Sector Weightings differ from the Market

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RadAudit
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Re: Sector Weightings differ from the Market

Post by RadAudit »

As promised, I'm back with the answer to my email to Vanguard of 3/16/23 (?) My text below.

This morning, while looking at my Portfolio Analysis, I noticed a Portfolio
Alert. It said "Some of your sector weightings differ from the markets."
Thanks for the heads up.

It seems that on the stock side my portfolio is underweighted by 14 in
consumer discretionary, 19.5 in energy, 10.5 in health care and 18.7 in
technology.

Now the questions. Now since all of my investments are in broad based index
funds, what are you people doing with the money?


They sent me a nice reply that essentially said please call us. I did. Paraphrasing - just to give "Jeff" the benefit of doubt - he said that the report was correct. I asked specifically, just to understand, that was he saying that neither Life Strategy Conservative nor Life Strategy Moderate had any US consumer discretionary companies in those mutual funds. He said yes. I said OK and hung up.

Wishing Jeff all the best in his future endeavors beyond customer service. But, I am too old to fight this. Maybe a strongly worded letter like Nisi wrote earlier in this thread landing on the Chairman's desk might stir a more thorough examination.

Went through the phone in process again. Got Jack. Said he would put in a repair ticket.
Last edited by RadAudit on Tue Mar 21, 2023 5:25 pm, edited 1 time in total.
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
Clarky
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Re: Sector Weightings differ from the Market

Post by Clarky »

RadAudit wrote: Tue Mar 21, 2023 1:48 pm As promised, I'm back with the answer to my email to Vanguard of 3/16/23 (?) My text below.

This morning, while looking at my Portfolio Analysis, I noticed a Portfolio
Alert. It said "Some of your sector weightings differ from the markets."
Thanks for the heads up.

It seems that on the stock side my portfolio is underweighted by 14 in
consumer discretionary, 19.5 in energy, 10.5 in health care and 18.7 in
technology.

Now the questions. Now since all of my investments are in broad based index
funds, what are you people doing with the money?


They sent me a nice reply that essentially said please call us. I did. Paraphrasing - just to give "Jeff" the benefit of doubt - he said that the report was correct. I asked specifically, just to understand, that was he saying that neither Life Strategy Conservative nor Life Strategy Moderate had any US consumer discretionary companies in those mutual funds. He said yes. I said OK and hung up.

Wishing Jeff all the best in his future endeavors. But, I am too old to fight this. Maybe a strongly worded letter like Nisi wrote earlier in this thread landing on the Chairman's desk might stir a more thorough examination.

Went through the phone in process again. Got Jack. Said he would put in a repair ticket.
I left a note as well, and was told IT is aware of the issue and the responder claimed that management was made aware as well. Apologized for the inconvenience and thanked me for using Portfolio Watch.

The response was about what I expected. It will self-correct at some point. Like I mentioned in another post on this thread, M* showed no Consumer Discretionary for VTI as well, when this all started at least.

I don’t know why I keep posting to this thread. I got caught up! Lol
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nisiprius
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Re: Sector Weightings differ from the Market

Post by nisiprius »

Clarky wrote: Tue Mar 21, 2023 4:04 pm...I left a note as well, and was told IT is aware of the issue and the responder claimed that management was made aware as well...
Bravo! Well done.
RadAudit wrote: Tue Mar 21, 2023 1:48 pm...Went through the phone in process again. Got Jack. Said he would put in a repair ticket...
Well done.

I am sorry to say that I got an unsatisfactory reply to my note this morning. I had submitted a high quality bug report, including an attachment of the same screenshot I posted here in the forum. A day later I had a need to call Vanguard about a completely different issue, involving a change in bank account information. This morning I got a reply saying
We understand that you have already been in contact with a Vanguard representative. If you still have questions or concerns, please do not hesitate to call us.
In other words, whoever fielded the message didn't bother to read what it was about, or find out why I had talked to a representative. I've spent as much time as I care to spend, and will take it that Clarky and RadAudit have succeeded where I failed.
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Clarky
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Re: Sector Weightings differ from the Market

Post by Clarky »

Thanks, but let’s not get carried away. Last I checked, the issue lives on. But I’m done too, in any case.
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RadAudit
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Re: Sector Weightings differ from the Market

Post by RadAudit »

Clarky wrote: Tue Mar 21, 2023 5:35 pm Thanks, but let’s not get carried away. Last I checked, the issue lives on. But I’m done too, in any case.
I'll keep an eye out to see if the fix ever gets done. But, I guess the takeaway is, to paraphrase, - that anyone who likes reports from index funds and sausage shouldn't watch either being made.
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AlohaBill
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Re: Sector Weightings differ from the Market

Post by AlohaBill »

In my case, ignorance is bliss! However, I do appreciate you fellas taking the time to try to inform Vanguard of its problems. A company such as Vanguard, growing so fast in such a short time, is bound to have growing pains! Maybe they should increase their AUM charges to handle the barbarians at the gate. One could always switch to Fidelity, Schwab, ARKK or Edward Jones. :D
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Re: Sector Weightings differ from the Market

Post by RadAudit »

AlohaBill wrote: Wed Mar 22, 2023 9:49 am One could always switch to Fidelity, Schwab, ...
Yes, one could.

If I thought that this was anything more than a minor dustup about an obscure report, the first thing I would do is transfer all of my taxable MM funds to about five or six local FDIC insured banks. Then I might try to notify Vanguard.
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
Topic Author
RadAudit
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Re: Sector Weightings differ from the Market

Post by RadAudit »

I checked the sector analysis report this morning in the Portfolio Analysis and it appears it has been fixed, at least for my account. YMMV. Best of luck.
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
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nisiprius
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Re: Sector Weightings differ from the Market

Post by nisiprius »

Mine, too. I'm down to the usual two alerts, both accurate statements of fact as to how my holdings compare with their recommendations. They now show microscopic numerical differences for sector allocations compared to the market, and don't show an alert about it.

Not too bad.

It's interesting that they apparently did pick up on the minuscule foreign bond holdings in Total Bond, as they say 2% of my bond holdings are international.
Portfolio alerts (2)

International Exposure Information:
To further diversify your stock portfolio, consider allocating 30% to 50% to foreign stocks.

Bond Information:
Holding more foreign bonds can potentially increase the level of diversification in your portfolio. Allocating up to 20% to 50% of your bond portfolio to foreign bonds is a reasonable amount to capture the diversification benefits.
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Significant error in Vanguard Portfolio Watch Market Cap Analysis

Post by Rocinante Rider »

[merged into existing topic - moderator prudent]

Just within the past couple of weeks, Vanguard's Portfolio Watch tool begin alerting me to a substantial overweighting in mid cap stocks in my portfolio despite no recent change in my holdings. After some investigation and calculations on my part, I found that the analysis tool was categorizing 15.7% of my S&P 500 Index fund holdings (e.g., VFIAX and VOO) as being mid cap, while mid caps comprise only 13.43% of the US stock market according to the tool. Thus, according to the Portfolio Watch tool, Vanguard's S&P 500 Index funds are suddenly over-weighted toward mid cap. It's highly unlikely that the large cap S&P 500 Index suddenly became skewed toward mid caps. I sent a secure message to Vanguard about this, and they responded that a technician is looking into the matter. In the meantime, I just want to warn people not to rely on the accuracy of Vanguard's Portfolio Analysis.
Clarky
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Re: Sector Weightings differ from the Market

Post by Clarky »

RadAudit wrote: Thu Mar 23, 2023 9:11 am I checked the sector analysis report this morning in the Portfolio Analysis and it appears it has been fixed, at least for my account. YMMV. Best of luck.
All good here as well. Just finished reading something about indexes being reconstituted. Don’t know if that had anything to do with it - or just enough people made just enough noise?
sycamore
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Re: Significant error in Vanguard Portfolio Watch Market Cap Analysis

Post by sycamore »

Rocinante Rider wrote: Thu Mar 23, 2023 9:24 am [merged into existing topic - moderator prudent]

Just within the past couple of weeks, Vanguard's Portfolio Watch tool begin alerting me to a substantial overweighting in mid cap stocks in my portfolio despite no recent change in my holdings. After some investigation and calculations on my part, I found that the analysis tool was categorizing 15.7% of my S&P 500 Index fund holdings (e.g., VFIAX and VOO) as being mid cap, while mid caps comprise only 13.43% of the US stock market according to the tool. Thus, according to the Portfolio Watch tool, Vanguard's S&P 500 Index funds are suddenly over-weighted toward mid cap. It's highly unlikely that the large cap S&P 500 Index suddenly became skewed toward mid caps. I sent a secure message to Vanguard about this, and they responded that a technician is looking into the matter. In the meantime, I just want to warn people not to rely on the accuracy of Vanguard's Portfolio Analysis.
Keep in mind there's no industry standard for large / mid / small cap. Different market data providers (S&P, MSCI, CRSP, Russell) have their own definitions. If I had to guess, Vanguard is using CRSP because that's whose indexes they use for Vanguard's "own" funds -- as opposed to the Vanguard S&P Index funds, which of course follow S&P indexes.

So it's possible a "Vanguard" fund like VOO will not be classified as you might expect.

Anyway a few percentage points difference is really no big deal IMO. If I were Vanguard I'd make the alerting threshold wider than they have it, in order to avoid false alerts.
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Re: Sector Weightings differ from the Market

Post by nisiprius »

Clarky wrote: Thu Mar 23, 2023 11:17 am
RadAudit wrote: Thu Mar 23, 2023 9:11 am I checked the sector analysis report this morning in the Portfolio Analysis and it appears it has been fixed, at least for my account. YMMV. Best of luck.
All good here as well. Just finished reading something about indexes being reconstituted. Don’t know if that had anything to do with it - or just enough people made just enough noise?
I don't see how it could have anything to do with indexes being reconstituted. Whether or not reporting the bug did some good, I don't know. But I did just add a reply to my original message noting that as of today the bug seems to have been fixed.
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Re: Significant error in Vanguard Portfolio Watch Market Cap Analysis

Post by TOM1964 »

Rocinante Rider wrote: Thu Mar 23, 2023 9:24 am [merged into existing topic - moderator prudent]

Just within the past couple of weeks, Vanguard's Portfolio Watch tool begin alerting me to a substantial overweighting in mid cap stocks in my portfolio despite no recent change in my holdings. After some investigation and calculations on my part, I found that the analysis tool was categorizing 15.7% of my S&P 500 Index fund holdings (e.g., VFIAX and VOO) as being mid cap, while mid caps comprise only 13.43% of the US stock market according to the tool. Thus, according to the Portfolio Watch tool, Vanguard's S&P 500 Index funds are suddenly over-weighted toward mid cap. It's highly unlikely that the large cap S&P 500 Index suddenly became skewed toward mid caps. I sent a secure message to Vanguard about this, and they responded that a technician is looking into the matter. In the meantime, I just want to warn people not to rely on the accuracy of Vanguard's Portfolio Analysis.
Try this: go into Portfolio Watch and create a new group, and place just one security in that group, VTI. That’s Total US Stock Market ETF. Then run a stock analysis. You will find that you are overweight on mid-caps by nearly 7 points!

Vanguard says that the US market’s capitalization is at 78.6/13.4/8.0 percent for large-, mid-, and small-caps, respectively. Vanguard also reports that its Total US Stock Market funds are at 72.4/20.0/7.6 !

I don’t care what break points they use to define market capitalization, they should at least have some internal consistency. VTI/VITSX is by far my biggest domestic equity holding. How am I supposed to keep small and large caps balanced if there’s really this much tracking error in their main equity fund?
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