just responding to me privately, but 🤷 I guess that’s probably too much to ask for.
Vanguard has often been seen to have less-than-stellar IT capabilities. According to some. And customer service seems to be suffering too. See below links. I would not be surprised to find that your findings are from a fundamental problem with Vanguard’s code OR are from an ethical or questionable trading tactic by Vanguard.
– “Some Vanguard loyalists decry lost checks and poor service as the Pa. giant hits $8 trillion in assets”
https://www.inquirer.com/business/vanguard-cuts-secure-messaging-customer-service-complaints-bogleheads-20210821.html
“Vanguard added to the furor in July when it said it is phasing out secure messaging on its website by the end of August for clients under $1 million in assets. Those with $1 million or more, known as Flagship investors, will still have secure message access on the company’s website.”
– “Vanguard may remove secure messages, members transitioning out of Vanguard]”
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=354745&start=100&sid=c14619c7ca83d69b46be0fc9e66407b5
My recommendation: ditch Vanguard.
I’ve noticed that their service has been getting worse, but I’m not yet ready to jump ship to one of the other brokerages with much higher fees.
Honestly, I can’t fathom why they think getting rid of secure messaging will save them money. It seems to me that being able to respond to customers asynchronously in messaging must be more efficient and therefore cheaper than needing to help them on the phone. Won’t getting rid of secure messaging force people to call on the phone and therefore end up costing them more money? Unless they’re legit trying to make the service sufficiently worse for their sub-$1million (less profitable) customers that some of them leave and go elsewhere?
Note that as of today, I can still send Vanguard secure messages through their web site, and I don’t have $1million in holdings on their site, so I don’t think I’m a Flagship investor.